PROTECTION FROM MARKET SPIKES

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PROTECTION FROM MARKET SPIKES

Posted by BOOGIE145 BOOGIE145 on Friday, May 24, 2013 Under: Technical Analysis

PROTECTION FROM MARKET SPIKES
With our unique contracts you won’t get stopped out, even if the market spikes against you. And your risk remains capped throughout.

WHAT IS A MARKET SPIKE?
A market spike is a large upward or downward price movement occurring over a short period of time.
In traditional trading, market spikes can force your positions to close. This is known as being 'stopped out' and can occur in either of the following instances:

A stop order is triggered
There is insufficient margin to keep the position open
Placing a stop order can significantly reduce your risk on a trade. However, in some cases your stop can be triggered, only for the market to recover and reach a level where your original trade would have been profitable.

Similarly, if there isn’t enough margin in your account to cover your positions, you risk getting closed out of some, or all, of your trades, at any time.

HOW DOES NADEX PROTECT YOU?
Our Binary Option and Bull Spread contracts have built-in floor and ceiling levels, which provide the same protection as a stop order without the risk of being stopped out.

With Nadex, the price of your contract always remains between the floor and the ceiling, so you know your maximum potential profit or loss in advance. Unless you choose to close your position early, it always remains open until expiration. You never get stopped out, no matter how much the market moves against you.

And you can never lose more that your initial collateral. There are no margin calls and your risk is always capped.

EXAMPLE: CRUDE OIL BINARY OPTION
Imagine the price of crude oil opens at just over $90.00 and you think it will increase by the end of the day.

Nadex Crude Oil > $90.00 (4:00PM) is trading at a bid/offer of 48/52 so you buy at 52.

The underlying price of crude oil then falls significantly and the bid/offer for your Binary Option drops to 0/4. Your contract has reached its maximum potential loss, but you haven’t been stopped out which could happen with traditional trading.

The market then rebounds upwards in your favor to finish above $90.00 at 4pm. The price of your Binary Option also climbs and settles at 100 at expiration. What could have been a losing trade with traditional financial products is a profitable trade with Nadex.

Remember, you can close your position at any time to cut a loss or take a profit. You do not have to wait until expiration. With Nadex, you’re in control.

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