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Four Ways to Restrict, Reduce, or Control Risk in Binary Options
Think about binary options – isn’t it risky? Think again. You should read this guide in order to learn how to reduce, control or reduce risk when trading binary options.
Taking risks is one thing, but being risky is quite another
Risks when trading binary options
Trading in the financial markets and trading binary options carry risk. It’s like a game: the risk of investment capital on changes in the prices of securities, forex, indices and commodities. In general, the greater the risk, the greater the fruits of it, that is, the greater the expected profit, the higher the risk. The most successful traders know, and novice traders want to understand how to distinguish between riskiness and risk, risk taking. You can take the risk in the expectation of profit and move on. You can also be risky, blow out all your money and get out of the game.
Scammers are the first problem
– The first way to limit risk is to avoid scams. I know this may sound like a well-known truth that everyone knows about, but unfortunately it’s not. The binary options market has increased in every way, but also in relation to scammers. Every time I find a new good broker, I find a new scam corresponding to them. The trick for any trader is to learn how to spot them. For beginners, this can be a problem. Shady brokers have put a lot of effort into appearing legitimate. Some go for cloning the names of a well-known financial company to lure traders, others create fake regulators in order to get the seal of approval. On the periphery are all the schemes, trading systems, robots, and gurus who claim they can make you rich. Yes, it’s tempting, but if it were really that simple, then everyone would be rich. Here’s a hint: if it’s free, then it’s most likely a scam. If it’s not a scam, then it has real value and will cost money.
Stop hovering in the clouds –
The second way to limit the risk is to live in reality,
not to be in the clouds and come down to earth. It seems that binary options trading is fun, it’s easier than other types of trading, and you can make money from it. But in fact, it is risky, difficult, and not everyone can master it. If it’s easy, then everyone will do it, right? You have to be realistic. It’s nice to dream of huge profits and relaxing on the beach, but in order to get such a result, you need to make more effort than just making a deposit. If you are already trading, then you know that working with binary options may be easier, but not very easy. If you trade, you know that it takes time to become consistently successful. Please note that I say this all the time. It’s not hard to get some wins, but you have to be prepared for some losses along the way. And as soon as there are more victories than losses, you will move forward. If you think you’re going to just make a ton of money, you’re going to be disappointed.
Focus on what you’re doing-
Staying focused is the third way to limit risk
. There are many metrics, many strategies, and hundreds of assets that you can use. It’s distracting, and I’m not talking about the basics, the economy, the market sentiment, or the never-ending line of gurus, signal providers, and advisors who are trying to get your attention. Jumping from tool to instrument or from strategy to strategy becomes a quick way to lose money. The goal of the strategy is to weed out false signals. If your strategy doesn’t work, then it’s probably not a problem with the strategy, it’s most likely a problem with how you use it, how you trade, or some other aspect of your system. Focus on what you’re doing, learn what you’re doing, how to properly use your strategy and system, don’t look for the next holy grail. It goes without saying that if you can’t set one strategy to work correctly, then you’ll have problems with the other. I think it’s okay to experiment and learn new strategies, you just need to do it wisely.
Don’t wash yourself out of the market – the
fourth way to limit risk is to use wise money management
. I can’t even think of a strong enough word – wise money management. You have avoided fraud, you understand that trading is a challenge, you are focused on a certain strategy and ready to trade. And even after all this, risky behaviors such as placing large amounts on a single trade can destroy you faster than other risks. Managing your account and choosing your position size allows you to trade, and will not allow one loss or even a series of losses to destroy you. A generally accepted rule is to use a % of your account.
This way, your trade amount will grow along with your account, maximizing profits while keeping each trade to the right size. The low risk level will be 1-2% of the account value, the high risk may be 10%, but in general the accepted range is 3-5% of each trade.
Tagged with: Risk management • Risk Management Binary Options
