Every trader in the financial market, no matter if it is a professional or an amateur, loses money at the beginning of trading. Even Warren Buffett lost several billion during the global financial crisis. Many millionaires have also gone through this, only some have lost everything, others have increased their billions. The same thing happens in binary options trading.
So what distinguishes those investors who have lost everything and disappeared from the world of finance, and those who have risen and increased their capital at times?
The answer is very simple: Risk management.
Rules that answer the question: “How not to lose our money, and increase the deposit, in binary trading?” Strong investors manage risks correctly and planned, weak ones do not pay attention to risks. In binary options trading, the same risk management strategy, and the same reasons for losing a deposit. In this article, we will analyze the basic concepts of risk management in binary options trading. What you need to pay attention to and how to avoid losses.
Basic concepts of risk management
The basic rule of risk management is to understand that one or more negative trades should not empty your deposit completely. This entails the following definition. Understanding what percentage of the deposit should participate in binary trading, before the start of trading How much should be in the auction at the same time, what stock should remain Using the right psychology in bidding and planning
How much should participate in the auction
Many experts in the industry advise that the trading risk should not be more than 5%, in the market at one time. The trader must calculate how much 5% of the deposit will be, and then calculate the size of the transaction. This will give an understanding of how many trades a trader can open. The size of the transaction should be calculated so that one negative position does not cause the loss of the deposit. It is very important to understand that not everyone starts trading with $20,000.
Many novice binary options traders make a deposit of $ 300-$ 500. With such amounts, the risks are higher, but you can work with them. To do this, you need to correctly calculate the size of transactions, and their number. The rule works here, less but better. The goal is not to make money, but to disperse the deposit (to increase the deposit for the trading amount, which will reduce risks and increase the amount of earnings for each transaction). If your goal is just to familiarize yourself with binary brokers, the size of the deposit does not matter.
- Loss of deposit as a result of excess Presumption
- Binary Option Trading Deposit Acceleration for Beginners
Opening an account with a real amount for trading.
Have you ever traded with a $100 deposit? And how is your result? Statistics have shown that
more than 98%
of binary options traders, with minimal deposit amounts, lose all their money during the first two days. It is difficult to calculate the risk with such amounts. Therefore, before making a deposit, write a clear plan of your trades. The risk will be calculated based on the performance of your binary strategy and the number of trades. We must remember the rule: The larger the deposit amount and the smaller the transaction size, the lower the risks . Don’t try to make a million from a hundred dollars for 5 minutes. You won’t succeed. The deposit must be in line with the binary strategy and risks Using the bonus to increase the working deposit can be a good tool to reduce risks. Traders can increase the amount of the deposit at the expense of a binary broker, in exchange for the conditions for working out a binary bonus.
Expectation of profit.
A trader who does not expect how much he can earn and how to do it is likely to lose his deposit. Why? Because the trader does not respect the proportions, he does not have a plan for trading. If you only have a few dollars on your deposit and you expect to earn $1000 in 3 hours. This will lead you to lose money.
See why:
[list style=”arrow”]
- Deposit 200 $
- The minimum trade is $10
- Payout : 80%
[/list]
This means that in order to earn $ 1000, a trader must make 125 transactions in plus, without a single negative transaction. At the same time, if he makes 20 trades in the red, he will lose everything. The trader must clearly and correctly calculate his expectations. By determining the time of trading and making a profit. Test binary options strategies, this will help you really calculate the profit.
Market Risks in Binary Options Trading
Like all trades in the financial market, binary options are also influenced by market risks. Be sure to try to predict market risks by analyzing economic news and global incidents. Correct psychology during trading. A lot of emotions are present during binary options trading. Having lost some money, novice traders lose control and try to recoup.
Whereas, after two successful trades, traders begin to make inexplicable trades, increasing the size and trading on dangerous assets. One of the advantages of binary options is that the risks are known in advance. The trader immediately knows how much he can earn and how much he can lose. Therefore, it is important for a trader to use a strategy for trading binary options, with clear statistics. Planning and calculating risks will help the trader to earn constantly. This will make it possible to control emotions and rationally bid.
Conclusion:
Experts say that 70% of trading results depend on psychology and discipline . Risk management in binary trading is key. Traders must develop and educate a professional. You need to understand that being a trader is a job. Requiring self-education and aspiration.
Risk management shows how not to lose and how to make money in binary options trading, even if it is a simple following a binary strategy.
Tagged with: Risk management • Risk Management Binary Options • The Psychology of Binary Options Trading
