👉⚡💰How to determine risk on a trade?
(Anything you are still unclear about? Ask us at https://www.facebook.com/BinaryOptionsStrategy/)
The risk in the Binary Option is always a fixed amount. For instance, if you put $10 in binary options trading, then the maximum amount you lose is $10 only. Whereas the profit can be more in case you win. Therefore, some brokers offer a rebate on losing trades. This means, that if you invest $10, the maximum loss can be $9 only. It can be explained with the following formula.
👉Maximum loss+ Rebate= Trade Risk
In the above circumstance,
-$10 + ($10 x $10)= -$9
Currently, Nadex Binary options do not have rebates on losing trades but, there is an alternative to complete loss. For example, in Nadex, if you buy an option at $70, and it drops to $50, you can have the option to sell for a partial loss. This way, you won't lose it entirely after dropping to 0.
However, when the Nadex option expires, it will be valued at 100 or 0. As a result, when calculating your risk, you must consider all the subsequent scenarios.
👉Determining position size on a Binary trade
Till now, it must have been clear to you about the maximum trade size to use while buying an option in the Binary option. However, there is an exception. Your trade size also depends upon the broker. If they are offering a rebate, then you can increase your risk and invest more. But if there is no rebate, stick to the 3% policy strictly to avoid huge losses.
Now let's talk about if the Binary Options broker provides a rebate. To understand this, let us consider that your broker is providing a 10% rebate. So if you were going to invest $50 without a rebate, you could now invest $55 because you have a rebate.
Now, if you lose the option, you will still have your $5, and the loss amount will be the same as $50, which is still 2-3% of your trading account balance. But, if you win, you are going to win it whole. So you get a double benefit.
#NMBO1686

(Feed generated with FetchRSS)
source https://www.facebook.com/441750894624738/posts/835998285199995
No comments:
Post a Comment