Every form of trading carries a certain amount of risk, and binary options are same as every other trading market. The difference between binary options and other trading markets lies in the level of complexity.
Binary options are rather simple when compared to Forex and stock market. This means that it’s easier to learn about them rather than Forex and stocks. Placing trades is simple, and the amount of research that is required is trivial when compared to research that goes into stock and currency trading.
Zero-sum game that is unforgiving
If you think that trading binary options is easy just because it isn’t complex, then you won’t survive for long in the market. The simplicity of this trading system has drawbacks, and the biggest of them is the so-called zero-sum system.
This system represents the way the trade is carried out. Every trader invests 100 dollars (they can leverage it for more income), and if they fail to win the deal, then they lose the total investment. This is different from other types of trading as the notion of absolute loss doesn’t exist in other markets.
If you guess correctly then you will win between one and 90 dollars. This means that you can’t double the investment. The profit in binary options is fixed, and the trader knows how much they will get even before they place the trade.
If you want to play it safe and invest in deals that have a low risk, then the profit will be flat and vice versa. This means that it isn’t possible to generate a lot of profit without entering a huge number of trades.
Tipping the scale in your favor
We already stated that making a profit through binary options is a laborious and time-consuming process. We also mentioned that the existence of the absolute loss (losing the total investment) makes it hard to stay in the profit.
We only forgot to mention Fincrowd App, software that offsets many of the binary options downsides. This software makes trading binary options easy as it does everything from the procession of the data, calculations of the price movement and investments. The investment part is optional, and you can decide to place trades on your own. In that case, the application will come up with viable deals and send you a notification about it. You can choose which trades to invest in and which to skip. Additional options make it easy to limit the risk and increase the profit that this application will generate.