Advanced Money Management Strategy

Hopefully you’re now familiar with the basics of money management. The basics should keep you trading for longer, but there are other factors to consider when managing your money effectively in binary options trading.

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Diversity

We all have favourites. Some traders like to trade a particular asset class or perhaps a specific underlying asset. Whilst here at Binary Options Insights, we believe in trading in what you know, we also believe in not putting all your eggs in one basket. Having a broader range of investment possibilities means that at the end of your 10% trading cycle, you are more likely to come out in rather than out of the money. You are protecting your trades through diversity. Start with what you know, but branch out to what interests you, and soon enough you’ll be increasing your percentage amount to benefit from all your successful trades.

Risk Assessment

No matter how sure, how certain, how definite you think the indicators show a trend or pattern, there is always a risk, no matter how small, which means your binary option trades might not go your way. You might, in fact, be lured by the high risk – high rewards trade, or lulled by the excitement of the 60 seconds ‘could go either way’ trade. And thats fine. But it should be a calculated risk, and the exception rather than the rule.

Always measure your risks for every trade, and if you fancy trying your luck with some of the higher risk trade, be sure to balance that with low risk trade, ensuring you minimize your losses should things not go your way. This is, in fact, a different way of diversifying, only instead of financial assets, you are diversifying your risks. Always calculate the risks, negate the risk as much as you can and then start trading.

Profit and Loss Tracking

Whether you prefer pen and paper, spreadsheets or any other mean of note taking, keep track of everything that is coming in and out of your account. It may take a while before you perfect your routine, but start a pattern, change it, and test it out.

Most binary option traders analyse the results of their trades over a period of a month, taking out any winnings then, or adding additional funds to match their preferred monthly spend. You may wish to start tracking your profit and your losses on a daily or weekly basis when you first start to keep a tighter rein on your spending. Be flexible, but always keep an eye on the numbers. If you want to test out your capabilities, many binary options brokers will give you demo accounts and money to play with in order to help you learn. Use these to test your potential for success.

The importance of money management cannot be over-emphasised. No matter how calculated the risk, there is always some risk, so be sure to only start trading with money you can spare. Ultimately, once you’ve built a successful formula for your money management strategy, you should be able to minimize the amount of transfers and deposits in and out of your account, minimize your losses and increase your profit margin.

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