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Basic Money Management

Basic Money Management


Smart money management is the first step towards your trading success!


Be sure to have a strong money management strategy, before you start on the path of binary options trading!

In the end will ensure, at worst, that your losses are more easily absorbed and, at best, that your profits steadily increase, although this will require discipline.

The easiest place to start is selecting a specific amount of money you are willing to trade that month, and then selecting a percentage amount which you will use to make all trades at any given point. This can be 5% when you start and 10% or 20% when you’ve become a more experienced trader.

So, say you’ve decided that you have $1000 to spend that month. At any one time, for any one trade, you can only place financial bets which are equal to 5% of the sum total of that pot, whether it increases or decreases.

So your first trade might be one asset at $50 or two assets of $25. If you end in the money, and increase your pot to $1100, your next trade will increase to $55. If your trade ended out of the money, and your pot is now at $900, your next trade would decrease to $45.

At the end this might prolong the length of your trading, by minimizing your losses and maximizing your profit potential on your wins, although the point of this may seem obvious to some.

Some traders increase or decrease the percentage depending on whether their pot is looking healthy or neglected. But are on a winning streak, you might up the percentage to 10% or 20%, if you start at 5%. If your trades are not going your way, that 10% might start looking like 8% or 5% as you get closer to the end of your limit that month, vice versa.

Check out our next video and learn more tips to improve your money management strategy:

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