Good money management strategy is one of the most significant facts to consider a good trading strategy. First of all because none of the traders, neither advanced nor beginners wish to lose money and second because money management strategy will assist you in earning money successfully. All in all, this short guide will let you through all money management secrets, advantages, usage and of course profit you will be capable of making with it.
Why this particular strategy?
When trading binary options, a trader wins a certain percentage of his/her trades no matter what strategy is chosen. Let’s look at an example, you were trading on the market using a particular strategy for some time and won 60% of your trades with the help of this strategy. From the one hand, this winning means that if you use the same strategy for 100 trades, you will be expecting 60 trades with it. Yet, from the other hand, it also means that you are losing 40 of your trades. Such loses might also come in a row yet not always.
For a trader, losing 40 trades is a failure and it often happens because of long droughts. Another reason is fixed amount of money for a trade or some random investment. And the third reason – no usage of money management strategy.
The first and foremost thing trades should never do (under no circumstances) is to invest random or fixed amount of money for trades. On the contrary, it should always be flexible. The only thing that must be fixed is the percentage of your starting balance.
How to determine the percentage of a starting balance? – it always depends on the risk of a strategy as some of them are more risky whereas others less. If the strategy you opted for is extremely risky, invest less. And viсe versa, if the chosen strategy is not very risky – invest more.
Even with money management strategy traders will have losing trades in a row but much less comparing with other binary options strategies. Consequently, manage your money wisely and effectively and they will double for you soon.
To make the right decisions upon each trade, always consider the risks a chosen trading strategy might have. Being a novice is a little bit harder, as he/she doesn’t know what to expect from the market place in general, from the strategy and consequently it is hard to make high-quality predictions.
To avoid failure situations even if you are a beginner, use special offered by the brokers demo accounts. They will help you to understand the process, system and a big number of trading strategies. Having learnt and understood the most suitable ones, you will be able to invest real money.