Money Management for Binary Options
It is often talked about the topics high profits and risks. An important issue is the subject of money management. Perhaps the term is known primarily from the field of wealth and asset management, as well for the binary options trading it is very helpful and it can also increase the chances of success.
The main task of the Money Management is that the trader can check his existing money. Because only the planned insertion of capital can ensure that a given strategy can be followed. Without money management many traders would use their money by emotions which then often leads to losses. In addition most do not even think of a reserve which is very important in some situations. For that reason it is not uncommon that with no money management trading becomes a pure gambling. Therefore the control of the money is very important for a successful trading.
Sprinkle your capital
The biggest mistake which many traders make while trading binary options is the use of the complete capital. For a good money management that is strictly forbidden. An important piece of advice is therefore not to invest the available capital in only one option. Rather it is important to distribute the capital to several options. In this context should also be noted that the options have different maturities as possible and include various underlying types. For beginners the experts recommend to use five to ten percent of the total account. Even if there are several losing trades further capital is available for the next trades.
A good money management also implies that the trader remains realistic and not hoping for the one-time big win. Of course there may be a gain of 500 per cent in individual cases but this is not . Therefore it is much more successful to trade with less risk but to achieve continuously smaller gains.
Another mistake is to act out of boredom. This is e.g. also the case when there is no clear trend for a longer period of time. Many traders are often too impatient and then after some time simply speculate on "any" underlying.
Follow your own strategy and do not break the rules
The important basis of every Money management is a strategy . This strategy should be carefully selected and then the trader should also hold uncompromisingly to its own strategy. Whenever there is a risk that a rule would be broken which was compiled on the basis of the strategy a break should be inserted. After the break the trader will get a "cool head" and may make the next trade successfully.
Have a look at the Money Management subpages, there you can find videos about the importance of stop losses, how to calculate targets etc.