If you’re currently trading binary options, you likely made the decision to do so based at least in part on the fact that the return rates are high. With each trade that finishes in the money, traders can earn up to an 85% return on their investment. In some cases, the offered return rate can be even higher than this. However, profits only come to those who trade well on a consistent basis. If you are not earning as much as you’d like, now is the time to improve your skills.
Money Management Skills
Lower earnings can come stem directly from poor money management skills. Fortunately, this type of problem is can be corrected quite easily. Most brokers now have extremely low minimum investment amounts in place. While you may not earn a fortune while investing $5 to $10 in each trade, these lower amounts can safeguard your overall account funds while your trading skills are being improved upon.
Large investment amounts that are committed to trades while you are still a novice can be a recipe for disaster. If your minimum deposit was small, it’s entirely possible to lose all of your funds in a single day when making large investments. Often, large investment amounts seem an excellent way to recover from previous losses, but the truth is that they can take the problem from bad to worse. Forget about the past and start fresh with a new plan.
The most popular investment strategy with binary options traders is the percentage strategy. This plan involves selecting a specific amount of your total account funds (typically 2% to 10%) and using this amount with each trade. For example, if you choose 10% and have $100 in your account, the investment amount would be $10. Should that trade be won and your account credited with additional funds, the investment amount on the next trade would increase. In the case of a loss, the next investment amount would be lower.
Elimination Of Emotion-Based Trading
Learning to control emotion is indeed an important skill. Emotional traders are prone to making rash decisions, many of which result in losses. Emotions could lead you to enter into trades without first completing the proper analysis. Poor decisions in regard to investment amounts can also come from too much emotion. Unfortunately, both positive and negative emotions can lead to losses.
Those who consistently earn money within their chosen binary options platform are those who are only make decisions based upon solid facts. These facts are derived from technical and fundamental analysis, with any guesswork being completely eliminated from their findings. Trading is often referred to as gambling by those who do not fully understand it. Detailed analysis is what sets the two apart.
Loss and Risk Reduction
There are a number of ways to reduce the amount of risk that is associated with each trade. The use of proven strategy is one method. Optimal trade selection is another. When struggling, consider trading only along with solid asset price trends. These provide clear insight and a reduction in the overall risk level. Strong trends make it easy to know where the price of an asset is likely to travel next.
Reduced investment amounts and well-researched trade selection automatically the amount of risk and should in turn limit loss amounts. Couple this approach with strong money management skills and a better grip on emotion-based trading and you have the formula for success. With binary options trades being short-term by design, you’re given a clean slate to work with after each and every trade, so don’t give up hope if you happen to be struggling.