Fixed Gains and Losses
One of the ways that trading binary option what differs from standard market trading lies in the fact that losses and gains are fixed.
With fixed gains and losses, it means you know exactly how much money you can win or lose in advance on each trade. When trading with binary option brokers, these values will be clearly placed within each trading window, ensuring that you have access to financial information at all times.
Fixed earnings is a simple concept and very easy to calculate. An example would be a trade that is offering a 90% payout if your prediction of price movement is correct, assuming you decided to invest $100, and your trade ends up in cash, your account will be credited the amount of $190.
The first $100 is your investment amount being returned and the additional $90 of pure profit.
The amount of losses is fixed and can never exceed the amount you have decided.
For example, if you decide to invest $25 in a trade and that trade ends up out of money, $25 is the maximum amount of money that would be lost. Your total financial risk with each trade will always be exactly equal to the investment amount as decided by you.
Fixed Earnings Benefits
Obviously, when trading in the traditional market, the opportunity to earn unlimited profits is wonderful. But the other side of the coin? Losses can easily add up quickly, even when a stop loss is triggered.
These concerns do not apply in binary option. Having these numbers in advance can also help you make important decisions regarding when to step away from a trade.
Another important benefit is the money management. It becomes much easier to track gains and losses when values are fixed.
Money management is an integral part of trading. Those who are not careful with their financial numbers are much more likely to make careless investment decisions.
Knowing where you stand financially can also eliminate some of the excitement in trading, something that can be a real problem for some investors.
Many brokers make it extremely easy to know the financial result with an accurate perspective of each transaction.
Visit the trading windows to see the exact payout amount, with all the important details surrounding the trade. The payout percentage will be shown clearly in each window.
Potential earnings will also be shown and may change as your investment amount is adjusted. In seconds, you'll know exactly how much you can earn from each trade.
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