An advantage of trading online with CFD / Forexs is that there is virtually no risk involved, and even better, the minimum deposit can be very low which reduces the chance of you losing significant funds. However, virtually no risk does not mean totally no risk, and that is what this article is looking to assess. If the deposit is very low, does that mean that the risk as well is reduced?
To understand this, it is necessary to comprehend the psychology of the trader. Ideally, when trading it is recommended that you use your discretionary income, and that you should also be prepared to incur a loss. This means that any money you invest; you should be willing to lose. Now, let’s say you invest $1000 in a trade. This may seem like a considerable amount of money to lose, and therefore, you will view it as being high risk. However, if you are asked to invest $10, you may not think that the loss of this amount would cripple you financially, and therefore, this amount could be termed as low risk in comparison.
Understanding this is important as it points to risk being about perception, much more than simple reality. If we were to look at the aforementioned scenario in terms of percentage values, the person who invested and lost their entire investment of $1000, is in the same boat as the person who invested and lost their entire investment of $10. Both these individuals lost 100% of their investment.
Risk and Benefits
Minimum deposit does not necessarily mean minimum risk, though it could mean minimum benefits. When you choose CFD / Forexs trading, normally, when creating an account on a CFD / Forexs site, you will be given a selection of account types to choose from. Your choice will determine the benefits that you are able to enjoy. The higher the value of your account, the more benefits you can enjoy. Having this larger deposit actually minimizes your risk, as you are able to spread it better thanks to deposit bonuses and other promotional provisions.
Risk and Trial
If you are a beginner in trading, and are trying to learn the ropes, then a minimum deposit for you could mean a minimum risk. This is because you are likely to make several losses before you get the hang of trading and winning, and it is less uncomfortable to lose minimal amounts then it is to lose large amounts. Furthermore, making a minimum deposit gives you the opportunity to determine whether the site that you are using is legitimate, before you make a large deposit and lose everything to the site. Minimum deposits make one feel safe, and also help with overall peace of mind which is a great averter of risk.
Lower Deposit, Similar Rewards
When comparing the rewards that one could get with competing financial investments, it is easy to see how a low minimum deposit is of a lower risk. If the same amount was invested in another venture, it is possible that the return would be lower, although the rewards from the different investment methods are likely to be the same.
Making Money with your Deposits
Once you have managed to learn all about trading, taking minimal risk with a minimum deposit, you will have gained enough confidence to make larger deposits and possible enjoy larger rewards. With experience, the risk level will also be low because you will be aware of what you are doing. This will make It much easier for you to grow financially with Binary Options Trading.