Win- lose trade a di­rec­tional bet

The Weekend Australian - Review - - Wealth - James Dunn

IN 2005, IG Mar­kets ex­tended the use of CFDs with the in­tro­duc­tion of bi­nary’’ CFDs, which quote a price be­tween zero and 100 on a dis­crete event — for ex­am­ple, the Aus­tralian mar­ket fin­ish­ing up or down on the day — oc­cur­ring. If the event oc­curs, the trade set­tles’’ at 100, but if not, the bi­nary set­tles at zero. This prod­uct al­lows spec­u­la­tors to make di­rec­tional bets’’ on stocks, in­dices, cur­ren­cies and com­modi­ties.

No com­mis­sion is charged on bi­nary CFDs, be­cause IG Mar­kets makes its money in the spread ( the dif­fer­ence be­tween the bid and of­fer). Traders can bet as lit­tle as a dol­lar per point. So far, IG Mar­kets is the only provider to of­fer bi­nary CFDs.

IG Mar­kets also quotes range’’ bets, for ex­am­ple a price for the mar­ket to fin­ish up 20 but less than 50, or up 20 but less than 30. The client can ac­tu­ally pick th­ese ranges and ei­ther bet on the mar­ket fin­ish­ing within that dis­crete range, or out­side that dis­crete range.

Bi­nary CFDs are also quoted on other share­mar­ket in­dices, as well as cur­ren­cies and com­modi­ties. As well as the ASX 200, prices are of­fered on the Dow Jones In­dus­trial Av­er­age, the Nas­daq Com­pos­ite In­dex and the S& P 500 in the US, the FTSE ( UK), the DAX ( Ger­many) and the Hang Seng ( Hong Kong). In cur­ren­cies, bi­na­ries are quoted on the $ A against the $ US, Euro, ster­ling and yen, and in com­modi­ties, on the NYMEX ( New York Mer­can­tile Ex­change) prices for crude oil, gold and sil­ver. The Aus­tralian share­mar­ket bi­nary CFD set­tles at the close of trad­ing at 4pm. The cur­ren­cies fin­ish at 8pm Lon­don time, while the US in­dices and com­modi­ties fin­ish at 6am Aus­tralian time.

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