Category: Complexity

Trading is becoming more and more popular with private investors as well. In relevant specialist magazines, you currently read a lot about particularly one new financial product: Binary options.

Binary options are becoming more and more popular and of course, there are reasons for that. For many investors, the main argument in favor of binary options is their simplicity.

Indeed, this option type is particularly easy to understand and trade. Basically, there are only two possibilities. You bet on rising or falling prices. The digital option, that is what a binary option is also called, has a fixed expiry time which decides on win or loss. If you bet on “price rises” -in order to make profit- the option needs to note higher at expiry time, compared to the initial course
– vice versa if you bet on “price falls”.

With binary options, you invest indirectly, that means you bet on an underlying financial instrument. This can be a currency pair such as EUR-USD, a share, a stock index, or even commodities, such as gold, silver or crude oil. So you have a wide field of application and you are able to diversify very well with binary options, apply them for hedging strategies or for idle speculation.

Even if trading is dead easy with this financial product, it requires a lot of knowledge, discipline and more or less complex strategies in order to really make profit. Read on to find out what matters or check out this Swedish site www.binaraoptionerhandel.com or this binary options site from the Netherlands www.binaireoptiehandel.net.

Technical or fundamental analysis

Before you even can start trading, you have to decide which trading approach to take.
This can either be the technical or the fundamental analysis, but also a combination of both.

The technical analysis mainly deals with evaluating charts and chart patterns. It is sometimes said about this analysis to be hocus pocus, but if you take a closer look at it, you can easily see that the technical analysis works. Indeed, this analysis is based on psychological principles that reflect in charts in an abstract way. And as you might already know: the stock market is mainly pure psychology.

On the other hand, with the fundamental analysis, the focus is clearly different. It generally deals with certain key figures, either of business or national economic nature, and their effects on the respective security paper.

Money-Management

Another important aspect is how to manage your trading assets, that means how much risk you are willing to take. Very many beginners do not spend much time thinking about that at all and often lose their entire bankroll, because if you are not able to handle risks, it is not possible to earn money in the long term. You should only bet about 0.5 % up to 3 % of your assets with a single trade. This does not mean that, when you trade with €10,000, for example, you can only take single positions for €300, no, but you should not lose more than €300 per trade. So, you definitely can open a position for €5000, as long as you make sure you do not lose more than €300 with this trade.
If you have enough discipline and consequently implement the simple principles, you can never lose your entire assets and there is enough scope for studying and learning the trade.

Profit expectation

How high is the profit expectation really with binary options? People advertize with spectacular figures of 80 % profit per trade! Can that be true?

The figures are correct. However, you need to consider that we are talking about “all-or-nothing” trades. Either you win or lose the whole bet. That is why you always can only bet a fractional amount of your trading assets (not more than 3 %!).

Let us just take a look at a small example. A broker pays you 80 % per won trade. Your trading assets amounts to €10,000 and from the past 1000 trades, you know that you meanwhile win about two thirds of all your trades with your strategy. You keep applying the money management with discipline and therefore, you do not bet more than € 300. Your profit expectation per trade is
(2/3 * 0.8 * € 300) – (1/3 * 300) = €60. This means, you win €60 per trade on average.
This is only a statistical figure and of course, you could lose 10 trades in a row. But in the long term, this does not change the profit expectation.

Conclusion

Binary options are a new and very simple financial product which is also the reason why they are very popular. However, you should not let yourself be fooled since making great profit is relatively hard. This can mainly be traced back to the fact that you need a relatively high profit probability
in order to be successful in the long term. Therefore, you need the right strategy which, unfortunately, we cannot tell you at this point.

References:

http://en.wikipedia.org/wiki/Binary_option
http://finance.yahoo.com/q?s=EURUSD=X
http://binaraoptionerhandel.com/
http://binaireoptiehandel.net/
http://www.amazon.com/Technical-Analysis-Financial-Markets-Comprehensive/dp/0735200661/
http://www.investopedia.com/university/fundamentalanalysis/

Parents are bombarded by messages urging them to buy their children educational games and toys so they will turn out intelligent, brand-name clothing and gadgets so that they will fit in and be popular… Then there are the activities urged upon parents: sports, dance, art and music classes, academic enrichment programs… Parents who don’t have money to buy many of these things and experiences may feel that their children are missing out. Parents who can afford to buy them may find that their children are missing something more subtle but at least as important.
Children can learn many valuable things from structured activities, but they need some unstructured time in order to learn creativity and self-motivation and to discover their own priorities. Children can enjoy and learn from games and toys, but they can also become swamped with stuff, constantly looking for something new instead of using and enjoying what they have. Children may be temporarily protected from some kinds of bullying by having all the ‘right’ things, but social relationships based on having the right stuff are not apt to be constructive and lasting.

Virtual Life and Real Life

Classrooms are adding more electronic technology and parents are told that children need to become adept in the digital world if they want to succeed professionally or socially as adults. It’s true that the Internet provides vast amounts of useful, instantly available information, electronic communications technologies can help children connect with and understand the lives of people in distant places, and many careers do require virtual capability. But the Internet also provides vast amounts of misinformation, manipulative advertising, hate speech and offensive content, and electronic communications technologies can allow children to be harassed and bullied by their peers twenty-four hours a day, seven days a week. We need to be aware of the gifts and dangers of these technologies.

Children also need plenty of time in the real world. Many doctors and researchers warn that infants and toddlers need real-world, tactile activities to help them develop their minds and their grasp of life, and that screen-time is usually counterproductive for them. Even older children show higher rates of obesity, sleep problems, mood disorders and other difficulties if they spend many hours on-screen each day. This is partly because screen time distracts them from other essential activities–talking, working and playing in person with family and neighbors; exploring the natural world; reading books, which engage the mind in a different way from image-based media; taking time for quiet reflection, spiritual practice and creative activity.

Balancing Act

Mary Pipher’s book The Shelter Of Each Other talks about the difficult and paradoxical task of parents. They need to prepare their children to understand and take part in the wider culture around them, and at the same time to help them question and find alternatives to the parts of that culture that are unhealthy. There is no simple rule for striking the right balance. If we are clear and honest with ourselves and our children about the hard questions, we may eventually be able to help them develop the insight and judgment to determine the right balance for themselves.

Modern science offers us a wide range of new medicines, procedures and supplements designed to help us stay healthy, along with constantly changing recommendations about what we should eat and how we should avoid pathogens. How can we sort through the flood of information and make healthy choices?

Remedies or Risks?

Usually the benefits of new supplements and medicines are well-documented early on. Their risks may not become apparent for months, years or even decades.

Omega-3 oils were highly recommended by certain studies to reduce the risk of conditions including depression, Alzheimer’s, rheumatoid arthritis, strokes and heart disease. Then newer studies questioned the effectiveness of omega-3s in preventing heart disease and strokes. Then some studies seemed to show that omega-3s could increase the risk of prostate cancer. Even medical experts seem uncertain about how to understand the research.

Conflicting claims about actual medications can be even harder to evaluate. There’s controversy now about whether certain drugs designed to help people suffering from depression and anxiety may actually increase patients’ risk of suicide. Sorting through the studies could be stressful and bewildering even to someone with a healthy mind.

Problematic Precautions

It can be hard to know when precautionary measures protect us and when they actually compromise our health.

Often apparently healthy people are urged to come in for regular preventive screenings for various cancers and other diseases. This can help detect illnesses while they are still relatively easy to treat. It can also create problems. Sometimes there are inherent risks in the screening process itself. There is also the risk of ‘false positives’: the test suggests the presence of a disease that is not there, and the patient worries needlessly and then undergoes a biopsy or other procedure that carries its own risks.

We’re encouraged to wash frequently with antibacterial products to avoid sickness. This does reduce our exposure to certain germs. It can also destroy healthy bacteria on our skin, leaving us more vulnerable to infections, and encourage resistant strains of bacteria to develop, making it harder for doctors to effectively treat patients with serious bacterial infections. Some argue that carefully avoiding contact with germs can weaken our immune systems, leaving us less resilient when we actually become sick.

The Big Picture

Sometimes we let the controversies about new products and procedures distract us from the basic things that we already. Many modern health issues are caused or exacerbated by our failure to attend to these basics. We need to eat reasonable amounts of food and choose food that is as whole and fresh as possible. We need to exercise regularly. We need to get enough sleep. We also need to be attentive to public health, doing what we can to protect our neighbors and ourselves from contaminated air, water and food, and also from excessive noise and light. If we do these things we’ll be in better shape to face whatever health challenges come to us.

For the rest, we might as well use common sense and moderation, do the best we can, and then stop worrying. We’re all going to die of something eventually. We might as well worry less and enjoy more while we’re here.

In today’s hyperconnected society we have access to incredible amounts of information about what’s going on all over the world. How can we sort through the flood of data and decide what is reliable, what is relevant, and how to respond?

What’s really happening?

We expect to hear breaking news instantly. This doesn’t allow time for fact-checking. Even reputable news sources tend to get important facts wrong in their initial description of any traumatic and unexpected event. We get one narrative firmly into our minds, respond emotionally, write letters or make donations…and then the story changes.

Different media outlets tell very different stories. Some disagree on basic facts. Who released the sarin gas that killed so many civilians in Syria? Is human activity actually driving climate change? How do the homicide rates in the US compare with those in highly developed countries that regulate firearms more stringently?

News sources also make very different decisions about which stories to tell. Some focus on the economic benefits of hydraulic fracturing and the degree to which atmospheric pollution can be reduced by burning natural gas instead of coal. Others focus on the cases in which the extraction process has contaminated drinking water and released large quantities of methane and other greenhouse gases.

These differences complicate our attempts to discuss current events with people of differing ideologies. Before jumping a heated argument we may want to step back and ask what stories the other person has heard.

What matters?

Ben Hecht once said “Trying to determine what is going on in the world by reading newspapers is like trying to tell the time by watching the second hand of the clock.” The same could be said of TV, radio and web news. Much ‘news’ time is devoted to celebrity gossip and movie reviews. Serious stories tend to focus on spectacular, immediate events. Wars and elections get a lot of coverage, focused more on moment-by-moment tactical shifts than on the larger issues involved. Climate change generates less news because it’s gradual and constant and we’re seldom able to definitively blame it for any particular devastating storm. We hear much more about the immediate fluctuations of the market than about the basic assumptions, strengths and drawbacks of our economic systems. Sometimes it helps to step back from the flow of news for a little while and read up on those background issues that interest us most.

How much can we process? How do we respond?

Knowing about injustice can motivate us to work for social change, and knowing about the suffering of refugees and disaster victims can inspire us to offer help. Such knowledge can also alienate us. Journalist Susan Moeller has written extensively about ‘compassion fatigue’, in which a constant flow of images of trauma and suffering leaves us feeling helpless and wanting to tune out. We may be able to cope better when we have some sense of context and of the ways in which we can help to remedy the damage that’s being described. Taking time to do that in some areas may mean allowing ourselves not to follow breaking stories in other areas.

Most religions and ethical systems have urged caring people to share their resources with those who are in need. Doing this well–generously, fairly, in a way that empowered the recipients–was not simple even when most people were focused on helping immediate neighbors. It’s more complicated in this hyper-connected age.

We are aware of so many needs. Every day the news brings us images of people in refugee camps, people trying to rebuild in the aftermath of natural disasters, people suffering from terrible diseases, people constrained by extreme poverty. Our paper and electronic mailboxes are full of appeals from groups promoting worthy causes: advocating for human rights and world peace, protecting wild lands, countering pollution, providing educational help to low-income students, researching sustainable technology and cures for diseases and…

How can we decide which appeals to answer? How can we be sure that our giving does more good than harm?

When Helping Hurts

Wayne Muller’s book Sabbath includes a chapter called “Doing Good Badly.” In it he writes about the compassionate response to starvation in the Sahel region of equatorial Africa in the 1990s, when nomadic farmers were being driven off their traditional lands by commercial farms and the dry lands left to them were not able to support enough cattle. USAID received massive amounts in donations for the Sahel and used that money to drill wells. Once the water supply increased, he says “the cattle population exploded, the fragile lands were overgrazed, and then cattle began to die in unprecedented numbers. In the end, our good intentions helped create a terrible famine.”

Our good intentions may have unintended consequences when we are dealing with unfamiliar natural and human environments. There is a difficult balance between immediately providing desperately needed relief and coming to understand places and communities well enough to help in a way that is sustainable and empowering. Some charitable organizations are willing to answer questions about how they address this balance.

Who Can We Trust?

We’re not always confident that the people to whom we entrust our money really have good intentions. There are too many stories of charity fraud. Some outright scammers claim to be collecting for charity when they’re actually keeping all the money they collect for their private use. Some charitable organizations spend a disproportionate amount of the donations they receive on high salaries for high-level employees.

Some people consult their national governments’ lists of fraudulent charities and suggestions for detecting and avoiding fraud, or visit sites like charitynavigator.org and givewell.org which review charities around the world and make recommendations. Some people prefer to give time and money together, becoming involved as volunteers for the causes they support with their donations; this can provide satisfaction and also a chance to understand the real effects of their giving.

Since there are so many needs in the world, it’s probably a good thing that people decide where to give their money in very different ways. No one of us can meet all the needs or support all the good causes around us, but together we can make a positive difference.

Deciding what to eat has gotten much more complicated over the last century. Our food choices have expanded widely. Modern transport and the global economy stock our stores with foods from all over the world. We may enjoy having access to fresh produce in winter and seafood in landlocked countries. We may also worry about how fresh the food is, how safely it was grown and processed, and how much fuel was burned to bring it to us. Modern science and the fast-food industry have also introduced many additives into what looks like basic and familiar food; we’re still learning how these affect our health.

Even as our choices expand, our sources of guidance are changing. In many countries the local food cultures which used to model how to choose, prepare and eat food are fading out, especially among young people. In their place we have a fast-food culture driven by advertising and convenience.

The Cost of Convenience

When people speak of ‘fast food’ they usually mean the huge restaurant chains like McDonalds which sell standardized, highly processed food. They’re relatively inexpensive and save us the toruble of cooking. They also rely heavily on white bread, fatty meat, and artificial flavorings which are not particularly healthy.
But the fast-food model extends beyond these restaurants. Our agricultural system is based on raising food quickly and cheaply with minimal manpower and shipping it over long distances. In the US, food items travel an average of 1500 miles before being eaten. This consumes huge amounts of fossil fuel. It also reduces nutrition. Eggs laid by pastured hens are not nutritionally identical to eggs laid by hens raised in confinement and fed on corn and antibiotics.

Caveat Emptor

Some marketers who advertise healthy, fresh and sustainably raised food charge very high prices for it, and their advertising can be misleading. In his book “The Omnivore’s Dilemma” Michael Pollan describes visiting an American health-food store which sold organic free-range chicken. When he visited the farm he found that large numbers of chickens were kept in close quarters indoors. There was a door open to a small outside yard, making the chickens technically free-range, but the door was not opened until the birds had gotten accustomed to staying inside and stopped exploring the boundaries; the owners feared that if the hens actually went outdoors they might become sick.

Back to the Basics

It’s possible to step outside the fast-food system without spending huge amounts of money, if we’re willing to spend time and attention. We can learn to cook from scratch, using as many whole and basic ingredients as possible. I find the Mennonite cookbooks “More with Less” and “Extending the Table” particularly helpful in this process. We can buy more from local farmers, visit those farms and learn how our food is grown. We can grow more of what we eat. Barbara Kingsolver describes the challenges and satisfactions of this process in her book “Animal, Vegetable, Miracle.” Such engaged eating takes time and energy, but it can improve our health, increase our satisfaction in eating, and help us shift from being nervous and bewildered consumers to being competent partners in feeding ourselves.

There was a time when most people spent most of their lives surrounded by neighbors who had grown up near them and absorbed a similar set of stable cultural expectations. Now many people travel widely and many more conduct business and build friendships across long distances through electronic communications. Those who stay at home still have to cope with changing social rules. This adds richness and diversity to life, but it also adds opportunities for misunderstanding. When people meet each one carries a different set of assumptions about what courtesy looks like. Even when we mean well we often offend one another.

Culture Shock

People from different cultures may have different assumptions about how close people stand when they’re talking, how loudly they speak, how formally they address each other, what questions are polite and what questions are intrusive. It’s easy to get upset and to think that the other person is being deliberately rude or cold: “Why is he crowding me? Is he trying to intimidate me?” “Why does he keep backing away? Did I upset him? Does he think I smell bad? ” It takes a conscious effort to step back, look at our own unspoken rules and remember that the other person may be acting in good faith on a different set of rules.
In some cultures a hostess is expected to keep offering food to her guest until the guest says she doesn’t want any more. In others a guest is expected to take some of whatever her hostess offers, however often the offer is repeated. Some cultures express negative opinions fairly freely; others consider this rude and express disapproval with faint or vague positive statements. Unless these differences are understood and dealt with meals become interminable and conversations confusing.

Changing Times

Even within one country and culture changing social expectations complicate our attempts to be courteous. Some older people feel disrespected if younger people do not address them by their title and last name. Others feel that they are being excluded or held at a distance by being addressed formally. Some people, of both genders, assume that basic courtesy requires any man to hold a door open for any woman, or to offer her his seat on the bus; others feel that those behaviors are chauvinistic and patronizing. It’s easy to take offense if our attempts to be polite are treated as discourtesies. It’s sometimes helpful to address these misunderstandings openly, explain our intentions and learn how the other person wishes to be treated.

Etiquette and Courtesy

In today’s diverse, mobile and fragmented society we can’t assume that the people we meet will share our ideas of etiquette. But while etiquette varies across boundaries of age, class and ethnicity, courtesy is valued by all cultures. The will to attend to the other person, consider their wants and needs, welcome them and put them at ease, is as basic and necessary now as it ever was. If we hold onto this intention, become aware of our assumptions and remember that others assume different things, we can usually work through awkward moments to build constructive conversations and satisfying relationships.

In the 1980s Wright Morris said, “We’re in the world of communications more and more, though we’re in communication less and less”. Communications technology has continued to explode since then. We can call, email, text, tweet, Skype, blog, post to Facebook or Pinterest or Google+ or…, and our attention is constantly grabbed by communications from other people doing all of these things. This allows us to keep in touch quickly and easily with relatives and friends around the world. It also presents us with challenges: How do we decide where to place our attention? How can we make time for meaningful conversations and slow down enough to figure out what we really have to say?

Who Are We Talking To?

Very few people write longhand letters nowadays. Many don’t even take time for email, preferring to post thoughts on public forums where they’ll be seen by large networks of followers or friends. This is much easier and more efficient than writing individually to dozens of people when we want to share photos, news, insights, calls to action and appeals for help. It also changes the nature of what we say. Such public posting tends to reduce the amount of time we spend in dialogue, responding attentively to one person’s questions and perceptions. It may make our communication less personal: there are things that we might confide to trusted friends but don’t want to share with a larger, less well-known group of people…and, eventually, with anyone else who might be monitoring online communications.

Digital communication can have a paradoxically narrowing effect. While it helps us to connect across great geographic distances, it can enable us to communicate primarily with like-minded people. The people in my physical neighborhood don’t all agree with me or with each other about politics, religion, music, education or anything else, but I can easily find sections of the blogosphere that uniformly reinforce my convictions. Leaving this bubble requires a deliberate effort.

Breadth and Depth

William Powers, author of Hamlet’s BlackBerry, traces the history of human communication technologies and the ways in which they shape our social life. He writes about the contrasting values of breadth and depth. Modern communication technologies bring us unprecedented breadth, which can help us to experience new perspectives and develop wide-ranging connections. If we want these connections to have depth we need to be mindful in our use of these technologies, deliberately creating some spaces in which to step back from the constant stream of information and reflect on the meaning of those communications that we value most. His own family takes ‘digital sabbaths”; on weekends they disconnect from the Internet, television etc. and take time to reflect quietly, read books, have face-to-face conversations and write letters. They return to the world of instant communication with renewed energy and focus. Other people find value in celebrating Screen-Free Week, seven days in which free time is spent in nature, in solitude or in live human interaction instead of in screen-time. The idea isn’t to condemn instant communication technologies but to help us use them intentionally.