ASIC bans the sale of binary options to retail clients

ASIC has made a product intervention order banning the issue and distribution of binary options to retail clients.

The ban will take effect from Monday 3 May 2021 after ASIC found that binary options have resulted in and are likely to result in significant detriment to retail clients.

ASIC reviews in 2017 and 2019 found that approximately 80% of retail clients lost money trading binary options. ASIC found that binary options are likely to result in cumulative losses to retail clients over time because of their product characteristics:

  • the ‘all or nothing’ payoff structure, where one of the two possible outcomes for a binary option contract is that the retail client will lose their entire investment amount;
  • short contract duration (the average contract duration of binary options traded with one provider was less than six minutes); and
  • negative expected returns (that is, the present value of the expected payoff for a binary option contract is lower than the initial investment).

Commissioner Armour said, ‘Binary options’ product characteristics make them incompatible with investment or risk management use by retail clients. ASIC’s product intervention order will protect retail investors from these harmful products at a time of heightened vulnerability.’

ASIC estimates that retail clients’ net losses from trading binary options were around $490 million in 2018. The size of the market in Australia has since reduced significantly after ASIC issued a warning in April 2019 against providing unlicensed or unauthorised services to clients located in several foreign jurisdictions. Australian retail clients are estimated to have made net losses of more than $6.7 million in 2019.

ASIC’s binary options ban brings Australian requirements into line with prohibitions in force in comparable markets and follows the commencement on 29 March 2021 of ASIC’s product intervention order imposing conditions on contracts for difference offered to retail clients.

The order will remain in force for 18 months, after which it may be extended or made permanent. Civil and criminal penalties apply to contraventions of the product intervention order.

Background

A binary option is a cash-settled, over-the-counter (OTC) derivative entered into by two counterparties—the binary option issuer and the client. The ‘all-or-nothing’ payout under a binary option contract is determined by the occurrence or non-occurrence of a specified event in a defined timeframe. This can include an event related to movements in the price of a financial product or a market index (for example, the price of gold increasing in 30 seconds) or an economic event (such as a central bank interest-rate decision).

Regulatory Guide 272 Product intervention power provides an overview of ASIC’s product intervention power, when and how ASIC may exercise the power and how a product intervention order is made.

On 22 August 2019, ASIC released CP 322, seeking feedback on proposals to use its product intervention power to address significant detriment to retail clients resulting from binary options and CFDs (refer 19-220MR). CP 322 attracted more than 400 responses from consumers, consumer groups, CFD issuers, industry bodies and other stakeholders.

On 23 October 2020, ASIC made a product intervention order imposing conditions on the issue and distribution of contracts for difference (CFDs) to retail clients (refer 20-254MR). From 29 March 2021, ASIC’s order strengthens consumer protections by reducing CFD leverage available to retail clients and by targeting CFD product features and sales practices that amplify retail clients’ CFD losses.

In addition to the product intervention orders, ASIC’s actions to address concerns about binary options and CFDs include:

  • enforcement action to address misconduct
  • public warning notices and other statements
  • surveillance projects and thematic reviews
  • stronger regulations
  • extensive retail client education campaigns and guidance for binary option issuers.

More information about ASIC’s supervision and enforcement work is available on our website. ASIC’s Moneysmart website has further information about binary options.

Download

FBS Fresh Style

Meet FBS Fresh Style – On March 29, FBS presented a fresh brand style. It is a new chapter in the company development. For 12 years, FBS has been growing into a big international company with a solid ecosystem of trading products for traders and investors of any level. The fresh style is just one more step towards the smoothest trading experience for FBS clients.

Why Did FBS Markets Refresh

FBS has several products with their own functions and goals. Each fresh design element, such as logos, colors, fonts, or blocks has its meaning to highlight every FBS product’s uniqueness and make them more recognizable and manageable for users.

At FBS Markets inc, anyone can find something to their liking. For instance, FBS Trading Broker is an e-cabinet with web and app versions, where you can manage your accounts, deposit and withdraw funds, and check your progress. It has a garden-like green color that associates with the previous designs as well as new horizons and reflects the all-time striving for a better future.

Then, FBS Trader, an all-in-one trading platform, is now in noble gold. With the app, trading on the go, which appears to be a real treasure in the modern fast-changing world, is freely available for anyone! An easy access to the global online trading is in your pocket.

Finally, FBS CopyTrade is a social trading app for those who prefer a modern type of investing. The vibrant orange color has connection with the rising sun full of new beginnings and opportunities. Now the app logo echoes the general meaning of the application – copying the actions of successful traders.

Amazing three trading strategies to follow the trend

What is the most important thing you need before you decide to enter a trade? Do you need investment or the charts? Well, it is undeniable that you need both of these but the most valuable thing for you would be to speculate the market. Now, why is this market speculation so important? It helps you to find the most suitable point at which to enter your trade. 

Let’s say, you bought some stocks with your investment to make some investment. You will not find a single trader who doesn’t trade to make a profit. So, you will undoubtedly look for opportunities to sell your previously bought stocks at a higher price. But how would you know that you are going to sell your stocks at a higher price since you are trading online? Here comes the necessity of speculation to know the perfect market condition to sell your stocks.

When you virtually keep an eye on the market, you will find out there are some changes in the market value of the product. Sometimes the price may go higher than your cost price while sometimes the price may go lower. When the price goes lower it will not be a favorable condition for you to sell your stocks as the difference between your selling price and cost price will be negative and you will face a loss. That’s why, to avoid such losses, traders use some trendlines to know where the price is moving. By looking at the trendlines, they become aware to find their preferable entry points. Therefore, traders need to follow the trendlines without making any mistakes as a slight mistake can lead to huge losses in this sector. Traders use various strategies to keep up with the market trends and here are some of the most popular tips for you.

Fix one main trendline

It is no wonder that a trendline is the completion of multiple higher and lower price values. But when the trend remains bullish where a maximum of the price remains higher high and higher low, the trend is recognized as an uptrend. On the other hand, a downtrend is marked when the trend remains bearish or the price remains within lower high and lowers low. It can a bit of a challenge to follow a big picture trendline as the market is constantly fluctuating and is difficult to interpret for the traders. There may remain several trendlines in the main trendline but for a big picture of the market, you should have a main trendline in the sidelines.

Use a channel to follow the trend

Now the trends are mainly identified by smoothening all the roughly sketched price values. As the price fluctuation is very high in a chart, it is not possible for a trader to visually recognize what a trend may look like. Here comes the importance of channeling the day-to-day price movement into one single straight line. Now, this single straight line will indicate a trend.

The rookies need to learn channel trading method in demo environment. Use this link to get a demo account from Saxo. Learn to trade the channel by using the free resource without risking any real money.

Identifying a breakout

Trends are not eternal. They come to an end. But how to identify the end of a trend? For identifying the upsurge of a trend, you need to look for breakouts. In a trend, there may be times when the price value may move in the opposite direction for some moment and again go back to its previous direction. But after moving back and forth for some time, the value finally breaks the ongoing trends and completely moves in the opposite direction. This is termed a breakout in trading. These breakouts are important to identify a change in the trends. By speculating a breakout, a trader can predict the market value of a commodity beforehand and thus make decisions accordingly.

Traders need to execute all their works and strategies only after a trend has begun its action. So, to get a better result by following a trendline, a trader should also remain vigilant when speculating and predicting the market movement.

M4Markets Launches MAM / PAMM Account

MAM/PAMM Solution

Multi-account manager allows users to manage multiple trading accounts and sub-accounts, using a single terminal. Diversify and expand your portfolio of investors and manage their funds from a single trading account.

Leverage the M4Market’s flexible MAM/PAMM solution to trade and manage multiple accounts from a single interface under one master account. The solution provides direct connectivity with M4Market’s MT4 & MT5 ensuring a seamless experience.

Features and benefits of MAM/PAMM Account

  • Most advanced post-trade allocation tool
  • Allows Expert Advisor (EA) trading of managed accounts
  • Unlimited number of sub-accounts
  • Manage several accounts having different strategies
  • STP on master account for bulk order execution
  • Monitor commissions and performance in real time
  • No limit on trading accounts and deposit amount

Why open MAM/PAMM Account with M4Markets..?

  • Deep liquidity
  • Raw pricing connectivity
  • Fast order execution
  • Diverse product range

FBS Introduces New Currency Pairs

On February 5, FBS added CFD-cash to the list of trading instruments in MetaTrader 5. It’s more convenient than just CFD. You can choose when to close your orders because there is no expiration date, and your orders won’t close automatically.

Here is the full list of CFD-cash available at FBS:

  • JP225 (Nikkei 225)
  • US100 (NASDAQ100)
  • US30 (Dow Jones)
  • US500 (S&P500)
  • AU200 (Australia 200)
  • EU50 (Eurostoxx50)
  • FR40 (CAC40)
  • HK50 (Hang Seng)
  • UK100 (FTSE100)
  • DE30 (DAX30)
  • XTIUSD (WTI)
  • XBRUSD (BRN)
  • ES35 (Spain35)
  • XNGUSD (Natural GAS)

If you have any questions, feel free to contact FBS 24/7 support team. Trade wisely and earn big with FBS.

FBS Launches Free Educational Forex Course

Forex Intensive is the free course that our experts have prepared for you. You have five weeks to level up your trading knowledge. It is aimed at both beginners and experienced traders.

All the materials, which are articles and webinars, will be published daily, and you can get access to them free. Subscribe to FBS Forex Intensive and miss no chance to become a better trader.

The course is five weeks long. Every week subscribers get a new email with the Forex Intensive program according to their level of knowledge. It allows European traders to educate in real-time with fresh materials and use the opportunity to join the webinars where it is possible to ask any questions to FBS analysts. The online format of the course helps to gain the information anytime and anywhere it is convenient for traders.

Within five weeks, traders learn the following topics:

  • Week 1: Forex essentials.
  • Week 2: Fundamental analysis.
  • Week 3: Technical analysis.
  • Week 4: Trading instruments.
  • Week 5: Management tips.

Despite the fact that Forex Intensive lasts the whole month of October, all the materials will be available for free anytime.

ForexTime Closing Its FX Retail Business in Europe

The reason why FXTM decided to suspend its retail business happens to be quite straightforward. The Cypriot entity sent emails to clients explaining that as of this date it will provide its services in the EEA region exclusively for professional clients and institutional traders.

In light of internal business decisions to focus on other markets and grow their B2B operations, many forex brokers, like Exness, decided to close the retail business in EU/EEA, including the UK.

One of the reasons stated for the exclusive focus on the institutional business is the recent changes in the regulatory environment. Indeed, the retail FX market in Europe is becoming relatively challenging, which is why many brokers are looking into new opportunities in the wholesale liquidity and clearing market.

FXTM’s EU website also dropped the option of onboarding retail traders and is now only taking professional clients.

ESMA’s restrictions have already had a more severe impact than most retail brokers anticipated, though it was offset by a surge in crypto volumes over the past two years. For instance, the European regulator has banned any welcome bonuses or other incentives that encourage clients to trade CFDs. This was problematic for many firms who often rely on such bonuses and high leverage as a means of attracting clients.

Candlestick Chart

candlestick chart (also called Japanese candlestick chart) is a style of financial chart used to describe price movements of a security, derivative, or currency. Each candlestick typically shows one day, thus a one-month chart may show the 20 trading days as 20 candlesticks.

A candlestick chart is simply a chart composed of individual candles, which traders use to understand price action. Candlestick price action involves pinpointing where the price opened for a period, where the price closed for a period, as well as the price highs and lows for a specific period.

How To Read Candlestick Chart

Candlestick Chart

Open price:

The open price depicts the first price traded during the formation of the new candle. If the price starts to trend upwards the candle will turn green/blue (colors vary depending on chart settings). If the price declines the candle will turn red.

High Price:

The top of the upper wick/shadow indicates the highest price traded during the period. If there is no upper wick/shadow it means that the open price or the close price was the highest price traded.

Low Price:

The lowest price traded is the either the price at the bottom of the lower wick/shadow and if there is no lower wick/shadow then the lowest price traded is the same as the close price or open price in a bullish candle.

Close Price:

The close price is the last price traded during the period of the candle formation. If the close price is below the open price the candle will turn red as a default in most charting packages. If the close price is above the open price the candle will be green/blue (also depends on the chart settings).

The Wick:

The next important element of a candlestick is the wick, which is also referred to as a ‘shadow’. These points are vital as they show the extremes in price for a specific charting period. The wicks are quickly identifiable as they are visually thinner than the body of the candlestick. This is where the strength of candlesticks becomes apparent. Candlesticks can help traders keep our eye on market momentum and away from the static of price extremes.

Direction:

The direction of the price is indicated by the color of the candlestick. If the price of the candle is closing above the opening price of the candle, then the price is moving upwards and the candle would be green (the color of the candle depends on the chart settings). If the candle is red, then the price closed below the open.

Range:

The difference between the highest and lowest price of a candle is its range. You can calculate this by taking the price at the top of the upper wick and subtracting it from the price at the bottom of the lower wick. (Range = highest point – lowest point).

Having this knowledge of a candle, and what the points indicate, means traders using a candlestick chart have a clear advantage when it comes to distinguishing trendlines, price patterns and Elliot waves.

How To Use & Read

There are various ways to use and read a candlestick chart. Candlestick chart analysis depends on your preferred trading strategy and time-frame. Some strategies attempt to take advantage of candle formations while others attempt to recognize price patterns.

Interpreting single candle formations

Individual candlesticks can offer a lot of insight into current market sentiment. Candlesticks like the Hammer, shooting star, andhanging man, offer clues as to changing momentum and potentially where the market prices maytrend.

As you can see from the image below the Hammer candlestick formation sometimes indicates a reversal in trend. The hammer candle formation has a long lower wick with a small body. Its closing pricing is above its opening price. The intuition behind the hammer formation is simple, price tried to decline but buyers entered the market pushing the price up. It is a bullish signal to enter the market, tighten stop-losses or close out a short position.

single candle formations

Traders can take advantage of hammer formations by executing a long trade once the hammer candle has closed. Hammer candles are advantageous because traders can implement ‘tight’ stop-losses (stop-losses that risk a small amount of pips). Take-profits should be placed in such a way as to ensure a positive risk-reward ratio. So, the take-profit is larger than the stop-loss.

Recognizing price patterns in multiple candles

Candlestick charts help traders recognize price patterns that occur in the charts. By recognizing these price patterns, like the bullish engulfing pattern or triangle patterns you can take advantage of them by using them as entries into or exit signals out the market.

For example, in the image below we have the bullish engulfing price pattern. The bullish engulfing is a combination of a red candle and a blue candle that ‘engulfs’ the entire red candle. It is an indication that it could be the end of a currency pairs established weakness. A trader would take advantage of this by entering a long position after the blue candle closes. Remember, the price pattern only forms once the second candle closes.

bullish engulfing

As with the hammer formation, a trader would place a stop loss below the bullish engulfing pattern, ensuring a tight stop loss. The trader would then set a take-profit. For more forex candlestick charts check our forex candlesticks guide where we go in depth into the advantages of candlestick charts as well as the strategies that can be implemented using them.

Source – dailyfx.com