If you are new to trading binary options, and your scope is to make money, risk management is the most important subject that you need to master. Unless you learn how to reduce your risk of potential losses you will never be able to successfully see your capital grow.Funnily enough, this is probably one of the subjects that is not taken seriously by traders, because most new traders are just itching to start trading right away and do not give enough attention to the size of their capital.Risk management is not weighing out whether you can afford to loose “X” amount of money on one trade, and hitting the PUT/CALL button. The term reserved for such strategy is called GAMBLING.When trading without a risk management plan, you are in fact just gambling your capital. Trying to look for the “jackpot” instead of having a long term strategy? When you have a good plan for risk management you are not only safeguarding your capital, but in the long term you will realise that you have increased your earnings steadily.When people go to casinos looking for the jackpot, some may find it, and make a lot of money. But if you ever wondered why Casino’s are always profitable, it is simply because they make a lot more money from people who loose. The same is true of binary options trading.If you are trading in the hope that you guess the right direction, with large sums, your chances of burning your account fast, are very good. Now the point is that if you are reading this, you would like to be a great trader with a constant profit and NOT a gambler right? If you become a good trader, you will always be a winner and not just hit the jackpot once. HOW MUCH TRADING CAPITAL DO YOU NEED TO TRADE BINARY OPTIONS?Most binary Options Brokers require a minimum amount to fund an account and this is usually around $250. It takes money to make money. It is as simple as that. But the decision on your start up capital has to be treated like a business proposal.NEVER RISK MORE THAN 2% PER TRADEIt is common knowledge that to have serious growth you will need a funding capital of at least $5000. If you are consistent and practice proper risk management you should see this capital grow with the same amount every month. Most traders fail due to undercapitalization. So if you are unable to come up with this capital, that you can afford to loose, use a Demo Account with the equivalent capital until you learn to trade successfully and until you are financially ready to commit.You may be asking WHY would I need a $5000 capital to start off with? The simple rule you need to follow is to NEVER risk more than 2% per trade. If you are planning to risk more, then this is what may happen to your account in a scenario where you loose every trade. Here we see trades taken at 2% trade risk, 5% trade risk and 10% trade risk. Check out the balances in each scenario after just 10 loosing trades.
Keeping a strong money management strategy will certainly improve your chances of capital growth.New to Trading? If you wish to start trading immediately without too much knowledge, the best way to do it minimising your capital risk, is to copy trades made by successful traders. Trading binary options carries risk of loosing your capital unless you know how to trade. Join a signal group such as Mike’s Manual Signal Group and copy traders who are plotting strategies round the clock. 
No comments:
Post a Comment