Fixed time trade are the latest in a long list of financial products which have captivated the horde of both professional traders and part-timers who hope to make a second income. Unlike the majority of other new products, fixed time trade has not only taken the world of finance by storm, it looks likely to continue teasing traders with promises of quick returns on investment for many years to come. In the current volatile marketplace, the all or nothing nature of fixed time trade really appeals to bold traders who are eager to right the wrongs of previous market mistakes.
Oh So Simple?
On paper, fixed time trade are so simple, even novice traders can learn all about them in rapid time. The most commonly utilized fixed time trade are the simple ‘call’ and ‘put’ choices. If you ‘call’, you are hoping the stock price increases. If it does, you make money, if it doesn’t you lose everything. The maximum profit and loss is known before the trade which makes it very appealing. If you ‘put’, you are hoping that the price of the asset goes down.
Making Money Fixed Time Trade
Here is an example of fixed time trade in action. You buy share Z on a ‘call’ option that is $200 a share. The option costs $90 and pays out $153. This is a profit of $63 or 70%. In general, the profit will be between 60-80%. You can choose this as an hourly option and make this significant profit in less than 60 minutes. If the share is above $200 at the expiry date, you will receive $153. If the share is below $200, you lose your $90. Occasionally, the broker may pay you back 15% if you lose which would see you receive $13.50.
Within this simplicity lies the greatest problem with fixed time trade: The greedy trader who has no clue what he is doing. With two options, the novice assumes that it is a ‘heads or tails’ scenario. This is profoundly wrong for so many reasons. Firstly, heads and tails would offer a 50% go here chance of winning with a 100% return on investment. With fixed time trade, you lose between 85-100% of your investment while only winning 60-80%. This means the odds would never be in your favor if you treated fixed time trade as a 50/50 proposition.
Secondly and most importantly, the law of averages does not apply to fixed time trade. You can win or lose as many times in a row as you trade. It’s possible to lose 100 times in a row because each event happens independently of one another. Losing one trade does not enhance your chances of picking the right one next time. Trading blindly on stocks, currencies or commodities is a recipe for disaster. All markets can be affected by a single incident. For example, the Bank of England printed £75 billion worth of money in October 2011. This will cause a major change in the markets. Imagine placing a blind trade on pounds sterling the day this news was announced? Your losses could be huge.
Don’t ever assume that fixed time trade are a simple yes or no trade. There is a reason why experienced traders are more successful than novices. They read political and financial news and know what is happening in the markets and which direction they are likely to go. Guesswork on fixed time trade should be kept to a minimum unless you enjoy the feeling of money slipping away from you.