In some financial markets, traders can choose instruments where the result is simple and predetermined: a trade ends with either a fixed gain or a fixed loss. The goal is not to predict how much a price will move, but whether it will be above or below a chosen level at a specific moment in time.
These trades are typically short-term, sometimes lasting only minutes. Before entering, the trader selects:
- an asset (such as a currency pair, stock, or commodity),
- a direction (up or down),
- and an expiration time.
Once the trade is placed, nothing can be adjusted. When the clock runs out, the outcome is final. If the market moved in the chosen direction, the payout is known in advance. If not, the entire stake is lost.
Because the payoff structure is fixed, this type of trading relies heavily on probability, discipline, and timing, rather than long-term investing principles. Small price movements, news releases, and market volatility can have an outsized impact on results.
It is often marketed as simple, but simplicity can be misleading. Over time, transaction costs and unfavorable odds can work against unprepared participants. For this reason, education, demo practice, and strict money management are essential for anyone exploring this approach.
In short, fixed-outcome trading is less about guessing and more about understanding risk, statistics, and market behavior under time pressure.