In today forex faq, we have a question from one of our traders who are interested in trading binary option.
Below is the question:
In Binary Option when we are in the money we get 70-80% profit, how much we lose when we are out of the money?
For this question, there is no fix answer as the losing payout varies with different currency and time. However when you have a high winning payout of more than 80%, you will lose 100% of the money when you make a losing trade.
When you have a lower winning payout of less than 80%, you will only lose 95% of your money when you have a losing trade.
You can take a look at the examples below:
1) EURUSD 81% payout
When I click on either CALL or PUT button, I will be able to enter the amount of money I am going to invest in the trade.
Take for example that I place $200 in this trade and the platform will automatically help you to calculate how much you are going to win and how much you can take back if you lost.
From the picture above, you can see that you will take back $362 if you win and $0 if you lost.
2) NZDUSD 71% payout
For this currency pair, when I enter $200 as the investment amount, you can see that my winning payout is $342 and my losing payout is $10.
If you take a look at the bottom of both pictures, you can see that there is a green and orange bar which will tell you the percentage of traders that are taking CALL or PUT.
As binary option tend to have a poor risk reward ratio, you will have to rely on winning percentage. You can try to use the binary option strategy that I have shared with you guys some time back as it is the exact strategy that I am using to trade binary option myself.
The reason why I often recommend you to trade binary option as a complement to your trading is because of its ease of execution.
All you need to know is whether the price is going up or down for the next hour and you do not have to worry about where to place your stop loss or target profit. At the end of the hour, you will make money even when the price is only one pip in your favor.
Due to the fact that there are lesser and lesser legitimate broker in the market, I have stopped trading binary anymore.