THE UPSIDE AND DOWNSIDE

WED 01 FEBRUARY 2017 BY KEENAN MISC

There is a downside to these trading instruments, but it does require some perspective. A big advantage is that the risk and reward are known. It doesn't matter how much the market moves for or against the trader. There are only two results: win a fixed amount or lose a fixed amount, even with brokers like TopOption. In addition, there are usually no fees, such as commissions, with these trading instruments (brokers can vary). The options are easy to use, and there is only one decision to make: is the underlying asset up or down? There are also no liquidity problems, because the trader never actually owns the underlying asset and therefore brokers can offer countless exercise prices and expiry times / dates, which is attractive for a trader. A final advantage is that a trader can generally access multiple asset classes in global markets at any time when a market is open anywhere in the world.

The main disadvantage of high-low binary options is that the reward is always less than the risk. This means that a trader needs a high percentage of the time to cover losses. While the payout and risk fluctuate from broker to broker and instrument to instrument, one thing remains constant: losing trades cost traders more than he / she can make profits. Other types of binary options (not high-low) can provide payouts where the reward is potentially greater than the risk.

Another disadvantage is that OTC markets outside the United States are unregulated and little oversee in the event of a trade discussion. While brokers often use a large external source for their quotes, traders can still be prone to unscrupulous practices, even if it's not the norm. Another possible concern is that no underlying assets belong; It is simply a bet on an underlying asset direction. Continue to the Optionweb in the test.