In binary options trading, 95% of traders who start trading lose their first deposit. This is because many market players do not set specific goals and methods for achieving them. Inexperienced traders just want to become rich, peck at advertising, make a deposit and start opening trades. The main number of trades are opened at random and without much analysis. Then traders lose confidence in the market and in binary trading in general.
After losing a deposit during binary trading, novice traders act according to the following scenario: leave the market, move to another binary broker or make a second deposit. In this article, we analyze the third option: Re-deposit in binary trading: how much and why you need to invest.
Purpose of re-deposit
There are actions that bring results and those that do not bring us results. If we decide to make a second deposit, we must understand why it is necessary, determine the goals that we would like to achieve by trading on a demo account. After a survey of traders, we learned that more than 80% of site visitors want to try trading on a demo account again. It’s just not entirely clear what exactly they want to try? Lose money again?
Several goals for re-deposit for novice traders:
- Learning to trade and understanding the essence of trading is a live lesson better than opening several trades on a demo account of a binary broker. This will allow you to understand the feeling of loss of control during the loss of money. Thus, the trader will be able to focus on the psychology of binary options trading and correct his weaknesses.
- Learning how to trade real – novice binary options traders often spend a lot of time trading options on demo accounts. This leads to the so-called “Damschik Syndrome”. The syndrome is called the attitude of the trader, developed as a habit during trading on a demo account, characterized by complete disregard for risks and capital management. This attitude can only be corrected by working on a real account.
- Study of the strategy and the real work of the broker. Some binary options brokers keep real and demo accounts separate. Due to the load, not all brokers provide high-quality technical support and this can only be checked on a real account.
- Checking the binary options strategy. After testing on the demo, the strategy should be tested on a real account. The trader will be able to get clear data for adjustments and corrections.
- Start trading and working – often the first deposit is a trial without a specific goal. Therefore, the second deposit is already intended for the start of trading and earnings.
Basically, binary options trading brings results only to those who constantly train and treat initial losses as a lesson. No one makes money from the first trade.
- Binary options demo account.
- Creating a binary options trading plan.
- Binary options: the influence of demo accounts on the psychology of the trader.
What should be the re-deposit?
Traders find brokers with a minimum deposit for a test or just to try trades. With minimal amounts, it is very difficult to fully comply with risk management and money management. However, the problem begins when the trader makes a second deposit with a minimum amount. What for? After all, the risks are still too high and there will be a loss of the deposit for sure. Therefore, the second deposit must be calculated by the trader based on the algorithm of the binary trading strategy.
Let’s look at an example:
The trader chose to work with a minimum bet of $ 10. According to the binary options strategy chosen by the trader, the effectiveness of positive transactions is 60%. This means that out of 100 trades, only 60 will be in the black, and 40% will be in the red.
We also determine that the payouts on the option are 80%. If the transaction worked in the black, the trader earned $ 8, if in the negative – lost $ 10. To make 100 trades, you need a minimum deposit of $ 500. Of these, 40×5 = $ 200 are losses; 60*(8)= $480 trades in plus.
The final result: 500 $ -200 $ + 480 $ = 780 $ on the balance. Net earnings: 780 $ -500 $ = 280 $
As you can see from the example, if a trader decides to make money on a binary strategy with a 60% success rate, with a transaction size of $ 10, to earn $ 280, he must make a deposit of at least $ 500.
Of course, if a trader chooses a strategy with 75% and a minimum transaction of $ 20, he can earn more, however, the second deposit should be more.
How to develop a binary options trading strategy
Second Deposit Bonus
The bonus is taken if we want to reduce the risks. For example, if there is only $300, we cannot use the strategy with 60% and $10, this amount will not be enough for us. The binary options bonus should also be taken, having determined its purpose. In this example, the bonus will allow you to trade according to our strategy. And you don’t have to take a 150% or 200% bonus, so as not to be tied to a broker, we can only take 70%.
The second purpose of the bonus is to increase profits. If you increase the bonus amount, you can make transactions with a large volume. However, in this case, the risks remain the same.
Reducing risks when trading binary options
Inference
When making a second deposit with a broker, the trader must decide why he needs it. Every action must be deliberate. Do not change the broker if you have lost money through your own fault. Try to decide on the purpose of opening an account and answer the question “How will you do it?”.
Tagged with: Binary Options Academy • Binary Options Trading • Learning how to trade binary
