Trading binary options gives quick results and at the same time the risks are high. Although many professional traders define risks as average, which is quite acceptable in the financial markets. The risk mainly depends on the moral and psychological state of the binary options trader. Is it possible to trade binary options risk-free?
Let’s consider a few basic rules when trading options to reduce risks or the rule “How not to lose money on binary options”.
Binary Options Risk Management Rules
Trading Planning & Trade Analysis
If your binary options trading has reached an impasse and you do not know how to get out of it and start earning, this is the result of unplanned trades. Trading without a plan leads to a quick crash. The psychological pressure when trading in uncertainty is very high. Therefore, novice traders quit trading or incur large capital losses.
Always make a plan for trading binary options. The options trading strategy should also always be taken into account, it will help you not to lose money and paint a plan for your trading.
Risk diversification
Do not put your eggs in one basket, all traders know this postulate of risk management, but not many understand the depth and main idea. It should be understood that trading should take place not only with different assets, but also with independent instruments. It makes no sense to rely on 10 indicators that are based on the moving average, because the indicators will be the same.
Diversification is the execution of transactions with different levels of risk, so it can be: different assets, time parameters or trading strategies.
Limit and planned number of trades
Do not trade when you want, but trade when there is a signal for this. In a binary strategy, you can get a lot of trading signals, however, do you need to trade them all. The answer is a resounding NO. Don’t chase the number of trades. It is better to have fewer deals, but positive ones.
Financial Management (Money Management)
This is an important component of binary options trading and risk management. Don’t risk everything. Determine for yourself the size of the minimum and maximum transactions.
It is better to measure the size of transactions as a percentage of your working deposit.
Diversification by brokers
Binary options brokers behave differently. It depends on the quote provider and the broker’s trading platform. Also, not all binary options brokers have stable trading programs. Professionals open accounts with several binary options brokers so that your profit does not depend on technical problems. If there is instability with the broker, you can safely trade with a second binary broker.
Choose a binary options broker and distribute your risks correctly.
Tagged with: Risk Management Binary Options
