One of the ways in which digital options trading is quite different from standard market trading is in the fact that profits and losses are fixed. This means that you know exactly the amount of money that you stand to gain or lose in advance of each and every trade. When trading with Brokers Options, these amounts will be clearly posted within each trade window, ensuring that you have access to the financial details at all times.
Fixed returns are a simple concept and are simple to calculate. An example would be a Brokers Options trade which is offering to pay 80% if your price movement prediction is correct. Now, assuming that you have decided to invest $100 and your trade finishes in the money, your account will be credited in the amount of $180. The first $100 of this is your investment amount being returned, the additional $80 is pure profit.
The loss amount is fixed in that it can never exceed the amount that you have decided upon. For example, should you decide to invest $1 in a trade and this trade finishes out of the money, $1 is the maximum amount of money that would be lost. To put it simply, your total financial risk with each trade is always going to be exactly equal to the amount of investment, as decided upon by you.
Benefits Of Fixed Returns and Losses
Obviously, when trading within the traditional marketplace, the chance to earn limitless profits is wonderful. But what about the flip side of this? Losses can easily add up quickly, even when a stop loss is in place. These concerns do not apply to the digital options realm. Having these numbers in advance can also help you to make important decisions in regard to when to trade and when to walk away.
Another important benefit is money management. It becomes much easier to track profits and losses when the amounts are fixed. Money management is an integral part of trading. Those who do not stay on top of their financial numbers are much more likely to make careless investment decisions. Knowing where you stand financially can also eliminate emotion-based trading, something that can be a real problem for some traders.
Brokers Options makes it extremely easy to know the exact prospective financial outcome of each trade. Visit the trade windows to see what the exact payout amount is, along with all of the important details surrounding the trade. The payout percentage will be shown in bold black print in the right side of the window. Just above this is the potential payout, which will change as your investment amount is adjusted. Within seconds, you’ll know exactly how much you can earn from each trade.