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Advantages of Fixed-Term Trading

Fixed-term trading integrate assets from the Foreign Exchange market, although they are presented in a different way altogether. The price at which the option is exercised, is directly determined from the spot rate of the asset in the Forex market. Despite the price similarity of assets in both the standard Forex and fixed-term trading trading platforms, it is important to distinguish between the two trading methods.

Simplicity

Perhaps the biggest difference is the simplicity of fixed-term trading. Successful Forex trading can be complex and difficult to achieve for beginning traders, while the concepts of trading fixed-term trading are much more simplified. Since the options typically include a short-term expiration, traders do not need to analyze long-term trends in order to yield consistent profits. Indentifying a short-term trend will often be enough to successfully predict the outcome of an option. Moreover, the trader must only decipher the market’s direction to a certain degree. Depending on the varying types of options, the trader selects the option based on a personal intuition of either the market’s direction, or volatility. If the assessment is correct, the trader successfully yields a profit. fixed-term trading received their name from the fact that there are truly only two viable outcomes to the option. Either the option will expire in the money or out of the money. The remainder of the choices are eliminated for the trader, simplifying the decision making process to one of two options. For example, if the trader selected a One-Touch option, the decision would regard the level of volatility of the asset at hand and whetherthe trader believes that the target price would be reached. Ultimately, there are only two outcomes – either the price is reached or not.

Calculated Risk

The option will expire shortly after a trader has entered the transaction, and the risk is only extended to the fixed amount that the trader has chosen at the time of entry into the position. By contrast, the forex market does not include an expiry, thereby forcing traders to constantly monitor their portfolios to adjust to alternating trends. Another difference between these trading styles is that fixed-term trading provide for higher rates of ROI (return on investment). Brokers fixed-term trading< provides the highest returns in the fixed-term trading market, up to a staggering 90% return on successful trades, while ROI on a Forex investment is truly unknown, and it is only determined after the position has been closed. Generally, the dynamic characteristics of the forex market can often work against a trader, since there is no way to accurately predict the amount of profit or loss that will be incurred after the position is closed. However, with fixed-term trading, the trader selects a principal amount for the specific option, and that is the maximum loss that can be incurred, while the amount of profit that would be earned if the option expires in-the-money is known to all prior to entering the position. Since the amount of risk and reward is known to traders prior to entering a position, it becomes much easier to manage a portfolio. However, in a standard Forex position, a trader will encounter many unexpected events and market movements. Since Forex traders utilize such high levels of leverage, they can place their entire portfolio at risk.

Diverse Investment Opportunities

Fixed-term trading allow investors to diversify their portfolios among a wide variety of assets. Among the instruments available at the traders’ disposal are currencies, commodities, indexes, shares, and more. Market volatility can shift as a result of many factors, and a dynamic instrument list provides ample opportunities to yield profits, since traders can capitalize on opportunities across several markets in one convenient location. In addition, Brokers is proud to welcome portfolios of all sizes. Based on the calculated risk of the trader, an option can be bought or sold at a varying scale, depending on the trader and the respective confidence in the outcome of theoption at expiry.

There are times when there is overwhelming evidence to support the outcome of an option, which can provide extremely lucrative opportunities. Traders who recognize these trends can often yield substantial profits that would have induced far greater risk in the highly leveraged forex market. Similarly, there are often times when the market is behaving erratically, and this can cause some hesitation among investors regarding whether to enter a position, and in which direction to take action. However, since fixed-term trading incorporate a fixed sum at the time of entry into the position, a trader can place a relatively inferior amount on an option, thus limiting the risk to the portfolio. These conditions are ideal for traders of all experience levels and portfolios of all sizes.

Accessibility

The new age of investing allows traders to access markets across trading platforms from any location on the planet. Regardless of where you are in the world, you can connect to the Brokers platform and access your account. This is often of great interest to our investors, since they are able to monitor the status of their portfolio as well as to capitalize on unexpected prospects that might arise. In addition, investors can access their accounts at any time. Trading is available 24 hours a day, 5 days a week. The dynamic market of fixed-term trading integrates assets from across global markets and places them in one convenient location for our traders. Thus, traders can connect to their accounts at any time and enter a position. Even during times of ceased trading (i.e. weekends, and bank holidays), access to the accounts is permitted. Options XO remains persistent in providing its clients with the support and information they need. Our staff of leading professionals is readily available to offer support at any time.

No Transaction Costs

The foreign exchange maket is built on the premise that traders pay a spread on any tradable instrument. Each asset is quoted with two prices (Bid and Ask), and the applicable price is determined based on the direction of the trade. Long positions are entered at the Ask price, while short positions are sold at the Bid price. This ensures that for every position, the broker receives a fee equal to the difference between these two prices. fixed-term trading use only one quote at all times. This price is the middle ground of the Bid and Ask prices, and acts as a median to determine the estimated prices of the asset at any given time. The trader is able to focus on just one quote rather than two, and also benefits from the lack of incurring a fee on the position.

Moreover, ECNs have been on the rise in recent years. These versions of foreign exchange brokers use a floating spread, which varies based on liquidity levels of an asset. One of the downsides of ECN trading is the use of commissions to compensate for often lower spread levels of their asset prices. These commissions are often a burden, since they tend to cut in to the profit margin of a portfolio. There are no commissions involved with trading fixed-term trading, and traders are not forced to pay a spread or any other form of fee to the broker. These characteristics are what make binary options highly appealing to so many traders. It is no surprise to see the binary options market experience such promising growth over the past few years, and it is evident that this revolutionary method of trading will continue to engulf global markets for years to come.

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General Risk Warning: Trading Binary Options carries a high level of risk and can result in the loss of your investment. As such, Binary Options may not be appropriate for you. You should not invest money that you cannot afford to lose. Before deciding to trade, you should carefully consider your investment objectives, level of experience and risk tolerance. Under no circumstances shall we have any liability to any person or entity for (a) any loss or damage in whole or part caused by, resulting from, or relating to any transactions related to Binary Options or (b) any direct, indirect, special, consequential or incidental damages whatsoever.
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