IG Index new 5-Minute Binaries

as suggested by M.T.Glass...

IG Index have recently started offering binaries with a 5-minute expiry time which will swing around on just a movement of a few points of the index. So far only only limited to mainstream markets such as the FTSE 100 and DAX indices.

IG rules for these 5-minute binaries say that betting commences 10 seconds into each 5-minute session. I asked IG Index as to why therefore does the trading button remain red (i.e. market closed) till 30 seconds into each session:

'On the 5 minute Binary Bet markets that we offer we do accept bets 10 seconds after the quotes commence. The reason why you may experience a delay of up to 30 seconds after the stated time, is that we use the first tick of the underlying Index on after the stated start time. Indices such as the FTSE can only tick once every single component share has traded at a different price level. This can take up to 20 seconds to happen. As a result it may be up to 20 seconds in to the allotted 5 minute period before we have a starting level to use as a base, consequently when you also allow for the 10 second delay, this may mean that you can not deal until 30 seconds into the allotted 5 minute period.'

It strikes me that if they know there will be a 20 seconds delay built into the availability of appropriate data, surely their own 10 seconds delay could be concurrent with that, rather than additional to it - so that betting can commence 20 seconds in rather than 30 seconds in?

The usual warnings still apply - namely binaries are an easy way to throw money away and the spreads are big. But here's a few 'thinking aloud' observations from a trader's experiments this past few days:

  1. With 5-minute binaries, there's perhaps no great advantage in using charts. With practice, mental imagery based on the changing numbers might do the same job.
  2. Binaries may be ideal for capturing short-term volatility like weekly home sale figures and non-farm payrolls which announcements are prone to have a direct impact on many markets. Such announcements often trigger a sharp movement immediately following the annoucement but which then reverses and pulls back as traders digest the news.
  3. Except when there is a clear and strong trend under way within the 5-minute session, there is often little point attempting to predict where the index will be at some specific moment several minutes hence (and even within a very evident brief trend there is a significant probability of twitches sufficient to momentarily reverse the index).
  4. Perhaps regard it as merely a play on twitchiness. In a timeframe this short, with minimal movement needed to be up or down, random minor twitches can swing the index from up to down and up again several times - and it's only being up or down that matters here - not the amount - so a single point move is sometimes all that's needed.
  5. There are 99 five minute sessions available between 8:10am and 4:25pm (the times when IG allow trading). Some folk point to lunchtime as the flattest part of the day. Markets often seem to pause in the moments before key economic announcements - such as the noon Thursday news re UK interest rates, or the 1:30pm and 3pm (UK time) when US figures are released. So maybe use specific tactics in the 5 minute session immediately prior?
  6. Maybe it's daft to play while the market is ticking along in a predominantly one-way mode with very few of the momentary reversals that are needed for this. An index that is gently twitching up/down by tiniest amounts will do the job. So maybe the flattest times are favourite?
  7. The earlier that the trade is opened, the greater is the time period within which the market can swing about. IG don't allow trades within the first 30 seconds and the final 20 seconds, giving a trading window of 4mins 10 seconds (250 seconds). So, if taking whatever is the current market mood into consideration at all, should one place very late bets in a calm market (say 4m30 seconds in) in expectation of directional change being unlikely with so little time left, and very early bets during a jumpy market, allowing maximum time for trading vigorous movement? Or do the bookies automatically relax and worsen the spreads to compensate for calm vs jumpy markets?
  8. Initially I tried paper trading various configurations, before putting into practice a counter-trend strategy, of buying below 7 by the end of the second minute into the session, and looking to exit at a higher level before the curtain comes down - or if no such opportunity occurs, buying instead at sub-3 by the end of the third minute in, and letting those smaller bets expire. The vast majority will expire at a loss, but occasionally the market does reverse and pay out at 100. However, one approach that wouldn't work is taking every 2-98 bet at 2 on the chance that 1-in-49 will settle at 100 -- because many of those 2-98 quotes apply in situations where the move so far is extreme and less likely to reverse in time.
  9. Whenever the market is hovering at an unchanged level, the quoted spread will be in the middle (say 48-53 or somesuch). Eventually of course it is going to end at zero or 100. The smaller the amount of time left, the faster the quote will fly away from middle to edge - and the harder it is to catch any given quote during those last minutes if hovering in the middle.
Thought for the day: if a woman says "Five minutes", what does she mean?

If she is getting dressed, this means a half an hour. Five minutes is only five minutes if you have just been given five more minutes to watch the game before helping around the house.

I am logging some data, but not enough to be of use to others. I am merely doing this alongside other stuff as and when I have time. It may very well prove to be a total waste of time in which case I'll give up on it.

I don't know if other spread betting firms are offering these 5-minute markets. Anyone else doing anything with binaries at all?


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