Binary options trading strategy: your risk management.Barry Copeland 24 / February / 20 Visitors: 110
Risk is one of the key concepts in trading, so everyone who works with options will not interfere with learning the basics of risk management. One of the most successful and well-known traders in the world, Jack Schwager, states that two people who have the same high percentage of successful deals can have completely different, and even directly opposite, signals to enter into the transaction. However, one condition must still be common. Those whose work material is binary options must clearly represent their risks and act accordingly. These requirements must also be met by the strategy on which it works.
Schwagger talks mainly about forex trading, but risk management is no less important for options trading. It is worth noting that it is easier for us to calculate the risks to a successful strategy because in trading binary options, a trader does not expose a broker to a stop order to capture losses (which is not the easiest art). There are a few basic rules to keep in mind for a binary options trader.
And the first rule says: "Don't risk more than 2 (two) percent of your capital in one transaction." Never and under no circumstances. No matter how lucrative and “one hundred percent” the deal might seem. Remember that you are not trying to disrupt the big bush - you are working, you are managing your money as efficiently as possible. Do you have enough money in the deposit and two percent is a small amount? Replenish your account with real money: it's technically easy. If you think about it, this way of storing your earned money is more effective than placing it in a bank account. Profit from a bank deposit will be 6-7 percent per annum - you can immediately expect an annual profit of 250 or even 300 percent! However, a neat trading strategy will not allow you to lose all your contribution at once. Well, if you wish you can always "cash" again.
We pass to the second rul. It goes like this: "Don't risk more than 20 (twenty) percent of your capital in a month." Never and for no "good days". If you keep in mind this rule, you will in any case have enough deposit for at least six months. In fact, even longer term, because the previous statement is true even for those hypothetical traders who close all deals only in the negative. Of course, this is not possible in practice in binary options trading.
Two simple rules are your guaranteed loss protection. If you always keep your head on your shoulders, resist the urge to play big, you will have far less reason to criticize binary options trading, to compare this complicated craft with roulette or lottery.