How to minimize the risks of losing money when trading binary options?

Ted Capwell Updated:

Despite all the advantages of trading binary options in this mode of working with financial assets, like any other direction of trading, there is an indicator that has a critical impact on the end result of any trader’s work – it’s about financial risks! It’s the risks that do not allow you to achieve the goals set by the market participant and lead to a loss of investment capital. Most beginners and experienced traders faced such a problem. Today we offer for beginners of binary trading a list of recommendations – how to minimize the risks in trading binary options. We do not offer supernatural approaches or methods to reduce losses, but only recommend certain rules of conduct on the market that allow us to obtain the optimum risk regime.
So, let’s start from the very beginning and talk about the risks from the position of knowledge and experience. Most potentially successful investors lose their money in the first week of trading only because of excessive self-confidence. A familiar situation – I can, like that guy, earn fabulous money! I learned the instruction on drawing up options – what else do you need !? Yes, I can earn as much as I want! Well, other conclusions of this kind! Yes, with this start-up, the risks are simply incredibly high and the loss of the deposit is only a matter of time. Hence the first recommendation for minimizing risks – before completing your first real contract, thoroughly study all the techniques and approaches to option trading, as well as the very algorithm of the contract itself!

How to minimize risks of losing money while trading binary options

We go further, we will consider the statistics of trading operations. Many know that the growth of capital and the volume of profitability of trading depends on the number of issued rates with a positive outcome of the expiration. There is such a thing as a negative mathematical expectation, so in binary trading it is -15% with a maximum payout rate of 85%. It is these 15% of the difference between loss-making and profitability of contracts that eat up your deposit. Therefore, the main recommendation of professionals in effective trading is the use of highly efficient trading systems or forecasting (as you like more). In order for the investor’s capital to increase steadily, it is enough to execute more than 60% of contracts with profitable expiration. All is simple, so you will block losses from unprofitable rates and create conditions for the growth of investment funds. For example, a simple and uncomplicated system based on standard analysis indicators gives more than 80% of profitable contracts, which allows you to increase capital with high dynamics and always be in the positive area of ​​the account balance:

This will be the second recommendation on risk reduction techniques – always use the market valuation strategy – this will give you the opportunity to work in the market without critical losses of capital.
And finally, the financial indicators of trade. Here we are talking about the rules of money management and, directly, financial risks. Heard “Risk management” or “Money management”? Yes of course heard, but only if you have already merged your deposit, you just did not use these rules. Here everything is extremely simple and long calculated! To minimize risks, professional traders recommend choosing in each individual case a certain indicator of the value of options, which will have an optimal correlation with the efficiency of the strategy with the volume of trading capital. Standard values ​​of money management are considered to be the value of options, which is no more than 3-5% of the amount of capital. This mode of trading gives a completely normal level of risk, which allows you to earn earnings consistently, and not lose money. It is for this reason that most professional brokerage platforms set financial requirements for starting capital and the cost of options at a low level. For example – the best brokers, who are considered to be market leaders and technically advanced trading platforms, set a minimum deposit amount of 10 USD, and the value of contracts at the level of 1 USD. Thus, even on a minimally available trading account, it is relatively safe to trade options.

Let’s sum up. To minimize risks in binary trading, you need only a few logical things:

• Professional knowledge and experience in trading
• A working strategy with a good performance indicator
• Discipline in terms of financial management in the process of trading

If you follow these recommendations, your deposit will be safe!



“General Risk Warning: Binary options trading carry a high level of risk and can result in the loss of all your funds.”