Risk Free Binary Options Trading
The thought of being able to trade in binary options without any risk is impressive; if you could place virtually any trade knowing that there was no risk of losing your investment you would quickly gather a large amount of wealth! However, it is simple not possible to have a completely risk free trade, but, it is possible to reduce your risk as much as possible by using a few different strategies.
The key to minimizing your risk is placing several trades at the same time; usually using the same asset; one of the outcomes will finish successfully and leave you with a return on your investment. Of course, this requires careful planning, if you purchase two many trades your return will not be sufficient to cover the cost of your trade and you will still end up with a loss!
How to Trade
The safest and easiest way to implement this trade is to purchase two trades; one covers each direction that the asset may move in. This way you will be guaranteed to have one successful trade. To improve your return you will then need to purchase additional trades, these must be bought as you know which way the asset is moving and the returns on these trades will provide enough funds to cover the initial costs; whilst creating a good return on investment.
In theory this type of trading will reduce your risk to nearly zero. In practice it does not always go to plan as prices can be volatile. Fortunately, most of the time this is a successful approach to trading and will, at the very minimum, ensure you are not out of pocket for your trades. It will also help you to learn more about the markets and how particular assets move.
Downsides
Although an effective technique, this method of risk free trading requires you to keep constant tabs on your trades; this will ensure you know when to purchase a trade and even when you should sell before one expires. Certainly one of the initial trades, covering both directions can be finished early; once you know which direction the asset is moving in. It can also be used to improve the returns of your smaller trades, if the market changes direction.
For this type of trading to be possible it is essential to sign up for an account with a broker who offers early closing on trades; this is often referred to by brokers as option plus. Selling your option back to the broker before the trade finishes is usually called early closure and not an option offered by all brokers.
One of the best ways of ensuring you make a good rate of returns on your investment is to sell the trade which covers the wrong price movement as quickly as possible. This will ensure you recoup as much as possible of your initial trade and improve your rate of return.
Providing the asset continues to move in one direction you will be able to place several repeat trades, ensuring each one has a good rate of return and balancing out any costs. But, you will need to monitor the entire process closely; you will need to stay in front of your computer screen until all trade have concluded.
Providing you are able to do this, then this method of trading can be used very successfully.
