Basics of money management for binary options

Trading binary options is tricky as it requires traders to come up with an expiration date and this is the decisive factor between a profitable option and one that expires out of the money.

Putting the time element on a forecast is essential as knowing where price is going might turned out to be useless unless one knows when that is going to happen. For example, if you are telling me that EURUSD is going to 1.

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There are two approaches when it comes to having a money management plan and one of them is suitable to FX trading as well as to binary trading. The first one refers to having a trading plan ahead of market opening on a Monday and this means looking at the economic calendar over the weekend and spot the important economic releases to be announced next week as the economic calendar is available ahead of the actual releases. Then, based on the releases that are going to be announced and the technical analysis as well, two or maximum three currency pairs should be picked for trading.

Ideally, they should not be related in the sense that if your scenario is bullish on the EURUSD then try not to pick the GBPUSD to the upside as well as they are directly correlated. The next thing to do is to decide on the money to be invested so look for a proportion of your account and split the amount into equal parts for the currency pairs you decided to trade. After all, binary trading offers a percentage wise return so the overall result will not be affected.

Then I would always trade end of day expiration date on Monday with smaller parts for each currency pair and started with Tuesday end of week and even end of month should be recommended if the price action is happening on the second half of the month, ideally after the 20th of each month.

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Spreading the risk into smaller pieces is ideal and crucial for avoiding your account to be blown away through excessive overtrading. The other strategy that can be used is referring to the classical proportion of the account to be invested.

With this setup, trading should favor short-term expiration dates at the start of the week, namely looking for end of day positioning on Monday and Tuesday as well as end of week and months as well after Tuesday. A trading week is usually being formed by ranges and fake moves at the start of the week and once Wednesday is coming important news are being released and volatility is rising as well.

Keep in mind as well that markets have the tendency to range during summer trading July and August as well as during holidays so make sure you calibrate your expiration dates accordingly. Having a money management plan is vital as it keeps you afloat when things go the other way and keeps your confidence at high levels as well. A sound money management plan allows you to avoid overtrading as well as finding the perfect striking prices for the options that are traded as being patient and understanding how markets are moving as well as what moves markets is what makes the difference between a trader that still struggles and one that enjoys success.

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Trading plan | Money management rules | Binary options

Binary options trading entails significant risks and there is a chance that potential clients lose all of their invested money. Your capital might be at risk. Investment Rating Your capital might be at risk. Money Management With Binary Options — Strategy Revealed. Academy Articles for Level 1.

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