Binary options trading is risk-free?
Binary options trading is not risk-free and it is very important that you understand these risks before you start trading binary options.
Binary options are often referred to as “all or nothing options”, since most of them only have two possible outcomes. If the
underlying assets (e.g. the stock index or an individual stock) evolve as you predicted, you earn money.
This income can either be predetermined (eg 85%),or it can depend on how the underlying instrument evolves. The underlying asset
is not evolving as you predicted. If this happens, you lose your entire bet. When this happens normally your investment in binary
options is losing its value.
When you invest in binary options, you do take a risk of losing your entire bet. However, you cannot lose more than the option’s
price, unlike when trading with other kinds of options its limited to your original bet. Binary options must be due to their nature only
be used as a spice in your investment portfolio. They should not be your only type of investment her are two reasons:
They can bring high returns, but are also associated with high risk. By limiting their share of your portfolio, you limit the risk you
Binary options are a short-term investment. They do not create long-term value and they are not long-term investments. Therefore,
you should also invest in longer-term assets such as stocks and bonds.
Why binary options trading is risk?
Possibly the most important element of controlling risk in binary options trading is to limit your initial exposure and to trade only with
money which can be lost. Many professional traders use the ‘2% rule’ which only allows them to risk a maximum of 2% of their trading
account on any single trade.
Is online trading safe?
While it may be true that nothing is perfectly safe in this world, online trading is certainly as good as offline trading at providing
security for your financial transactions. If you are making securities transactions over the Internet, make sure your brokerage is
using high-end encryption.
Be the first to comment on "Binary options trading is risk-free?"