Money Management for Binary Options Trading

If you are a beginner and just started to learn about binary options, you should understand the fact that treating it like gambling won’t help you too much. Even though there are some similarities with gambling, having a more professional approach with regards to binary option can definitely give you an edge. This article was designed to give you some basic tips that can help you design a mathematical model which can generate consistent profit.

money management

Source: http://blog.wallstreetsurvivor.com

 

Tip #1 Never put all your money at risk

The ultimate goal of a trader is to make money and binary options trading is not different. However, letting greed influence you and make you risk all your money on each trade, is one of the strategies that will lead you to failure. Risk less, much less, 10%, 5%, 2%, so you won’t be wiped out by a single mistake. Trading is a competition and money is your ammunition. Without it, you are dead in this game.

Tip #2 Reward to risk ratio higher or equal to 2:1

Risking small is just one side of the problem. The reward as well plays a major key, especially when it comes to binary options. Since if you are right, you’ll make between 80-90% profits, depending on your broker and if you are wrong you will lose all your money at risk, having a high reward to risk ratio is a must. With 1:1 R/R you are doomed to failure, no matter how greater your accuracy is.

Tip #3 Improve your accuracy and keep it above 60%

The third and most important piece of advice you can give is to have at least 60% of your binary options in profit. By doing that, combined with a 2:1 Reward to Risk ratio and a small portion of your account at risk, you will be able to pass through some of the losses you will encounter, no matter what you are doing.

To sum up, at least focus on these three aspects, as they can help you a lot when trading binary options. Hope you found this articles useful.

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