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The Advantages Of Closing Options Early

By Timothy Young / September 18, 2016

Binary trading itself is an interesting and a relatively new trading concept. Thanks to its simplicity and many benefits, it has gained many users from all around the globe in a very short time. Since popularity of binary trading keeps rising, it keeps bringing innovations to the trading world. One of them is early closing of options, which has plenty of benefits for the traders.

How does it work?

Closing options early basically means that you have the opportunity to buy the option back. In other words, you can close the trade before the predetermined trading period expires. This feature is still not available with all binary brokers, but it rises in popularity, and the traders use it for a variety of purposes.

What are the benefits?

Early closing of options has a range of benefits, and many traders gladly use this feature for many trading purposes. It allows you larger security in trading and makes you more relaxed because your trading decision is not definite. All in all, this feature is rather useful for all types of binary traders and for all types of options.

Capturing profits

Sometimes there are cases of high market volatility and dramatic changes in prices of various assets. This happens due to a variety of factors, and the most extreme cases include wars, economic crises, natural disasters and unfavorable political and economic changes. In such cases, binary traders can face huge losses.

When you make a trading decision and a situation like this occurs, you can only sit and watch your money go to waste. However, with the possibility of early closing, you can stop the trade at the right moment. This way you can use the moment while you are still in a favorable position and capture some profit instead of losing the money.

Preventing the loss

Every trader would agree that it is equally important to prevent loss as it is to gain profit. Even some automated trading systems, like Brit Method, provide features that allow you to control the amount of money you lose.

Closing an option early also helps you prevent the loss, or at least reduce it immensely. The traders can use this feature when it becomes obvious that the trade is going in a wrong direction. In such case, the loss may be from 85% to 100% of the investment.

If you use the early closure, you can reduce the loss to only 30% to 50%. The amount of loss with this feature depends on the broker, but it is still much more favorable than ending the trade out of money and losing the entire sum you invested.

Increased flexibility

Last but not least, early closing allows you to be more flexible and relayed while trading. When you do not have this opportunity, you can make a trading decision and it is final, no matter what happens to the trade. With early closure, you have the opportunity to change your mind, for whichever reason. If you see that the situation in the market is unfavorable for your trade, or that you simply made a wrong prediction, this way you can save your funds.

About the author

Timothy Young


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