Learning to trade with knock-out certificates

Therefore, I do not want to withhold further information about trading the certificates from you. First, however, it is important to discuss for which trading strategy the knock outs are actually suitable. Furthermore, the risk of trading should also be considered.

Once the framework conditions have been defined, we can look together at which criteria should be considered when choosing knock out certificates and which advantages and disadvantages arise when trading. As a practical tip, I will also provide you with tools that I can recommend.

To which trading strategy do knock-out certificates fit?

Are knock-out certificates suitable for every trader? And if not, for whom are knock-out products suitable? Since knock-out certificates are indeed a highly speculative financial instrument, only experienced investors should venture into trading at first. Beginners in trading, however, need not only observe, but jumping into the deep end would be associated with an increased risk of loss. I therefore recommend trading knock-out certificates via a demo account, provided that little trading know-how is available.

Knock-out certificates are therefore initially reserved for professional traders at exness thailand. However, investors should not only be experienced but also clearly act speculatively. Thanks to the different types of knock-out products, the instrument can also be traded by day traders as well as intraday traders.

In general, however, it should be noted that trading a knock-out certificate is always active. For passive investors, speculation on the price of a share or an index such as the Dow Jones or the DAX is therefore unsuitable.

How risky is trading really?

It is already clear from the above that trading a knock-out certificate is a highly speculative business and therefore an undertaking. Anyone who does not have a stable nervous system should not take this risk. Fluctuations in value can occur quickly and without a stop loss your capital is not protected at all. You should therefore clearly ask yourself at what price you would like to trade the certificates.

Also define the pain threshold. With a turbo certificate, only invest as much as you are prepared to lose again. After all, rising and falling prices are a double-edged sword and can make you either profit or lose.

If you do not yet know what type of risk you are, you can ask yourself the following questions:

•     What feeling does a negative portfolio level trigger in me?
•     Do price fluctuations make me nervous?
•     Am I stress resistant?
•     Do I have the financial means to suffer a large loss?
•     How good are the trading conditions from my issuer?

If you can answer these questions for yourself, you will also find out whether turbo certificates are the right choice for you. Note, however, that knock-out certificates have been assigned to the class with the highest risk for investors in the risk classification.