Fixed options in the Binary market is a great way to control the risk at the same time as the benefit from the advantages of the upward trend in the market. Options concept is extremely broad for this I in this article I intend to discuss only one term and then I will follow that other an article subjected to a second overlay strategy. One trading systems that we offer in Automata Formula Review used options overlay and you can follow the actual performance of this strategy in real-time from months to last. Two concepts which I will talk with them very common forms can also be carrying out with ease and without the need for periodic maintenance. These two things are what I search for them in the trading system and therefore I would not be this person who commits all the mistakes from the first time and then I can enjoy my life along with my business in Binary Options Trading. I will cover the situation warrants preventive in this report that I covered the summons in the report, which will be followed.
Preventive orders situation
The situation is a component option of three elements. The first is the contract. When you are buying mode option, this means that you buy the right to sell someone’s base currency according to pre-specified price during a predetermined period of time. You can buy the option of the situation today to sell a large amount of dollars the pound at a price of $ 2.0000 at any time between now and the date of your choice in the future. If the currency pair fell to 1.9900, you still have the ability to sell at 2.0000 and then make a profit. In fact, it does not matter how much currency’s slide. As long as within the time frame you have chosen you can sell the currency at 2.0000 at any time AUTOMATA FORMULA REVIEW . Price situation (2.0000) of your choice to your contract, known as the exercise price. The second element is time. Options are available in the form of monthly periods. Which means that you can buy in favor of a contract until next month or the following month from 12 now. Choice up to you. Finally, options costs money. The price of the option is called the premium. The premium be greater the higher the value of the option. The choice in the long-term schedule and the price of high practice be more expensive than the option that is his trade in the short term with the price of a smaller practice. I think the best way to explain this is that we take an example of him.
Let’s assume that on January 22, 2007 Art purchase contract on a pair GBP USD. Suppose that the price at this time was 1.9750. Since you are a wise investor, you might want to get some protection from market risk for this Automata Formula Software buy protective mode allows you to sell the contract at 1.9750 at any time before the expiry of the validity of the contract option. In this case, this decade may end after a month from now, specifically in the third Friday of February or the sixteenth of it. This mode option will cost you the equivalent of 150 points per contract. If the pair fell in the time subsequent to the 1.9502 level. In this case, the situation is still the option is equal to 248 points, he was still able to sell at 1.9750 -. This amount is equal to the amount that completely lost in the purchase contract and therefore both Automata Formula other effect. In reality, the only thing that is lost 150 points, which is the amount you paid to buy the option in the first time. You do not need to put stop orders because you are fully protected. Even if the value of the contract fell sharply – more than 150 points planned, you still have the necessary hedge to protect your capital.
Trading in the next month, from February to March, there will be another loss, but trading from March to April will be the winner. For trading March to April, you may be purchased Automata Formula trading center pair at 1.9372. And thus may be covered by the trading center option situation at 1.9350 which will cost you 120 points and thus puts you in the position of exposure between 1.9350 and 1.9372. Nonetheless, if you add these two centers to some of you are going to have a level of total loss is similar to you during the trading period from January to February During the month, we assume that your Automata Formula position rose to 2.0027. This means that you have achieved 656 points. Now what about the mode option? Well, no doubt will want to sell this option at 1.9350 and therefore the situation will leave the option to expire without interest. This would mean a reduction of earnings by the same amount you paid for the option while the situation will be the new Total net earnings about 535 points.
This strategy may seem a bit complicated initial glance, but well worth learning more about them due to the large advantages. Copyright institutional traders with using overlay options, such as preventive mode options, at all times because they help them to control the risks and reduce the overall volatility in the financial wallets. Also we will mention here some of the additional benefits for both sides of the use of this strategy.
Interest # 1 – There are no stop orders
You will not need to place stop orders to buy the currency Center. How many times have you are correct in predicting the direction of the market, but stopped as a result of sharp fluctuations? I can say that this happens to most traders on a regular basis. But with preventive mode options remain constant in circulation even though the exchange rate fell to zero, if this is possible without the maximum loss exceeded. Also, this feature is available through the release of important news because you always remain in control of the situation.
Interest # 2 – the rise of unlimited
Unlike many of the hedging strategies, this technique will still allow to rise is limited. And although the gains are offset by the profits Mode option also remain significant.
Interest # 3 – lower volatility of the financial portfolio
The total portfolio in this situation is less than the level of volatility, because setbacks can fit. Here we will mention an additional example. Suppose that the pricing was reasonable and volatility on an ongoing basis, on average, during the last ten years and was your Automata Formula strategy is to buy the Long Center for the pound dollar with a mode using the leverage of the total portfolio of 20: 1 option. This helped to achieve a return of 10% per year during this time period. When you combine this feature with some wise analysis it will be possible to see much better than this returns.
Face # 1 – the cost mode option
Mode option will cost you 150 points if his legacy is valid until the expiration date, whether the market moves up or down each month. This price will be deducted from boarding gains and creates a specific decline in advance. Even if the market fell by less than 150 points, the maximum loss will remain as it is.
Face # 2 – the cost of trading
If you purchase mode option, you will pay a commission. It continued with the decline in exchange rates over time, this despite being nominally it but he adds another point to losses with each monthly trading.
The most difficult thing for most investors is to maintain their capital. Always you will hear from successful investors say that if the head of the owner was able to effectively protect the profits will take care of itself. I totally agree with this statement and use protectionist mode options in order to help myself in the hedge. The Automata Formula offer in the financial model of the portfolio at the Department of deals which uses overlay options to clarify this concept in real time. Login real and then discovered it to learn that we are winners and permanently.