Money Management
When it comes to binary options trading, the emphasis is always on the type of strategies that should be used while placing a trade. What most traders do not know is the fact that Money Management is a key feature of binary options strategies, and it should be taken into account whenever the strategies are devised.
The AutoTradingBinary Money Management Approach
It’s tough to define proper money-management guidelines when different types of traders have different risk/reward personalities. It really all starts there before trying to globalize a money management technique. However, there are a few VERY important methods that allow us to always come up on top when it comes to our binary option trading strategies, long term:
Risk is Defined EVERY Trade
We allow you to set a fixed dollar amount or a % of your account for each trade. This is the absolute max you will lose on any trade, worst case. This is possible due to the binary options trading markets we operate in.
Martingale will NEVER work
You know the drill - double your investment for every loss until you finally win. This will put you at an extremely sensitive position if you have 3-4-5 losers in a row (which WILL happen sometime in your trading career). We do NOT take this approach - it’s deadly!
We do NOT Overtrade
You’ll see some strategies and signals services out there that provide these 60 second binary options signals up to 100 times per day. They won’t work. It’s too many trades. There are too many variables in the market to win overall when placing so many trades. Instead, we isolate the best trading opportunities every day, and that way we’re able to stay on top!
Below are some more generic money management guidelines we believe in. Please do read them - you will be glad you did.
Determining the Risk Appetite
Defining a Risk – Money Management and Risk are two closely related terms. The way you manage your fund actually determines your risk appetite. It defines the amount of risk you are willing to take. A strategy is devised to manage the capital in such a way that it reduces the overall risk of loss to a minimum.
Do Not Invest The Entire Amount – When you execute your trades using AutoTradingBinary platform, it is not only the trading strategy that you keep your focus on, but also the amount of money you plan to invest on each trading outcome. We, at ATB, understand that it is very tempting to invest the entire capital based on the result of one profitable contract, but it can also blow your trading account if you do not manage the capital efficiently.
Setting up a Strategy to Control Risk – It is necessary for ATB traders to follow effective money management strategies in order to define the level of risk in trading and to maintain a discipline while executing the strategies. The primary purpose of money management is to define the percentage of risk in order to limit your losses. Here, at ATB, traders can choose different auto trading strategies from a list of strategies available in their account, including, USD strategy, EUR strategy, Optimal strategy, Conservative or Risky Strategy, Metals strategy, Optimal Strategy; thus, managing the capital right from the start.
Diversification
Do not put all your Eggs in One Basket – Different traders prefer to trade different classes of assets. Some of them want to trade a certain type of the underlying asset, while others want to trade another class of asset. However, when you trade in the binary options market, you get to trade in different classes of assets, because we, at ATB, believe that a trader should not put all his eggs in one basket. Investing the capital in a wide range of assets diversify away the risk of higher losses and is more likely to close the trade in the money rather than out of the money.
Different Level of Volatility – A good strategy always demands diversification. The level of volatility in the currency pairs market is comparatively a lot different from the volatility in the stock or commodity market, which allows traders to maintain a reasonable balance in investing the capital across different classes of assets.
Choose from a Wide Range of Assets – Autotradingbinary platform offers a large number of assets for binary options trading, including, indices, stocks, commodities, forex, etc. and enable you to branch out to different assets you wish to invest in after starting with the one you are experienced in, so that you can increase the percentage of your successful trades.
Keep Track of Your Profits and Losses
Take Your Losses Positively – No trader can avoid losses, because when you trade, losses are bound to happen. However, what you can do is take these losses positively. The outcome of your trade can impact the future trading decisions that you make. Therefore, define the extent of losses that you are willing to take while devising a strategy and limit your losses. For example, when you trade binary options, you can use a stop loss strategy in order to secure your position by putting a stop to your losses. You can choose to define a number of wins and losses, like a maximum of 10 losses or 10 wins per day. Once, you reach the defined limit, the binary options robot stop trading.
Start off at a Slow Pace – When you trade the binary options using ATB platform, a profile is created according to your financial goals. For the beginners, it is advised that they should initially invest small amount of capital to gain experience of the binary options market and develop a self-disciplined approach. It gradually boosts their confidence and helps them identify the market indicators to devise reasonable strategies and minimize the losses.
Track the Progress – It is important to keep track of your profits and losses, because it helps you identify the patterns and modify them in your strategies as and when required. You can track your progress on a daily or weekly basis, and be flexible about your trading decisions according to the market trends. Keep an eye on the market figures and modify your trading decisions on the basis of the direction in which the asset moves, market indicators and the money management strategies.
No one can deny how important it is to have reasonable and efficient money management to avoid the risk of heavy losses. It doesn’t matter how calculated your risk is, because there is always a certain degree of risk attached to the money you invest. So, make sure you invest the part of capital that you can spare. You are in a better position to control your deposits and account transfers, and increase the profits when you learn to develop a successful money management technique.
About AutoTradingBinary
We are forex traders at heart, but the ROI from binary options is too high to disregard. Our expert traders manage your trading account and place profitable automated trades with 100% transparency.