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Guide To Reduced Risk Trading

The built-in risk that exits in Forex, traditional stock trading and various other financial marketplaces lies in leverage. It is a fact that leverage can indeed increase earnings, but for the bulk of retail market traders, leverage increases risk and serves as the main reason as to why many traders lose money in the aforementioned markets.

Leverage isn’t the only problem for retail traders. Elements such as slippages, excessive volatility, and the reality that losses are often not restricted to the initial investment amount all render trading in other markets quite risky. But with binary options, most of these factors are not an issue. Profits are fixed percentages and losses are limited to what the trader decides to invest. Slippage is never a issue, and marketplace volatility has no impact on profit or loss amounts. These factors make binary options an investment tool with minimized risk potential.

Market conditions are not always suitable for trading. There are periods when trading Forex for example, that there will be minimal chances to profit due to lower trade volume or insufficient volatility, particularly when major data is anticipated. But those things which present problems for the Forex trader only offer profitable opportunities for the binary options trader. Those who trade binary options can use reduced volatility to trade a No Touch or Boundary type of trade.

One issue that many retail traders encounter when trading commodities and other assets is that the costs associated with trading are quite high. Commodities brokers typically demand thousands of dollars just for a trader to open an account. Forex brokers generally require as much as $50,000 for opening capital, and traders are required to pay the cost of spreads and commissions. Margin demands can also be high. Many retail traders simply cannot afford the costs. When trading binary options, traders can start out with only a few hundred dollars and never pay any fees, commissions, or additional costs.

Binary options trading allow traders plenty of control over each trade. Within the Best Options platform, traders know exactly how much money they stand to earn or lose from trading in advance of each trade. Risk to reward ratios are clearly defined. Trade selection is solely the responsibility of the trader, a task which is much less challenging within the binary options platform.

Retail traders began to flock to the binary options arena in 2008, a trend which continues to this day. The advantages of this financial tool are clear and for those who are craving reduced risk trading, the solution is clear. No other form of trading provides so much potential for profit with such low risk levels.


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  1. Pingback: Guide To Trading With Lengthy Expiry Periods - My Blog

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