Money management is a key to obtain success in any business. The same concerns the binary options trading strategy. The binary options features allow to work out some of the best practice which permit not to hold the earned profit before, but also to produce a profit. This is precisely why a need arises to create the strategy of binary options trading named ”Money Management” in course of time.
Money Management Strategy basic rules
There are five main principles which define the trading style in respect of deposit trade size as well as amount sum that trader is ready to have set aside as a rate when purchasing of Put and Call binary options
So the deposit size is a cornerstone. This is the first the trader shall define before binary options trading. Exactly the binary options purchase amount will depend on this factor. Here it should be pointed out the more initial deposit the more amount will be carried a risk by trader when buying one option. If you are beginner please be advised in bonus programs which are proposed by brokers. For more detailed information about proper use of bonus charge please contact our experts for free advice.
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Trading volume and risk ratio
On the other hand the deposit size may be estimated based on the trading volume. So in this case you may play in reverse (not deposit size defines the trading volume but alternatively the trading volume will define the deposit size). Such concept as risk ratio is in trading. Its best value is an interval from one to five percent. At that this factor may be diversified depending on as far as trader is experienced.
For example provided 10 000 USD on account the binary options buying may be performed to the amount from 100 USD to 500 USD
Return on trading
Return on trading estimation is also significant side. Any business including job at the financial markets implies planning. When trader came up with broker he can pay attention to what factor is proposed by company in case of profit taking as well as which compensation may be provided if trader will make a mistake in appraisal and bears losses. So in course of planning trader should pay attention to what return will be for the stated month if one or two good trading to be done per day, for example. The same concerns those purchases which may be loss ones.
A situation may be often come up at the market when some brokers manipulate the market through full-sized option types or specific basic assets. It is possible to grasp above manipulation comparing the indices of several broker’s firms.
As a result some picture turns out and many traders do not pay attention and consider that profit earning cutting down like by 5% do not have impact on trading remarkably.
But it is not like that, it affects on assumed net result. Undervalued percentage reduces the theoretic average of trading essentially.
Trading journal recording
Trading journal recording is also a key to success in binary options working. There is a conception as reporting in any business. It is also necessary in binary option job. Trader records own work results to the special journal where he is able to remark what information should be paid attention on in time. For example using one of the strategies in trading trader adds up to 5 % to own money monthly. After working with use of another strategy trader remarks it is more profitable and monthly profit rises up to 10 percent. Trader is able to conclude that usage of the second strategy is more expedient than the first one. Also trade journal will be able to establish not only with deposit size, but to work out own money properly with which trader is ready to risk starting the transaction.
Trading journal also facilitate the own emotion control in the course of trading. If it is recorded in due time so investor makes a record in real time in which he gives a reason of one or another action. For example if lot was acquired so trader records the date and time of purchase as well as decisive reason why the trading was completed.
Binary Options Money Management Strategies will assist trader to control own money better and make it working truly profitable!