Learn How To Reduce Your Trading Risk With Binary Betting And Binary Options
Markets often move remarkably quickly and this volatility especially in uncertain times can leave new traders with a massive headache and substantial losses.
Although they are relatively new to the world of trading they are now becoming recognised as a real and viable alternative to derivative products like spread betting and futures and here are some key reasons why.
Firstly products such as spread-betting or futures are open to unlimited losses, hence the need for stoplosses. The problem with this, of course, is that in volatile, or even fairly moderately moving markets, if your stop is hit your trade ends often with a significant loss. You don’t want to place your stop too close to current market action or too far away which is often a very difficult balance to strike.
With binary bets / binary options you don’t need to bother with stoplosses at all. Binary trading products protect you from any volatility as the amount you win or lose is known from the outset of the trade and cannot change. Yes let’s just repeat that, it doesn’t matter how much the markets move against you, you can only lose the agreed amount.
Secondly binary bets and binary options require a low account size, often a fraction of a leveraged account like a spread betting or futures account.
Thirdly these products can be applied to many of the major world indices over time periods preferred by the trader. So a binary bet / binary option can be placed for a single day, a week or longer with indices such as the: FTSE 100, Dow Jones, Hang Seng, Australian Index to name just a few. They can equally be applied to Forex markets and pairs such as the British Pound versus the US Dollar and the Euro versus the US Dollar and other currencies. Other markets available for binary trading include individual share markets such as Barclays and Commodities such as Gold and Oil.
Finally binary trading products allow you trade per point like spread-betting and futures. However unlike these products binary trading offers much lower risk as the amount won or lost is fully disclosed before any trade is entered.
A binary trade whether it be a binary bet or binary option is priced on a scale of 0 – 100. You are quoted say a price of 40 and this would be the cost of the trade. If you win you would win 100 minus 40 being 60 times your per point figure. So if we chose $5 per point we would win 60 times $5 being $300. However unlike other products we would have a maximum loss of the cost being 40, times $5 being $200.
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