The popularity of binary options started in 1973 and has grown over the years to more than 3 billion by 2007. Options provide many benefits including lesser risk, cost efficiency, higher potential returns and more strategic alternatives. Furthermore, there are online brokerages providing opportunities to the option market through the internet at competitively low-commission costs. Therefore, the average investor has the opportunity to use powerful tools to invest just like the professionals. However, like all investments options bear some risks. Some of the potential risks traders may face in the options market include:
· Market risk
Like other investments, trading in options involve market risk. Having an awareness of the presence of this risk can help reduce some of the uncertainties. This will help traders or investors to focus on the investment, knowing where some of the pitfalls lie. Markets have a tendency of moving in various directions, often with little or no warning. Although, there are several ways of predicting potential market movements, the most thorough analysis may not pinpoint exactly all the market directions.
· Precise profit & loss points
Unlike most of the other investments, options are determined by the slightest movement or tick. Therefore, the value of options can be determined by as little as 3 or 4 decimal points. In other words, even 0.0001 points can make a difference between making a profit or loss.
· Capped profit amount
Although risks cannot be eliminated completely, option traders should be aware of the fixed profits. The gains and losses can be fixed to ensure there is ideally no unlimited upside potential with the investments.
· Illiquid
Generally, options are not deemed "liquid" type of investments. As a result, because they cannot be exercised at will investors or traders need to wait until the expiry date of the options before they can take profits or losses.
· Sparse regulation
The greatest risk associated with trading in options, markets are not regulated. Although there are several regulations, there is the possibility of some traders using unscrupulous practices. By reading through the customer reviews you will be able to know the experiences of real investors in the hands of a particular financial trader.
· No ownership of the assets
Options are generally a wager towards the direction of the underlying asset. Therefore, traders do not invest in the ownership of tangible assets. Although many of the investors have no problem with this kind of investing, some of them see a potential risk.
We provide the best info about bitcoin brokers. For further details please visit the provided link.
Tidak ada komentar:
Posting Komentar