While leaders in Davos worry about the global economy, short-term traders see opportunity in the volatility. The key is to limit risk while taking that opportunity. Binary options are uniquely designed to do that. The list of troubles discussed at the Alpine resort was long. That much bad news makes investors very nervous. However, many of the hedge fund managers also see opportunities in the short term drops and chops in the markets. Some are shorting stock index futures or buying the strong dollar even as they comment on the weakness of global currencies.
Others are short-selling commodities and profiting from the price drops. In short, they were talking like investors, but acting like traders. The average investor fears or misunderstands the concept of short-selling. But traders, unlike investors, work in both directions. So where some investors see falling markets as problems, traders see them as opportunities. But all opportunities involve risk. The key to successful trading, of course, is controlling risk. Good traders know that losses are part of the business.
The key is to keep those losses small. The usual way to protect yourself, using stop-loss orders, has its own risks. Set your stop-loss too far back or cancel it in the middle of a trade, and you can lose more than you can afford. The well-known statistic that most trading accounts go broke within a month results from this failure to manage risk. But playing it too safe comes with its own risk. You were right, but you got in too early. What if there was a way to trade that automatically did that for you every time, without a stop loss?
You decide your maximum possible loss before you enter the trade. No matter how far the market goes against you, you can never lose more than that amount.
You stay in the trade, able to profit if and when the market turns back in your direction. Stock indexes, forex, commodities, Bitcoin—trade them all from one account. In a time of great economic turmoil, Nadex binary options offer a way to trade the markets without taking on all the risks of those markets. In addition to the disclaimer below, the material on this page does not contain an offer of, or solicitation for, a transaction in any financial instrument.
Nadex accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk.
Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication.
Benzinga does not provide investment advice. Membership is Free What are you waiting for? Free Account Login Click here to access your premium account. Contribute Login Sign up. Benzinga - Feed Your Mind. January 21, Keep your losses small and affordable, so you have money left in your account to trade again and let your profitable trades make up for the losses.
Avoid getting stopped out, so that if the market turns against you for a little while, you are still in the trade when it moves back in your direction. Limit your losses without getting stopped out. View the discussion thread. Subscribe to our free newsletters:. Market in 5 Minutes. If you have any questions as it relates to either of the three newsletters, please feel free to contact us at ZING.
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