What’s The Risk of Trading Binary Options

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How to Reduce the Risk of Losing Your Money with Binary Options Trading

There is no denying that there is no risk involved with binary options trading. In fact, you cannot find a form of investment that does not carry an inherent threat. The possibility of jeopardizing all of your savings does seem to be amplified with binary options, nonetheless. Fortunately, there are so many different ways to reduce the risk of losing your money with binary options trading. Simply follow the strategies below and you will providing yourself with an ample amount of security:

Make Sure Your Broker Offers Certain Features

There are two ways that a broker can help you out if it seems as though have made the wrong call on a trade. The first is known as an out-of-money rate. As you are probably aware one of the biggest issues with binary options trades is that you can lose all of your investment. Fortunately, there is a way to ensure that you get some of this amount back.

The out-of-money feature is one where the broker returns a small percentage of your investment. This tends to be about 10 percent. Get yourself a broker that gives you one of the highest rates around and you will be able to make some money back.

The other service is known as the sell back feature. This is something that you can employ if you notice that you have made the wrong call and are about to lose your money. This feature allows you to exit the trade before the expiry time. By doing so, you will be forfeiting between 40 to 60 percent of your initial. When considering the alternative, however, this is quite a good option.

Utilize the Straddle Strategy

Volatility in an asset can prove to be disastrous for a trade. That is, however, unless you use the straddle strategy. With this strategy, you are almost literally hedging your bets. This is because you put both a call as well as put option on the same asset.

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This way, regardless of the way that the asset moves, you are bound to be right. Of course, there is a caveat with this. As you are both predicting that the value will rise and drop, you are bound to be wrong on one occasion. This means that you stand to lose some money. To utilize this strategy properly, you will have to ensure that you are making more money with the trade that you will win.

Manage Your Money

In the end, perhaps the easiest and best way to minimize your losses is to manage your money well. This means creating a plan for yourself even before you start trading. In order to do so, you will have to come to the conclusion that regardless of what an experienced trader you are, you are going to lose. Sometimes, you may encounter a series of losses. While you cannot control this, you can control how much you will exhaust in the process.

It is up to you, how you decide this. For instance, you can decide that you will stop trading once you have lost a particular amount. Or, you may decide to take a break once you have reached a set win/loss ratio. All that is important is that you know when to stop.

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This is how to reduce the risk of losing your money with binary options trading. These are not foolproof methods but will certain put the odds in your favor.

Low Risk Binary Options Trading

The question we hear most of the times when considering trading binary options: Isn’t it a high risk to invest money on something that is said to be fraudulent and a scam? Well, we have created a way for traders to have a great experience in their trades through low risks. By providing winning automated trading signals, Binary Options Robot is the perfect binary options software to help traders profit in a very smooth way.

Binary options are versatile short term investments that can bring high profits

The power of binary options lies in their versatility, as they enable traders to adapt or adjust a position according to any situation that may arise. However, this factor does not come without costs, as it involves risks and many people get frustrated when they are not successful, and so start spreading the news that it is totally a fraud and a scam.

Of course that you should know that it is not advisable to put too much money into one trade, as they are not long-term investments or a strategy for profits should be considered, but when you have an automated trading system doing all the hard job for you, things get easier and more efficient.

Binary Options Robot offers free trading signals

Well, Binary Options Robot offers signals for traders and also allows them to trade automatically from the comfort of your house, or from the beach, or from wherever the trader may be, without stress or risk, or too much thinking!

Everything is handled semi-automatically by the software, and the trader just needs to wait for the winning trades.

Extremely profitable binary trading software

So, how does Binary Options Robot work? The software is able to analyse the market trends in real time and calculate the value of each trading indicator. Then, the trading indicator gives an auto trading signal to CALL or PUT.

Finally, Binary Options Robot instantly executes the trades on the binary options broker available, according to the signals and the trading system.

Here is one of the several reviews we have about this trading system:

“When I first got to know about the use of binary options trading systems, I was a bit confused that how that the system can change my financial state. In fact, I had started feeling bizarrely odd in terms of trusting the software, but thanks god I did the right thing by giving it a try. Binary Options Robot has been a great way for the online traders to maximize the profits they earn in the trading world.”

Binary trading vs. CFD trading: What is the difference?

Contracts for difference (CFD) and binary options are some of the most popular trading instruments available to online traders.

Many marketers wonder how these tools differ and which ones to choose to win better.

To understand it, we must analyze in detail the two trading platforms and put them side by side to see exactly what is what.

In this article, we will briefly review the similarities between CFD trading and binary options trading and we will make a more thorough assessment of their differences and we hope to draw a rational conclusion.

What Are CFD’s and Binary Options

Many beginner traders confuse these concepts. Therefore, first of all, we want to inform you briefly about each of these forms of trading in the stock market. So, what are then CFD’s and binary options?

CFD’s (Contracts for Difference)

CFD means contract for difference. In short, a CFD is an agreement between you and a broker to pay each other the difference between the price of an asset (such as gold, EUR/USD, Microsoft shares, etc.) at the time the contract is made and its subsequent price when it decides to terminate the contract, that is, close the transaction.

It means that you do not own the real asset, but you make a contract with the owner (in this case, the trading platform) to resolve the difference between you when the deal is over.

This opens the door to many opportunities, such as the fractional ownership of shares, short shares in assets that do not offer them and much more.

Binary Options

Binary options are often referred to as “yes or no” investments. If you believe that an asset will be quoted above a fixed price, you are predicting a “yes” and buying the binary option. If you believe that an asset will fall below a fixed price, you are forecasting “no” and selling the binary option.

There is a low barrier to enter. A binary option contract will not cost more than $100. You are not buying an underlying investment or even the option to buy an underlying investment. You are simply placing a bet on how the price of that investment will move.

These contracts always close at $0 or $100; You win or lose. If it correctly predicts the movement of the price, it is on the winning side of the operation, and the person on the other side of the contract, who incorrectly predicted, is on the losing side. Your profits or losses can not exceed $100 in a single contract, which means that your exposure to risk is limited.

Limited, but far from not existing. You can negotiate multiple contracts to increase potential profits; but at the same time the size of the possible losses increases.

To perform a binary option you must follow three main steps:

  • Decide on an asset or market to trade.
  • Decide an expiration date or time for the option to close. Most trading platforms allow you to sort by expiration date, so you can see contracts that expire within the next hours or days. Most contracts will expire at the end of the trading week, except those linked to economic events.
  • Decide if you want to buy or sell the binary option, according to the exercise price and the expiration date. The exercise price is essentially a line in the sand. If you believe that the asset will be above the strike price when the contract expires, buy the binary option. If you believe that the asset will be below the strike price, sell the binary option.

Similarities between CFD’s and Binary Options

CFD’s and binary options are similar in the following ways:

  • They are derivatives: it is not necessary to own the underlying asset to trade in the asset.
  • They have short trading periods: for both binary options and CFDs, traders can select trading periods from one hour to a week depending on their business objectives.
  • Predicting the movement of prices: both trading instruments involve making predictions about the market prices of the underlying assets.

Differences between CFD’s and Binary Options

Although CFDs and binary options have some similarities, these two trading instruments are also markedly different. The main differences include:

Risk Level

In binary options trading, the operator is usually aware of the possible loss or gain that will be incurred depending on the movement of the price of the underlying asset. However, with CFD operations, it is not possible to determine in advance what you can earn or lose with the fluctuation of market prices. This is because CFD transactions involve negotiating the difference between the entry and exit prices of the underlying asset.

Advanced traders can earn more dividends by trading CFD. However, the level of risk in CFD trading is considerably higher than the binary options trade.

Investment Amount

CFD transactions, unlike binary options trading, involve the payment of commissions and fees for each transaction you make. This is because CFDs are financed with borrowed money, so traders can trade with numerous underlying assets at a reduced price. Each broker has its own commission structure.

When it comes to binary options trading, traders are not required to pay fees or commissions in addition to the initial investment. No fees are paid, even if the operation ends without money, that is, even if you lose. In fact, many binary options brokers offer a return of between 10 and 15% of the money exchanges.

Instead of reimbursements, CFD traders can protect themselves against losses by “stopping” their own losses. But stopping losses can only be applied when losses are already imminent.

Range of Tradable Underlying Assets

CFD trading gives you access to a much broader set of bases that includes bonds, currencies, indices, etc. On the contrary, binary options trading requires the existence of an underlying asset; This currency and the average index can not be negotiated using binary options. If you are looking to access more bases to operate, CFDs offer a better option.

Conclusion: Do We Have a Winner?

Yes, of course we have a winner: the trader! The trader is the final winner of this “battle” between OB and CFD because with this new CFD trend, we have more options and more negotiation styles. We do not believe that one is better than the other. They only have a few differences and operators will have to decide which style suits them best. If you are a trader who wants quick wins of 60 seconds, then binary options are your game. If you do not want to worry about where to put your “Stop Loss” and “Take Profit”, once again, the binaries are for you.

On the other hand, if you are a patient operator that wants to keep good trading for longer, then CFDs are for you. Because in the end, the patience of the trader who chose this tool, is much better rewarded. If the transaction closes successfully, you will earn much more money, and this is the goal of any trader!

In the end, it’s up to you if you want to invest a little time and learn a new way of trading or follow the known path.

If you decide to try the CFD trade, Libertex will be happy to offer you the best conditions. Our CFD service covers a wide range of asset classes. Get more information about CFD operating costs. Also for beginners, we are pleased to offer a demo account, through which you can practice CFD trading without taking any risk.

Best Binary Options Brokers 2020:
  • Binarium
    Binarium

    Best Binary Options Broker!
    Perfect For Beginners!
    Free Trading Education!
    Free Demo Account!
    Sign-up Bonus:

  • Binomo
    Binomo

    Good Choice For Experienced Traders!

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Best Binary Options Trading Guide For Beginners
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