Binary Options Money- and Risk-Management

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7 Binary Options

Currently, there are tone of articles that have been published on various sites and online forums, regarding binary options trading strategies. It is also a known fact that the majority of traders spend about 99 percent of their time searching for the best binary options trading strategy, indicators and the best markets to invest in. While this is important, traders rarely take time to ponder about a most important aspect of trading binary options – money management. Since the trade is about either winning or losing it all, it is important that you exercise money management strategies. If you are to succeed in this trade, you have to explore the current strategies and settle on the one that will maximize your chances of profiting from the trade.

Risk and Money Management

While risk and money management have different meanings, they are closely related when it comes to binary options. This is mainly because the manner in which you manage your trading capital will determine the risk that comes with the investment choice. In this regard, you need to manage your capital in a way that minimizes the risk. For instance, you should avoid staking all your capital on one outcome because the risk is too big.

The Best Strategies to Manage Your Money

To set up an effective money management strategy for binary trading, there are various approaches that you may use. Among the simplest and most effective strategies is the ‘Kelly’ system. Over the years, this method of betting has become a preferred money management strategy among binary option traders. With this method, the objective is to maximize the chances of profiting from the trade while minimizing the risk that comes with the investment. In theory, the system suggests that minimizing the risks associated with your investment will put you in a better position to profit from the trade.

Implementation of Kelly System in Binary Options

When using this strategy to invest in binary options, it is advisable that you invest only five percent of your balance in any particular outcome. With a regular broker, this translates to a 5 percent risk against about 3.5 percent return on the investment. While this may appear to be a small investment, the method focuses on reducing the risk and maximizing the potential to grow in the long term. With this strategy, a string of losses will not put you out of business as you will still have money to invest.

Traders need to understand that there is a slight difference between trading and gambling. With an effective money management strategy in binary options, you increase your chances of profiting from the trade.

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Binary Options Risks

Binary Options Risks and How to Manage Them

Successful trading is all about understanding and managing probability. There isn’t a magic bullet that will guarantee that all of your trades are successful, so in the absence of that, every smart trader needs to think about binary options risks and developing strategies to manage them. You can’t manage binary options risks if you don’t have both an effective trading strategy and money management strategy.

You can base a trading strategy on:

  • indicators (trend indicators, oscillators or both)
  • a theory of trading (Elliott Waves, Gartley, Gann, Point and Figure, Drummond, etc.)
  • anything else that might reasonably be expected to generate a profit.

With binary options you don’t just have to say which way the price is going to go, you also have to say by what time or date it will do so. While they don’t seem as complicated as some of the more exotic financial instruments, don’t be deceived into thinking that binary options are simple. You still need to manage your binary options risks when you trade.

What Makes a Good Money Management Plan?

Managing risk means managing the variables within your control. These are:

  • how much money you put into each trade
  • the asset you choose
  • the way you think it will move
  • the expiration date

Steer Clear of Short-Term Expiration Dates

It may seem odd, but the direction of price movement is not your greatest concern, the expiration date is. Minute or hourly expiration dates are best avoided because they’re one of your biggest binary options risks. It’s much better to use end of day, week, or month. Let’s face it, you might be looking at greater than 70% return on your investment, so there’s no need to rush into anything! You can afford to take a longer view, no matter how hard a broker tries to appeal to your greedy self with tantalising short-term offers. It’s in a broker’s best interests to influence you with fear and greed. So, to survive as a trader over the long-term and manage your binary options risks, it’s best to only listen to the voice of reason.

Brokers won’t make it easy for you though. You might have been hoping to set your own expiration dates, but they try to limit their own binary options risks by setting them for you. They would much prefer it if you’re expiration time fell just when the market was at its most volatile, like when significant economic news is scheduled to drop.

To manage your binary options risks, set your expiration is well beyond such events and avoid the shorter expiration dates whenever you can.

Trade Only a Few Assets

You need to check the economic calendar for the coming week every week. Look out for important news that affects your underlying asset and consider what it may do to its price. And to start with, consider only trading with one or two assets that you understand. The more assets you dabble with, the more you open yourself up to being blindsided by something that you didn’t expect. Binary options risks are better managed if you stay within your areas of understanding.

For instance, if you know that an event is coming up that may affect the US dollar, such as a non-farm payrolls announcement on the first Friday of the month, it might be prudent to stay away from trading USD pairs until afterwards. It’s been established that the dollar will range before that Friday, so you’d be hard pushed to guess which way the market will go. Better to avoid the dollar during that period and keep your binary options risks to a minimum. If you are hellbent on trading, however, you could look to set your expiration date for some time afterwards, when volatility has died down.

Direction and The Amount to Trade With

The amount you choose to trade is also very important. After you’ve completed your technical and fundamental analyses, you should apply the same diligence to selecting the size of your trades.

If you have $2000 in your trading account, you could split it into 10 equal parts, and trade each lot of $200 in the week ahead, so 10 lots of $200.

You could also divide that $200 between one index, a commodity, and two currency pairs, so you would wind up risking $50 on each one. Do so and you’re now looking at 40 trades over a 10-week period, and what are your chances of losing on every one of them during those 10 weeks?

Given that you will have spent time researching your underlying assets and their price movements within the market, it seems unlikely that such a dismal outcome would befall you. Even if you flipped a coin to decide what to do on every trade, probability would suggest that half of them ought to be successful. So, it should be clear that by combining your research with a high number of well thought out trades, you will not only be reducing your binary options risks but significantly increasing your chances of trading success.

Манименеджмент или бинарные опционы без риска

Управление капиталом при совершении трейда бинарных опционов является одной из важнейших задач каждого, кто желает получать прибыль в этом виде инвестиционной деятельности. Говоря о мани менеджменте, трейдер бинарных опционов всегда должен понимать, что под этим понятием подразумевается умное управление средствами с соблюдением риск менеджмента в своей торговле. Именно риски играют ключевую роль в получении прибыли или наоборот – убытка в торговле бинарными опционами.

Первое, с чего нужно начать трейдеру, который уже знает, как работают бинарные опционы – это определить размер своего стартового депозита. Такая задача является непростой, ведь практически каждый желающий заработать на трейде бинарных опционов хочет получать хорошее вознаграждение. Потому при анализе графиков для бинарных опционов, перед тем как открывать сделку, трейдеру нужно знать, какую сумму он готов потерять, в случае если что-то пойдет не так, как он планировал.

Если для трейдера бинарных опционов потеря нескольких сотен долларов не будет особо ощутимой, то такая сумма вполне может служить его стартовым капиталом.

Нужно помнить, что в успешной торговле бинарными опционами обучение играет очень важную роль. Потому прежде, чем начинать торговать собственным капиталом, лучше всего проверять свои силы на бинарных опционах демо. Чем больше трейдер будет анализировать графики для бинарных опционов, тем скорее он сможет выработать свои стратегии бинарных опционов, которые будут отвечать оптимальным характеристикам соотношения риска и прибыли.

В торговле бинарными опционами нужно всегда планировать сумму прибыли, которую вы желаете получить. Кроме того, для себя нужно прописать определенные правила, согласно которым по получению желаемого результата вы будете останавливать
торговлю. Это один из обязательных элементов мани менеджмента, который позволяет трейдеру уйти от азарта и остановится при достижении своей поставленной цели. Торгуя бинарными опционами без таких правил, часто бывает так, что трейдер все заработанное теряет и потом жалеет, что не остановился ранее.

Также нужно установить для себя правило остановки торговли в случае серии убытков. Это поможет вам ограничивать возможные потери на счете, когда стратегия бинарных опционов дала сбой. Торгуя бинарными опционами без этого правила, вы рискуете уйти в большую просадку, или, что еще хуже, слить свой торговый депозит.

Нельзя обойти мимо также такое понятие, как диверсификация рисков. Это торговля на разных инструментах. Часто бывает так, что трейдер, узнав, как работают бинарные опционы, сразу начинает торговать одновременно на нескольких финансовых инструментах. Хорошо, когда он использует торговлю бинарными опционами с минимальным риском. Но в большинстве случаев все наоборот. Начинающие трейдеры торгуют одновременно на нескольких инструментах, закладывая в сделку по 5-10 %, чтобы получить хорошую прибыль, но в результате получают наоборот – быстрый и большой убыток.

Потому очень важную роль играет торговля бинарными опционами с минимальным риском. Закладывая в сделку, например, 1% , и торгуя одновременно на трех инструментах, трейдер будет рисковать всего лишь 3% от депозита, но никак не 15-30%. Все эти моменты нужно поначалу хорошо попрактиковать на бинарных опционах демо, где и проверить, как трейдер прошел обучение бинарным опционам. Если результат торговли на виртуальных деньгах будет положительный, тогда можно будет смело приступать и к торговле с реальным капиталом.

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