Before we discuss trading strategies that help to win trades I would like to talk about risks and balance management. It has been said above that binary options are attractive due to the fact that you can know exactly what sum of money do you risk because the sum is your option’s value. However you run the risk of losing, not only the investment amount of the option but also some part of your deposit. Here some questions arise: what is the correct risk management method and how to place “bets” properly so that you don’t lose everything and keep positive dynamics going in total?
The first thing you need to understand well is that you can’t win in every trade. You will lose in 40%, 30%, 20% of cases which depends on your trading system and experience. Both novice and very advanced traders lose, and that’s OK, because it is impossible to predict the market fully. The main difference is that losses incurred by experienced traders of binary options do not prevent them from moving forward and earning. While beginners give up on all of their previous achievements and quit after losing once.
How can one prevent it?
Suppose you have 100$ on your account. Therefore, this is a maximum value of the option available for you. However, you can’t buy the option for 100$, of course, because in case of failure you will lose all your money at once and have to replenish your balance again. 50 dollars will be a critical loss too, because if you lose it, it will be very difficult for you to recoup and in general you should remember that the less money you have on your balance, the harder for you to make a certain amount of money. For example, if you have 100$ deposit you can easily make a profit of 25$ in 1 or 2 trades. But if you have 10 trades then it is difficult to earn the same $ 25. That’s why; sophisticated traders adhere to the following principles:
A good options trader is not someone who can win million dollars in one trade. The ability to increase one’s initial deposit after two or three months of trading is considered to be an attribute of skilled traders. This kind of trading enables to earn a steady income on trading options and make this occupation a truly profitable business for you.
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