As such, you will discover that this tool can effectively lock-in your gains if trading conditions are unpredictable and volatile and you are concerned that price could suddenly retract sharply without warning.

However, the prevalent volatile market conditions are causing you concerns about potential price reversals. As such, traders are advised to become totally familiar with the drawbacks and benefits of implementing this facility in order to maximize its usage. You need to acknowledge that exiting a trade early can help you either limit your loss or lock-in a profit.

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Brokers who support this feature normally allow you to take advantage of it right up to a few minutes from expiration. As such, you can delay your decision to almost the last minute. This action means that you will be forgoing the full payout rate in preference for a reduced one.

If your broker does support this feature, then details will be clearly displayed while your positions are active. For instance, the payout ratio and commission charge will always be visible in order for you to evaluate the merits of an early closure.

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You must be totally aware that one of the negative attributes of this facility is that you will never collect the full payout ratio offered at expiration. However, you must also appreciate that accepting a smaller win earlier is often a wiser strategy than facing a total eventual loss.

As you must now be concluding, there are pros and cons to this type of trading. Should you hold out for a maximum payout when prevalent trading conditions are volatile and unpredictable or should you cash-in early and safeguard your account?

If you are a novice, then you should always opt to minimize your losses as a top priority. In essence, it will be the skills acquire over time that will eventually enable you to perfect your judgment when making these vital decisions.

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Very importantly, you must understand that should you opt for this course of action, then you will need to expend time to carefully monitor your trades throughout their lifetime. This is because you will need to assess very carefully all evolving developments in order to identify the optimum moment to close your positions and cash-in at maximum profit.

You must be logged in to post a comment. You then have the ability to prematurely close your positions and register a profit, albeit for a small commission.

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