How to distribute risks on binary options?

How to distribute risks on binary options?

Binary Option

2020-05-13 16:43:00

Professional traders know how important thorough preparation for binary options deals is. The various aspects and factors affecting asset quotations should be fully considered, identifying possible options for the outcome of trade transactions. Proper money management requires not only a clear prediction of the price parameters of the underlying asset, but also an accurate assessment of the risk levels.<


Features of effective money management

It is possible not only to increase the total yield of trading, using money management technologies, but also to minimize the risks of possible financial losses. For this purpose it is necessary:


1. Limit the sizes of transactions

Even professional traders use the "golden rule" of investing. Investments in each transaction should not be more than 4-5% of the size of the working deposit. Such a method of trading would be good insurance against significant losses. Limited transaction sizes will help not to lose the entire amount from the deposit account even in a series of unsuccessful transactions.


For those who like to work with several transactions at the same time, experienced traders recommend not to invest more than a third part of the deposit balance in such transactions. High levels of market volatility can trigger unexpected trend reversals that lead to negative results.


2. Control the level of profitability (loss) of transactions

Skilled traders follow a simple rule: splitting profits in half. They leave 50% of the earned money in the deposit account, and the other half is withdrawned from their account to pay for current expenses. This simple method allows you not to spend more than half of your profit in trading.


3. Diversify risks

Professionals also try to limit the amount of losses for the day. If 4-6 "negative" transactions are concluded during the trading session, it is better to stop operations and carefully analyze the reasons of failures.


4. Apply various strategy

Professional traders know: perfect strategy does not exist, the market is so unpredictable and constantly changing so any technique can give "failure". Experienced traders use several profitable strategies in their work, applying them depending on the current situation. A wide range of ways of conducting transactions allows to reduce the level of risk of transactions.


5. Use different asset types

It is better not to invest all the funds in one type of asset. It is necessary to reduce the level of risks by investing in different types of trading instruments. Experts recommend the use of assets from different spheres:

  1. • indexes;
  2. • currency pairs;
  3. • raw material resources;
  4. • actions;
  5. • derivatives.

For example, you can trade on stock indices and work in parallel with currency pairs or in the commodity market. This will help to reduce possible losses in case of panic or sharp surges and unexpected changes in trend in one of the markets.


6. Trade with various options

Using different types of contracts for transactions, you can offset possible risks. When using 2-3 types of options in trade, traders reduce the probability of large losses by reducing investments in similar transactions. For example, trading with classic options "More/Less," it is possible to carry out transactions in "One touch" aswell. It is useful to enter into parallel deals with long-term terms of export, working on short-term timeframes.


Constantly improving, mastering new working instruments and finding promising areas of trade, it is possible to allocate risks in trading correctly and increase the overall efficiency of working with binary options.


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