Win- lose trade a directional bet
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.