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As you can see from the calculations above, the risk you take is limited to the premium paid on the option. You cannot lose more than your stake. Unlike in spot forex tradingwhere your losses can get bigger the further the trade goes against you which is why using stops are crucialthe risk in binary options trading is absolutely limited. There are a few other factors that affect them.

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What is the Best Binary Options Broker? Binary options trading hinges on a simple question β€” will the underlying asset be above or below a certain price at a specified time? If so, you can make substantial profits with one of the most straightforward financial instruments to trade.

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Let us take them one after the other. Expiry times can be as low as 5 minutes. How does it work?