Although relatively minor in comparison with other forms of investment, binary options trading is not without a few disadvantages. You might even be surprised to learn that these stem from the overall simplicity of this form of trading. Consider the following potential drawbacks, as well as ways to easily overcome them.
The basics of binary options are so simple that even an older child could understand them. However, simplicity does not always equate to ease. Short-term profits can be easy to come by, but what you really want is long-term, steady profit growth. With each trade there will be both winners and losers. Clearly, you want to be on the winning side much more often than not. Doing this is going to require a combination of solid skills, proven strategies, self-control, and a healthy dose of patience.
There are negative sums to contend with and take into consideration. For example, when you enter into a binary options trade that offers an 85% return using a $10 investment, you stand to gain $8.50 if the trade finishes in the money. If the trade finishes out of the money, then your $10 investment is gone. The differential is broker profit, which simply means that you must win more traders than you lose in order to be profitable. Typically, you’ll need to win 55-60% of your trades in order to be earning nice profits.
So, how do you accomplish this? Education. This is one area in which brokers such as plataform options stand out from the rest. Education is the key to everything and very few brokers are willing to help you with this. The approach taken by Plataform binary options is that there is plenty of money to go around and therefore there is no reason why both sides cannot be profiting. With this in mind, this broker provides market analysis, guides, strategies, and one-on-one training with industry experts. These things can make a huge difference in how much you earn from trading.
The cost to start trading binary options is typically quite low. This is yet another fact that might seem like an advantage, but it really can be a disadvantage. How so? When you start out with too little capital it becomes tough to build profits. Low investment amounts are great at times, but they can lock you into a “see-saw” of winning and losing, never really getting ahead. This can be a waste of time and effort. It takes money to make money, and if your account is under-funded, you might struggle to get ahead.
No one, no matter how experienced, is going to win 100% of their binary options trades. This means that elements such as money management and education are extremely important if you’re going to maintain a high success rate. The disadvantages to trading binary options are few, but they can be serious if you allow them to be. Learn how to trade correctly from start and don’t be afraid to ask questions. A reputable broker will be happy to help you get on and stay on the right track.