The newcomer to market trading could be forgiven for looking elsewhere than the markets to begin trading right now. The level of potential risk faced by practising the complex range of trading choices out there is enough to make a seasoned trader’s head spin, let alone allow their accounts to tail spin.
So what is the point in looking further into investment strategies which can potentially wipe out your trading account in one fell swoop? The simple answer: NO POINT AT ALL. A simple answer to the unnecessary complexity of market trading and high risk is in a simple financial fixed odds strategy.
Simplify your variables, protect your trading account, achieve consistent wins and continue to learn and adapt your strategies with firm foundations. All of these results are possible with binary trading, which is why more experienced traders are increasingly adapting their trading patterns to this new way to achieve consistent profits no matter what the market is doing.
If you are wondering right now if this sounds too good to be true, let’s look at how it compares to traditional market trading investment strategies being pushed by brokers less concerned about the specific needs of the newcomer.
FACT: Spread betting and futures trading strategies, whilst popular, offer high risks to the inexperienced trader with potentially limitless losses.
FACT: Experienced traders seeking more security and consolidation of capital in unpredictable markets are increasingly recognising the value of financial fixed odds betting methods and re-focussing their investments here. Their similarity to futures and spread-betting because they operate on a points system give them added attractiveness.
Here’s how binary betting is the safer, better option:
Let’s say you wish to day trade and you think that the market on this day is going to rise overall.
You open a binary bet and are quoted a price of 48 for the UK market to close higher for that day, for example. You decide to risk £5 per point. Binary bets work on a price of 0 – 100 which means that if you win, you will earn 52 x £5 i.e. £260. This figure is the 100 points – 48 (cost of the bet) x the amount of your stake, (being £5). Had the market gone against you, you would know in advance that your loss would be exactly your stake x quoted points; i.e. 48 x£5… £240. Simple, predictable and manageable.
Now let’s instead say we opened a spread bet and the market stands at 5200 and again you choose to risk £5 per point, expecting the market to rise. For every point the market moves up you gain £5 and for every point the market moves down you lose £5. Let’s also say you place a stop at 5100, just in case the market should move down, against you.
With the binary bet you need not care how far the market moves one way or another. All you need is for the market to close higher by the end of the day to win. Simplification of the variables involved makes it easier to manage your money.
With the binary bet you know your maximum win being 52 x £5 = £260 and your maximum loss is £48 x £5 = £240.
The spread bet is a different story; your whole level of profit or loss is DEPENDENT on how far the market moves during the day. If the market, for example, dropped in early trading and you hit your stop at 5100, that would be the end of your trade and you would have lost £500 (i.e.: 100 point drop to your stop x £5 per point.)
Even if the market did close higher without hitting your stop first and closed at 5220 your win would still be less than the binary bet, as your win would be 20 x £5 being £100, whereas the binary bet would win £260.
Your only other alternative, to take the stop out on the spread bet could open you up to unlimited losses. Say the market fell 250 points on that day, you would lose £1,250 whereas your maximum loss with the binary bet would only ever be £240.
In fact the only time you would gain more with the spread bet versus the binary bet is if the market did not touch your stop and actually closed higher than 53 points up on the day.
Combination strategies can certainly be lucrative, but as a beginner, it would be financially prudent to limit your variables and focus on building solid foundations to make your experience of trading not only enjoyable but also more profitable in the longer term.
The binary bet suits all markets: forex trading, shares and commodities and can be employed over different time frames to suit your schedule.
It is no coincidence that there is an increasing groundswell of traders who agree that binary bets and fixed odds products are an excellent tool for both new traders and more experienced traders alike. Find out more about how you might best learn to use binary trading to build a solid foundation for your future trading career with financial fixed odds strategies from the specialists at Elm Trader.