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A profitability calculator is simply the best tool to calculate trading profitability. You input all the data, and our tool does all the hard work behind the scenes. The calculator does all the calculations based on the data you input.
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Some of these platforms today offer from 50 times to a ridiculous 1000 times leverage. A 1000 times leverage means that a trade can be entered paying just 0.1% of its actual value. Leveraging trades with much higher capital than own capital is the single biggest reason why traders lose money. There might be a few lucky trades where money doubles, but traders generally don’t stop trading when they profit and eventually can end up losing the profits and more as they are always just one small incident away from blowing up. Now the platforms had to figure a way to get a trader to lose money on the platform, that is, trade at extreme amounts of leverage. This means that you can double the money if the market moves 0.1% in your favour or lose the entire capital if it moves 0.1% against you. For those blinded by greed, this might seem like a great opportunity, but in reality, it is almost impossible to survive as a trader with such obscene levels of leverage. As soon as this shift happened in the CFD platforms where they moved from earning from transactions through either a spread or fee to profiting when clients lost, the incentives got misaligned with the customer interest.
When a client of ours loses money in the market, it doesn’t benefit us, but in fact, hurts us as a business. All order matching happens on an exchange, and the exchanges match counterparties from the market. This is unlike a casino where the profit of the casino = losses made by their customers. We clearly aren’t, because we aren’t counterparty to any trade that happens. These are CFD, Spread betting, or Binary option trading platforms. The reason I said almost all trading platforms is because there is a whole breed of them, illegal in India, but advertised aggressively online to attract traders, where the platforms earn when you lose. Almost all trading platforms want their clients to earn money when trading, as a winning client will continue trading and generate brokerage revenue. As a stockbroker, we sometimes get called a “casino”.
In most cases, price manipulation would not be even possible, because the investment objects are major companiessuch as Google and Alibaba Groupwhose share prices are almost impossible to be affected by an individual investor, world finance 100 binary options .
Using the technical analysis aspect is for traders who run multiple trades at one time. Just input the data, and read the result. Now, you can instantly know if your transaction is not profitable anymore. It can show you data on the slightest fluctuations in your trade. So not for all us “beginners”.
For dubious business operators, it is a lucrative business to run as long as they are able to continuously “churn” new customers who sign up and lose money. That said, every business, even the ones rigged against customers, come with their own risks. One such incident was when in 2015 the Swiss Bank removed the peg of 1.20 francs (CHF) to the Euro; Swiss Franc moved up 30%. Once in a while, when there is a black swan event that causes prices to move wildly, a group of customers can make a windfall greater than the other group customers losing by large amounts, pushing these platforms to become insolvent.
Of course, customers will stop trading on these platforms if there is a mismatch in terms of data as compared to the underlying exchanges where the security trades, but it is difficult to pinpoint a mismatch that happens for a fraction of a second. They are extremely popular as their short durations means lower risk of customers profiting, and hence, an opportunity to offer much higher leverages than normal CFDs. This is a huge risk on these platforms, where customers only have their word to go by, unlike a regulated market like India, where order matching only happens at exchanges. Unsurprisingly, many CFD platforms are based out of countries with lax regulations such as Malta, Cyprus, Belize etc. There are allegations that many of them intentionally rig market prices displayed on their platforms against customers for a fraction of a second to cause enough loss, binary option strategies so the customer is forced out of the position. And within CFDs, there is a class of instruments known as binary options which have an expiry time/date for the contract.
