All you should know about Binary Options Money Management
Binary Options Money Management is an essential tool in any business. When it comes to trading with Binary options, where there are only two possibilities- A “Call” or “Put” option, the trader needs to be extremely careful. A sensible plan of investment to determine the flow of money through the system will help in the long run. There a many ways to strategize the flow of money into the trade, however a planned and disciplined framework about how to go about it, will be of immense use. The key word is to stick to the strategies you frame.
For all the novice Binary options traders, a simple yet effective money management strategy could be a good beginning until you master manipulating the market for your benefit.
We all know that predictions about the market is our key to succeed. If the prediction is about the rise of the asset price, then it is “call” option. If the prediction is about the fall of the asset price, then it is “put” option.
The Binary Options Money Management strategies are to establish a focus on minimum winning or maximum losing limits. Once the proposed limits are attained, it is advisable to stop trading irrespective of the status of loss or gain.
Here are A Few time-tested Binary Options Money Management below:
Number of wins and number of losses:
At the start of the day, one has to clearly analyze the fund available to trade. Based on the capital, one has to define a specific number of wins and losses. Trade is advised to be stopped once the specific number defined is reached. This helps a lot to not get caught in the heat of enthusiasm and overdo at times. Many novice traders get hooked by the market. Drawing a defined limit line will keep you on the guard.
Percentage of losses:
This strategy is also similar to the number of losses described above. However, it is in terms of percentages. Once a specific set limit of percentage of losses is reached, one is advised to stop trading. This in a way aids risk reduction and growth maximization in the long term.
Amount based strategy:
This strategy also resonates limit system, whereby at the start of the day, based on the capital available, the trader defines the amount limit on trade. Beyond this amount the trade must be stopped. The focus here is again to get a hold of your flow of money and brings about a strong money management style in due course.
Trade limit strategy:
Setting a limit to the number of trades per day is also a means towards money management strategies. This generally works as a combination strategy. One may consider limiting the number of trades per day along with the number of wins and losses for example.
All said and done, it is the prerogative of every trader to decide how to trade with the available capital. However, adopting one of the above discussed Binary Options Money Management could definitely help the novice traders to establish a steady winning ratio and sustain binary options trading in the long run. Manage your available money effectively to make more money every day.