Option builder is of the latest trading methods which gives users a whole new level of control and risk management. The feature is still new and not all the binary options brokers have included this feature till now but with its growing popularity more binary options brokers are expected to include this trading option shortly.
Read more below the table…
What is option builder?
Option builder is a trading style which has an amazing risk management technique. You can adjust the risk factor yourself. With the option builder trading mode you have the option to decide a payback in case you lose a trade. The percentage profit will decrease as you increase the payback percentage.
Let us understand this with an example. Suppose you want to trade Apple stock and your binary options broker is offering 100% payout on Apple (hypothetically of course). Let us assume that your trading amount is $100. If you trade with 0% payback your potential output will be the same as in the case of High or Low trading i.e. 100% and you will earn a profit of $100 if you win.
Now suppose you are not sure of the outcome and you want to reduce the risk factor. If you select the payout to be 50% in case you lose your potential profit will also come down to 50%. Hence, if you lose the trade you will still get $50 back and lose only $50. On the other hand if you win you will make a profit of $50 only instead of $100. You have the option of varying the risk factor yourself which will be reflected in the potential profit.
High payout in case of losing will automatically mean a lower potential profit. In options builder you have the option to select the expiry period and you can set it as per your wish.
Trading with option builder
In order to trade option builder you must first ensure that your binary options broker. Log into your trading account and go to the trading platform of your binary options broker.
Now select the option builder trading mode. Start with selecting an asset. If you feel that the stock price of the asset will rise select High or Up and if you feel that the price level of the asset will fall select the Low or Down option. Next, select an appropriate time period. Most of the users select the expiry period of one hour or less. After that you need to enter the amount you want to trade.
The last step is to select the payout. If you opt for low risk your potential payout will be lower and if you opt for a high risk factor your potential payout will be higher. After this your trade will be made. If your prediction is wrong you will get a payback as selected earlier and if you win the profit will be added to your balance after the end of the expiry period.