In previous modeling I've did, I took a very profitable futures system and ran it against NADEX binaries using my best guess of the spread based on the data I had available. The overall returns were lower. However, the binaries provided protection against tail risk and could be scaled up. In fact, on a binary options system your max loss will always be equal to your max losing streak. You basically cut out your volatility risk which makes a very nice equity curve but one that grows slower. You could do something similar but not the same in futures if you have enough to trade multiple contracts and volatility sized your positions.
One technique you can use, as well, is to diversify a futures system over multiple forms. For example, let's say you have enough capital to trade 5 contracts on a futures system with risk of $1000 per contract. You could split the difference between futures and binary options and trade $3000 with the stop loss and $2000 with the binary. This gives you more possibilities/outs to win. Namely, you can still win if you get stopped out and the position closes above your entry. On the other hand, while options aren't subject to path risk they are subject to expiry risk (i.e. expiry sensitivity).
Because futures are generally more efficient, they will typically be more profitable. However, some hidden risk in terms of slippage on stop loss and other factors play a role too. It seems the binaries are more suited to trades where you have a bigger edge because the spread is higher. The bull/bear spreads in theory can work very well too but in my exp. it was hit or miss depending on what spread was available.
In terms of getting rich though, you can only need enough capital for your next trade with the binary and your account only needs to bet size * losing streak. So, if you have a system that only has a max of 4 historical losses then you can risk up to 20% of your account on every trade.
The difficult part is that when I calculated you need to hit a winning % of something like 52%-55% to break even on a 50/50 bet and to make money you need to hitting obvs over that. Notice your win ratio could be lower if you choose a different payoff ratio but the 50/50 is the easiest for comparison purposes. It is possible to get such win rates but your number of trades per year tend to go down which makes it more difficult. Most technical analysis methods top out at around 52% to 53% which is right on the point of break even. As far as discretionary trading, I haven't looked recently but I think the spread will be difficult to overcome because discretionary traders tend to have a much lower average profit per trade. I think you give up about 1/2 to 1 tick per side but haven't checked recently. If I recall, the most efficient way to trade was to hold them until expiry so you only lose the spread on one side.
Has anyone recently performed a cost breakdown to see how the costs compare to the futures and how efficient or inefficient they are? And is anyone trading these discretionary or systems successfully? Anyone trading multiple trades per day?
They used to have a cap at 7 contracts but now looks like they are charging $1 per contract which looks a bit high and only cap at 50 contracts. So it's basically 2% on your winning trades to commision and 1% on your losing trades. I believe you're also giving up 1/2 tick. A tick is going to be $1 or $2. So you're looking at 3%. 50+3= 53% to break even holding until expiry or 54% if you trade in/out.