Binary Options Trading Money Management

If you’ve already traded binary options, you’ll know how easy the platform it and how placing a trade works. Now, to increase your success rate, you need to understand the markets and how to effectively employ money management tactics in order to maximize your trading potential.

Why Money Management?

While you cannot always control how the financial markets work, you can control the way you respond to them. Managing your capital effectively is a vital step to becoming a successful binary options trader and ensuring effective, long-term, capital growth. There will always be trades that you lose regardless of whether you are a novice or experienced trader. If you know to expect them, losses shouldn’t stifle your planned strategy so it is important to remain calm. Losses can, however, be detrimental to traders who risk too much money on a single trade and open other trades in a panic without a clear thought process in an attempt to compensate. That’s why all good brokerages, like Banc De Binary who we have worked with, place a strong emphasis on the importance of money management when trading binary options. We recommend that before you even place one trade, you should strategize and decide a plan in advance.

Passive Money Management

Implementing a passive money management plan is the preferred strategy of many early stage traders and involves following the 5/15 rule. This in effect means investing up to 5% of your account on any single trade and up to 15% of your account in a whole trading session.

Aggressive Money Management

More experienced traders may prefer to adopt an aggressive money management strategy, although this is not recommended for inexperienced traders or those with small accounts. This is a higher-risk strategy offering aggressive traders the advantage of higher returns more quickly. Traders follow the 10/30 rule which means you are able to invest an amount up to 10% of your account on a single trade, exposing up to 30% of your account at any given time.

Banc De Binary 60 Seconds Platform

Banc De Binary 60 Seconds Platform

 Banc De Binary’s 60 Seconds Platform

60 Second trading is often favored by more aggressive traders. 60 Second trades are attractive because they provide feedback quickly and allow traders to capitalize on highly volatile trading environments.

Diversification

Reducing risk by means of diversification is also a key strategy in limiting financial risk and effectively managing the money in your account. By spreading your risks, you can avoid “placing all your eggs in one basket”. Selecting multiple asset classes which fluctuate independently of one another may reduce the volatility of a trader’s portfolio and provide higher potential returns on investments. With a comprehensive range of currencies, commodities, stocks and indices on offer, binary options traders have access to a full portfolio of assets into which they can diversify.

Implementing money management and diversification strategies are strongly recommended. This way, you’ll be best placed to fully exploit your trading potential.

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