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What is Binary Options?
Binary Options, also known as Digital Options or All-or-Nothing Options, have been available to the public-at-large since 2008. Basically, Binary Options have two possible outcomes: “in the money”- when a specific asset reaches a certain value after the fixed expiry time and “out of the money”- exactly the opposite outcome. Binary Option Trading is a revolutionary way in which traders can achieve high returns within a very short period of time. In case the investment doesn’t expire “in the money”, some brokers give a specific percentage of the cash invested as a refund to the binary option trader. This refund can go as high as 15% of the original investment, so not all is lost if your option expires out of the money.
Is Binary Options a Scam?
Before starting to explain how binaries work, I have to address an important issue: Binary Options have been surrounded by a vibe of Scam right from the start and this makes a lot of people stay away from the industry. Here’s the long story made short: Binary Options are NOT a Scam! But some binary options brokers definitely are. Binaries are a legit trading instrument and cannot be called scam but to trade them, you need a brokerage and unfortunately, among these brokerages, there are a lot of scammers. This doesn’t mean that binary options are a scam, however, it does mean you must be extra careful with whom you are doing business with. Once you’re done reading this article, go over the how to avoid binary options scams guide.
Think about this: a guy sells you a fake iPhone, saying it’s the real deal. After a while, you realize you’ve just bought a fake and you’ve paid full price. Does that make Apple a scam. NO! If someone sells you 14 karat Gold and claims it’s 22 karats, does that make Gold a scam. See where I’m going? Binary options are not a scam, but some of the websites that offer them are scams. Open your eyes when reaching for the wallet.
How does Binary Options Work?
I’ll try two different explanations; the first will be broader for those of us who don’t really understand what Binary Options are all about. Plus, a video below.
The Binary Options trader uses a wide range of assets, from Forex to Stocks, Indices and Commodities. These are commonly referred to as underlying assets because the value of the option is derived from their value, making underlying assets the backbone of binary option trading and we win or lose out on binary trades based on the movement of these underlying assets. Basically, a trader speculates that the price of X asset will be above or below the opening level at expiry time and if he is right, he will receive a specific, prearranged profit. Let’s say, I speculate Google will be above X value within one hour (X is the opening price level of Google), I will put my money on the Call Option (in contrast to the Put Option – when I speculate that the asset price will be below X value). If the Google stock is just one point above X value when my option expires, one could generate up to 85% profit from the investment. Many brokers will refund up to 15% of the investment loss in case I was wrong in my speculation.
Nowadays, with the Binary Options market growing rapidly, traders have many more trading options, such as Boundary Options, Touch Options, Up/Down, and the more recent type of fast trading called 60 Seconds trading where all options expire after one minute, so you could potentially increase your account balance almost faster than you can say “I love Binary Options Trading”. Each category of options is slightly different from the others in terms of its properties. Our readers can find more information about the different trading tools and options, by having a glance at our binary options glossary.
How are Binary Options Traded? Simple Explanation
David is the average trader. He keeps track of many American and Far Eastern markets. He checks out the live, online financial news; sometimes he even reads financial magazines. Today, David was checking out Reuters when he saw something about a rush for gold in India. Immediately, David checked with his favorite Binary Options broker, and started looking at the gold charts over the past few hours. The gold value was 1733.01 points. David speculated that in exactly one hour the gold value will exceed 1733.55 points, and so he decided to invest $100 for the option to gain 75% return from his investment. David checked the Call Option, and then started biting his nails. After 45 minutes, the gold value was still less than 1733.55 points, but David had faith in his choice. Two minutes before expiry time the numbers were still not so good for David. Egad! After exactly one hour, the gold value reached 1733.62 points. “Bingo!” David shouted while checking his account balance, which was now $75 higher. In case David was wrong and the gold value was lower than the expected value, he would have received up to 15% return from his losses, so his choice wouldn’t have been a complete loss.
How to Trade Binary Options in 3 Simple Steps
Although the explanation above is pretty straightforward, I want to make sure that everyone understands how easy it is to place a binary options trade, so I will use a visual representation – yea, pictures:
Step 1: Pick an Asset
All brokers will display the available assets in an easy to access and easy to see list. It may be placed to the right, or to the left, but you will definitely see it. In this case it is to the right.
Step 2: Choose Direction (Call or Put)
Once you’ve decided what you are going to trade, it’s time to decide if the price of that asset will be higher or lower at expiration time, compared with current price. Look at the blue line on the chart – that represents current price (of course it looks different on other platforms but it’s very easy to identify). If you think the asset price will be above (higher), you will choose Call and if you think it’s going to be below it (lower), you will choose Put. Remember, Call is for above, Put is for below.
Step 3: Choose Expiration and Investment Amount
Now that you’ve decided on direction, you have to choose an expiration time. These are usually preset by the broker so you will only be able to pick from a given list of expiries. In our example we are trading Short Term options so we can pick between 30 seconds, 1 minute, 2 minutes, 3 minutes or 5 minutes. In other words, we have to answer the question “Will my asset be higher or lower than current price after 30 seconds, or 1 minute, or 2 minutes (etc.)?” When the 30 seconds (or whatever expiration we have chosen) have passed, we will know the outcome: if price is higher and we’ve chosen Call, we win. If price is lower and we’ve chosen Put, we win. Any other scenario means we lost the investment but, as stated above, some brokers offer a refund of up to 15% even if your trade wasn’t successful. Next you have to choose how much you want to invest on the trade. This depends on your money management rules, your skill as a trader and how much “trust” you have in the trade. Picture coming up:
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Step 3.1 – Open Trade
Some brokers let you choose Call or Put, expiration, investment amount and have a separate button to open the actual trade that activates only when all parameters are set. On other platforms (this is the case in our example), once you click Call or Put the trade will be opened automatically. If you are trading on such a platform, make sure you set everything up before hitting Call or Put.
Where Can I Trade Binary Options?
To trade binary options you will need to open an account with a brokerage. Since 2008 when binary options became available to the large public, brokers have started to appear and they never stopped. Nowadays, literally hundreds of such brokers are operating and just waiting for you to open an account. Registration is free of charge and all you have to pay is some bank transaction fees (in some cases) and of course, the money you want to invest. Be careful though because not all of these brokers are trustworthy. We recommend you choose one of our Recommended Brokers or at least a regulated one. Also, before you venture into the binary options industry we advise you to read our articles on How To Choose Your Binary Options Broker and Binary Options Regulation – Everything You Need To Know.
When Can I Trade Binary Options?
Some markets are open for the entire 24 hours, 5 days out of 7 (the currency market is a great example) so you can trade whenever you feel like it, no matter the time zone you live in. However, stocks and indices have specific times when their markets are open so you will have to check with your broker to see what those times are. To make the story short, you can trade whenever the respective market is open
Who Trades Binary Options?
Newcomers to trading, ex FX traders, gamblers. Anyone can trade binary options. It’s not a discriminatory industry, meaning that you don’t have to have some special training or degree or stuff like that. If you are a plumber and today you decide you want to trade binary options, you can do it by tomorrow (or even the same day if you move fast). However, I wouldn’t recommend such a move because – just like almost everything else – binary options trading needs training. It’s better to spend some time educating yourself and then invest money, not the other way around. It’s all about training and because we know that, we’ve put together a huge Binary Options School – Free, of course!
Why Trading Binary Options?
Firstly, I would like to state strongly – Binary Options are based on speculation. Nothing is for sure and winning is a possibility not a certainty. Nevertheless, Binary Options trading definitely adds an extra dimension to speculation because there are so many trading tools and trading options that it is quite possible that one could make a correct speculation. Binary Options trading is mainly based on research and a certain amount of knowledge (about the markets and assets), but it is also strongly based on risk management. What I’m saying is that one is not required to become a Forex market guru to trade Binary Options, but he needs to be knowledgeable, alert and aware. To begin with, Binary Options require only a small level of investment but give a very rewarding level of return. Online platforms have made the trading of Binary Options easier because any trader across the globe can trade Binary Options and receive the needed information for trading. Making a few smart and profitable investments while losing some other minor investments could generate high profits in a short amount of time. Binary Options trading is breathtaking, profitable and fun. As the Binary Options industry is growing, trading has become more popular and far more advanced. Always keep in mind, however, the road for high profits starts with a trusted Binary Options Broker that fits your needs as a trader.
What are Binary Options? – Honest Review
Binary Options is a financial instrument to trade on long or short markets in a certain period of time. The Trader only got 2 options: Win a high amount of money (75% – 95%) or lose the investment amount for this trade. It is like betting on rising or falling markets. Binary Options are very flexible. It is possible to trade any financial market and use different time horizons (starting from 30 seconds).
- Call (Higher): Make a forecast for rising markets
- Put (Lower): Make a forecast for falling markets
Make a forecast for the future price direction
In this article, I will show you exactly what are Binary Options and how do they work. Knowledge is the key to success. Read about the risk and the opportunities to make money in the following text.
Where to trade Binary Options in 2020?
In the next steps, I will show you how Binary Options (Wikipedia article) work. You will understand it in a few moments. But first of all, where to trade Binary Options?
You will need a Binary Options Broker (see the table below). I searched after the safest companies which give the highest return for traders. There are different companies around the world who provide this financial service. You can open a free demo account. This is an account with virtual money so you can learn how to trade without risk.
- You need a company (broker) which provides the financial service (Binary Options)
- Open a free demo account with virtual money (Virtual trading without risk)
|1. IQ Option||(5 / 5)
High Yield 92%
Is Binary Options Trading safe or not?
Safety is the most important point in online investing. You should choose a good and reliable broker which is safe. I recommend using a regulated company for your investments. Have a look on my full Binary Options Broker Review to find the best one. There are regulated and unregulated companies for trading. It always depends on the broker to trade safely Binary Options.
I did a lot of research and clearly, I can say that a regulated broker does not cheat to its clients. Normally unregulated brokers do not cheat too. But it is not 100% safe because sometimes these are small and unknown companies.
It is safer to trade with a regulated broker than with an unregulated one.
In conclusion, you should use a regulated broker for trade Binary Options safely. It always depends on the Broker if it is safe or not. Do the research by yourself and read my review about the broker on this website.
Example of regulation or license
Safe and well-known regulators are:
What you really need to know about online platforms:
There is a huge diversity of Binary Options Platforms and you have to check out what is your personal favorite. Nowadays developed software is very flexible and available for any device. It is possible to trade with the computer (browser and desktop), smartphone and tablet. That means you can trade from everywhere around the world if you got access to the internet.
Especially for a beginner sometimes it is hard to learn to trade with a new platform. There are a bunch of options which can confuse you. Most brokers will give you education material like video tutorials or step to step guides. Also, you can ask the support for help by phone, chat or email.
A platform for any device
Flexibility and charting are provided by the platform. You can do a personal chart analysis with indicators, technical tools, and different chart types. Sometimes you will get access to economic news directly in the platform. Indicators are known for giving you feedback on the market price at the moment. They are customizable like you want. So it is possible to analyze different timeframes.
Today Mobile Trading is one of the most important factors for trade successfully. It is a great opportunity to boost your profit. In the past traders could not trade online or via mobile phone. So the options were much lower for making a profit. Apps are available for Android and iOS users or any other device. Check out your trading account 24 hours per day via your mobile phone.
In my opinion, it is better to use the web-based platform with your computer for analysis. Often there are a lot more functions than in the app. Furthermore, you can see the chart more detailed and a higher range of it. Professional analysis can be made by using a computer.
Binary Trading Tutorial | Step by Step Guide
As a trader, you can choose between a lot of different assets on a Binary Options Platform. You can trade Forex, Stocks, Commodities, Cryptocurrencies and more. This trading tutorial will show you how it exactly works to trade the financial product. The process is always the same as you see in the video and picture below. Just practice it in a free Demo Account.
Learn how to trade successfully
Now you have to imagine and predict the asset price direction for the future (forecast):
You can use the specially programmed trading platform of a Binary Options broker to analyze the charts and get trading ideas. It is very important to have a good working strategy for maximum profit. Beginners should use technical analysis for trading the chart. On the broker platform, you can learn more about it in different education videos/centers.
Therefore every Binary Option expires after a specified time. You can use the time horizon between 30 seconds or 5 months or more. Sometimes it depends on the broker. As you see you can trade short-term or longterm Binary Options.
After you have decided on the direction and the expiry time for your trade you can “sign” the contract with your broker. Just click the call or the put button. On some platforms, you have to confirm the trade.
- Call (Higher): The price will go up in your expiration time
- Put (Lower): The price will go down in your expiration time
If you are right in your decision, the broker will pay you a high asset profit of 75-95%. The trade automatically closes after the expiry time. Sometimes the broker allows you to close the trade before the expiry time ends. That is a way to reduce the impact of a wrong decision.
That means if you invest the amount of 100$, you can earn the amount of 195$ on a certain time horizon. 100$ is the return of your investment and 95$ is the profit.
Binary Options Platform Tutorial for beginners
- Search for an asset with a high profit. If you trade the assets with the highest yields in conclusion from my experience the result will be much better in the end. Some Binary Brokers offer you different account types with different asset profit.
- Analyze the chart on the platform. You can choose different time frames, indicators or financial news for your strategy. Every Binary Broker offers you some educations, too. Learn in webinars, videos or coaching the best strategies of the world.
- Now you should select the expiration time of your Binary Option. There a lot of possibilities for your trade. Some traders like it to trade short-term options and some other traders like it to trade longterm options.
- Choose an amount you want to invest in your trade. The most time it starts at 1$.
- At latest trade the Binary Option with a call or put. There are only 2 options in the market, that’s why it is called “binary”. In the end, you earn a high yield or you lose your selected amount.
What are the conditions Binary Options Trading?
You can trade any asset with Binary Options. It can be stocks, commodities, forex or cryptocurrencies! Most brokers give the option to trade more than 100 different assets. The expiration time depends on your broker. Some companies provide Binary Options with a time horizon of 30 seconds or less. These days you get a lot of different options on every broker.
- Trade stocks, forex, commodities, cryptocurrencies, and more markets
- Choose between a diversity of time horizons (short-term – longterm)
Yield – The return of investment can be high as 95%+
As the time horizons, the yield (return of investment and profit) depends on the broker. Often there is a possibility to get a high payout of more than 90% of your investment but there is no rule for the value of the yields. Sometimes short-term trades got the highest payout and sometimes long-term trades got the highest payout. In comparison to my experience, the yield is between 70% and 95% for standard accounts.
Another way to boost the yield is to get a VIP account type. Most of the brokers offer different account types, which are linked to the deposit amount. For example, you will get a VIP account if you deposit more than 3000$ on IQ Option. Not every broker got the offer of account types but you should search for it if you plan to invest a high amount of money.
Are Binary Options risky or not?
Binary Options are risky to trade, but there are advantages why the risk is less than trading other financial products. Especially new traders fear the loss of a high amount of money. With binary trading, you can only lose your bet amount. Traders clearly see what they can lose in a trade. Compared to other trading instruments this is a big advantage because the risk is limited always.
Another advantage is that you get a high asset payoff no matter how much the market moves. The asset price just has to be above or under the entry point. Traders like this financial product because it is so easy to understand and to calculate the risk and the trade profit.
Only invest the money which you can afford to lose in the worst case.
Binary Options Demo Account – Yes or no?
It is very important for beginners and new traders to practice the Binary Options Trading. Most brokers give you a free demo account. It is an account with free virtual money. You can always recharge the account with one click. It is risk-free trading.
Every trader should learn more about the trading platform before he is going to invest real money. Also, you can learn new strategies or try out different methods on the market. First, develop your own strategy with virtual money.
Most brokers offer a free demo account.
Opening your first real account
For trading with real money, you have to fulfill different criteria. On most brokers, you can trade and deposit without verification of your account. In my opinion, every trader should verify his account before deposit money. This can prevent annoying errors and waiting times. For a full verification, you need to complete the account setup.
Sign in with your real personal data. That includes full name, birthday, real address, email, and your phone number. After that, sometimes you have to upload the required documents for the broker. The company checks if you are a real person. Upload a picture/copy of your Passport. Sometimes they require a utility bill too. In most cases, the verification only takes 24 hours or less. With some companies, you do not need this verification process.
How much money do I need for Binary Options Trading?
You can start trading with a very low amount of money. Especially on IQ Option, you can open a live account with a 10$ deposit. The minimum trade amount is 1$. The upper limit is open for your trades. Have a look at my reviews to find a broker which fulfill your requirements
From my experiences as a trader, it is possible to make a huge amount of money with the right strategy. Binary Options are the tool for trading with a small or big amount of money.
Facts about the deposit:
- Start with only 10$ in your account
- Trade with 1$ per trade
- You can easily trade with high amounts too
- The minimum deposit depends on the Binary Options Broker
Easy deposit and withdrawal
As mentioned before the deposit is easy as the withdrawal of profits. On most brokers, there are not any fees for deposit and withdrawal money. For payments, you can use more than 20 different methods. It is possible to capitalize on the trading account in a few seconds. In most cases the payout takes the time of 24 hours depends on your broker.
Payment methods are depending on the broker:
- Credit Cards (Master/VISA)
- E-Wallets: Skrill, Neteller, FasaPay, ePayments, Yandex, and more
Get a free Bonus for your deposit
The most brokers offer a free bonus for your deposit or risk-free trades. The bonus amount depends on the deposit amount. It can be a 20%,30%,50% or 100% bonus. In other words, they give you a higher bonus for a higher deposit. Furthermore, some brokers allow trading risk-free trades. If you lose a trade, the broker pays back the lost money in the form of a bonus.
The bonus is not completely free. Sometimes traders have to trade a high turnover of the bonus. For example, make a turnover of 30x of the bonus to get the bonus withdrawn. If you are not satisfied with the conditions in most cases you can deactivate the bonus. A bonus is a good opportunity to grow a bigger account and trade with more money.
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Can you really make money with trading Binary Options?
The key to your success is to get a good education and find a professional strategy. In addition, you have to control the risk with sensible money management. In this article, I showed you an insight into profitable trading with Binary Options.
It is easy to make money with Binary Options but you have to be prepared. The markets are not easy to trade for beginners and it takes time to trade profitably. You will not see success directly. From my experience educated traders do not blow up the account. They earn money constantly. Read through my other pages to get deeper knowledge.
- Education: This is the most important point for beginners. You should be prepared for the markets and know how the financial product works. There are different tutorials on the broker webpage or on my website to learn the functions. In addition, it should be easy for you to use the trading platform of your broker. Just practice in the demo account until you feel comfortable. Moreover, most brokers offer deeper knowledge. There are webinars, coachings, and tutorials. Education and knowledge is the key to making money with Binary Options.
- Strategy: Develop or learn a professional strategy for trading. You have to know what you are doing in the market. It is like a system for you which always have to repeat. Without a proper strategy, you will blow up your account. There are different ways to learn a strategy. Use the knowledge of a broker or my website.
- Money Management: most traders fail to control the risk. In my opinion, money management should be sensitive by using 0,5 – 3% of the account balance per trade. Sometime a losing streak will occur. By using sensitive money management you can trade without emotions and you can trade enough trades without running out of money.
In conclusion, you can really make money with trading Binary Options but you have to learn and invest your time in the right knowledge. The demo account is the best way to practice before you start investing real money.
Are Binary Options legit or not? – My scam review
In my opinion, Binary Options are not a scam for your money. The financial product gives you the possibility to invest in short or longterm opportunities in the market. Binary Options are so popular because they are so easy to understand and you can make a lot of money in a short time.
It is very important to choose a good broker. Some small brokers are scamming users, that’s why a lot of people think Binary Options are a scam. Definitely, it is not a scam if you trade with a safe company.
Basic trading checklist for beginners:
- Choose an asset you want
- Forecast the price movement
- Choose a variable expiry time of the trade
- Bet an amount starting 1$
- Trade a call (long) or a put (short) option
- Get profit
- Payout the profit
On this site, I have shown you how the financial product is working. I think you can easily understand it now and start trading with more security. On my other sites, you can learn more about Binary Options. Happy trading.
How to avoid scams as beginner
The problem of Binary Options is that they are not a scam, but some brokers or financial educators are scammers. Every time before you start investing real money you should do a sort of research. You should pay attention to real reviews or advice from professional traders.
Binary Options Explained
Binary Options are options that only have two possible values upon expiration. Either the option will pay a predetermined value for being in the money, or will expire valueless in the same way traditional option contracts will. Predetermined payout values normally vary between 60%-85% but may be higher. Binary option times to expiration are typically much shorter than traditional options.
Binary option trading has recently become more popular amongst day traders. Binary options have also have received some bad press lately, mostly for brokerages opening accounts from clients who did not have any risk capital to trade with. Despite some unscrupulous brokerages making a bad name for them, binary options are a legal instrument, and can create extremely nice returns for successful traders.
Compared To Traditional Options
Binary options are not contracts traded over open secondary markets like traditional options. Binary options are a contract between you and the brokerage. The brokerage states a payout if the option expires in the money, at Tradorax usually 80% but the amount varies, and the option will expire worthless if it expires out of the money.
Usually the two options a trader has are to either buy a put or a call option, and the strike price is the exact price of the security at the time the trade is taken. Essentially a trader is simply betting on whether the security will be higher or lower than the current price at the time of expiration. It does not matter how far in the money a trade becomes, or if it is even only 1 cent in the money, the option payout price will be the same. Because of this it is obviously in a traders interest to take low volatility but highly probable trades.
Who Makes Money
A brokerage makes money over time because with a big enough sample size, they will win about 50% of the time and all traders combined will win about 50% of the time. Below is the payout tree to a trader with an 80% return for each winning trade, a typical payout.
Obviously for a binary options trading strategy to be effective for a trader, they must win on at least 56% of trades, given an 80% payout on winning trades. For this reason demo accounts are a necessity for new traders who need to work on developing a strategy. Choosing only the most probably trades are vital for binary option traders, since it does not matter how far in the money a trade becomes.
Short Time Frame
Binary option contracts have very short time to expiration most of the time. Some brokers offer time frames as low as 1 minute, and may offer as long as a couple weeks. Because the time to expiration is extremely short the vast majority of the time, binary options are very convenient for traders who do not have all day to watch trades. Trading can take place during a lunch hour, or whenever someone has a few minutes. The short time frame also makes it very enticing for traders to trade more often than they should, and traders must remember to maintain a disciplined approach.
Funding and Withdrawing
After the option expires a traders account is immediately credited with the payout amount or loss, and there are no restrictions on when a trader can withdraw money like traditional brokerage accounts. There are also no restrictions on funding accounts, and this means day traders must be cognizant of the amount of money they are putting at risk, as they must with any strategy.
To open your own binary options account, click below to use our preferred broker.
Closing Options Early
One of the newest features of the binary options market allows for the ability to close trades before their expiration times. But recent trends have shown that brokers are becoming increasingly open to this feature and the increased account signups that have been seen indicate that traders are equally interested in the increased flexibility that is made available through these features.
But when exactly is the right time to close a trade prior to its contract expiry time? And what are the advantages of ending your trade early? Here, we will look at some of the ways that you can benefit from “early closures” in binary options.
Uses of the Option Buyback Function
The function to end an options trade early is referred to as the “option buyback” or the “early closure” feature. Generally, this action is taken in order to capture profits on an “in the money trade” before markets are able to reverse (and erase those profits), or to cut losses in a trade that is not expected to work out favorably before the contract expires.
Using the Early Closure Option to Capture Profits
In recent years, we have seen events (such as the Credit Crisis) which led to extreme volatility in the financial markets. These rapid changes in price can make the outcomes for trades less predictable and this can lead to trades that are profitable one day and unprofitable the next. There are many reasons why situations like this might occur. Some of the most drastic events could come with events like a natural disaster, a surprise central bank decision to change interest rates, a disappointing corporate earnings report or an unexpectedly strong macroeconomic data release can all lead to unpredictable changes in asset prices.
To be sure, this can be a positive (when the change falls in line with your trading direction). But it is nearly impossible to know when this favorable outcome will occur and when the news comes out on the opposing side, losses can be seen. This can be a highly frustrating (and costly) experience, as gains that were seen previously are suddenly wiped away.
In years past, there was nothing binary options traders could do but wait for their trades to expire – we were essentially at the mercy of the market’s moves. Unlike spot markets (like Forex) there were no defensive moves that binary options traders could take to preserve their gains. Now, however, traders are able to close a profitable position (using the early closure function) whenever one of these unexpected events occurs.
Using the Early Closure Function to Prevent Losses
In other cases, trades will move in the wrong direction and create losses to a trading account. Here, the early closure function is also useful. When it becomes clear that a trade is unlikely to turn positive before expiry, traders can close a trade early and reduce the amount of losses that would be seen later. For example, if an “out of the money” trade would result in a loss of 85%, closing the option early might result a more favorable outcome – such as a loss of 30% or 50%. These percentages will vary depending on which broker you use,and the market conditions seen when the option is bought back.
Rules to Remember When then Using Early Closure
It should be remembered that the early closure function is not something that should be used to arbitrarily close trades. When trading using market makers, the broker is on the other side of your position. If every trader used this function, losses would occur much less often and the market maker would eventually go out of business (because of all the losses they would absorb). Because of this, there are some rules in place when using this feature:
- Some trades (such as High Yield contracts) cannot be closed before expiration. If every broker enabled traders to close every trade with a 250% payout, market environments would not be in balance.
- There will be certain time periods when early closures are not permitted. For example, a broker might enable the early closure function when a trade has been open for a certain amount of time that opens up the early closure function after a trade has been open for a certain period of time (or within a certain period before expiration). Outside of this window, the function cannot be used.
- Early closure carries some extra costs. This means traders cannot receive full payouts when positions are closed early.
Early Closures Allow for Increased Trading Flexibility
The relatively new early closure feature at 24options allows trader to protect their profits and prevent against potential losses when unforeseen events shift the market. While there are some trading restrictions for this tool, the added level of trade structuring should be utilized in cases where a trade is unlikely to increase in profitability before the contract expires.
***Your capital may be at risk. This material is not investment advice.***
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