In this binary options money management article, I will teach you how to minimize risks in your investments and thus ensure that you do not go broke. Effective money management strategies also ensure that you never lose more than you can afford to. I will also give you a little more detail about how to use binary option robots to help you manage your cash-flows and why technical aids are an effective way to keep your money management on the right track.
Binary Options Money Management | The Most Important Factors to Keep Your Investment Cash Flow Balanced
- Only invest money that you can afford to lose. Although the intention is to win money, that is never 100% certain in investing. Therefore, never invest money in binary options that is intended for necessary expenditure such as rent, food or other daily expenses.
- Start with a small variance/ risk strategy, if possible. For example, when you are using the real robot(best binary option robot),you have the option to choose your preferred risk level. If you are novice investor, I strongly suggest you start with the lowest level. While rates of return and risk always go hand-in-hand, it still makes sense to start at a safe level rather than taking on too much at the beginning.
- Always start with a smaller bet than what you can afford. This may seem very similar to the first advice, but it’s actually quite different. When in the first instruction you were advised to avoid betting money you can’t lose, here you are encouraged to start with small investments. Binary options trading is not gambling, you should not make large bets for the thrill, the goal should be to learn to invest profitably, and then increase your investments accordingly. Invest to earn money, not to bring excitement into your daily life. For some, investing with play money or demo accounts can be the best option, I myself, prefer to have real money in play, even if the stakes are small.
- Always go for the most cost-effective option. Compare the available options and always take advantage of the best offers. This is particularly important, when choosing broker sites. It is extremely important that you create accounts with more than one broker so you can take advantage of the best bonuses and invest through the broker with the best returns. The easiest way is to open accounts through the robot all at once, but you can also do this individually by opening accounts on each broker site. You should have a deposit in all your accounts (a couple of hundred in each) so that you are able to take advantage of any opportunity that arises quickly. For beginners, it is enough to have five different broker accounts. Good trustworthy broker sites to start with include Option, Banc, Bloombex Options, GOptions, CherryTrade, Option 888 and Interactive Option.
- Do not withdraw money from your investment account unless you have to. If you’ve followed the first four points, then you should never need to withdraw from your investments account to cover daily costs. It is best to re-invest the money you have won, your skill-set will grow and you will make better investment choices the longer you trade. By re-investing winnings, you should be able to raise the stakes and increase the value of your investment portfolio at a faster pace. Gaining you the so-called compound effect meaning your wealth grows even faster. This is one of the most effective ways to get rich and gain a major fortune, so don’t spoil it by withdrawing money from your investment account too early.
6. Set aside a fixed amount from your main income each month and use thiefproof binary options investments. Calculate how much you can put into your binary options trading from each paycheck. After this, make sure that you invest this amount every month. In this way, you have clear plan and boundaries, investing should not be a random thing you do whenever you feel like it.
7. Invest with borrowed money only when you are sure that the expected return is better than what the loan payment costs will be. Some investment advisers forbid investing with borrowed money entirely. I’m not that severe. Investing with borrowed money can be a really good way to make a profit, if you know for sure what you are doing. If you are going to invest with loaned money, make sure you have a good plan and the assurance that the expected rate of return will beat the average loan payment costs.
8. Make an investment plan and set yourself concrete goals. The plan should include clear and achievable objectives, such as:
- the exact amounts that you will be able to invest,
- the best potential investments,
- the things that you need to learn to improve your skills.
You can add new objectives as you reach your goals. You should strive to stay with the plan unless you have a really good reason. If you know more experienced investors, ask them to evaluate your plan before you start.
9. Keep track of your wins and your losses. Analyze what happened, what worked? What didn’t? The best binary options money management advice is that you should always keep improving as an investor. If you lose, you should analyze what went wrong. Was it due to outside factors, or was it just a bad investment overall. Think what you are able to correct, and whether there is something which you can’t fix. Even when you lose, it does not necessarily mean that it was bad investment, it is very possible that you only had bad luck. If you win, think about what went right, did you do something better than everyone else or was it just pure luck. Consider whether you can reproduce the winning investment, and if you can, think how you can get an even greater return.
10. Don’t ever chase losses. Last but definitely not least, don’t ever chase your losses. Lost investments are sunk costs which no longer have any relevance for future investments. You cannot get back lost money by raising the stakes, or by setting more bad investments. Your target should be to develop yourself as an investor not to earn a certain amount of money. When you are developing your skills and your results start to improve, you will notice that almost imperceptibly you are already an experienced investor that makes good productive investments time after time.
Binary Options Money Management and the Robot
Binary option robot can help you to manage your investments in many way. I uses on of a kind signals system which reduce risk and improve profits in a way which is impossible for human investor. Also the following features of the robot will help you manage your investments more efficiently.
- Automated stop-loss: Never lose more than you are suppose to. Experienced investors say that you should cut your losses and let the winnings ride. That is exactly what automated stop-loss does for you. This basically means that there is no upper limit for winnings, but you can lose only certain amount.
- The possibility to set your own level of risk. You can start investing easily from lower risk level, and as you want higher returns, and you are ready to take bigger risks, you can raise the level of risk whenever you want.
- You can set maximum trade amount and maximum number of daily trades with one click. The robot is able to operate fully independently, but you can also easily set daily limits within which you want it to work. In this way, your investment will remain fully in your control
In addition to those characteristics, the robot has a myriad of other features that I have come across only in investment banks options trading software that cost tens of thousands of dollars . I recommend trying out the robot personally, it is almost invaluable assistance for every binary options investor. Now with our exclusive offer, you can get this excellent software completely free. Do not let this unique opportunity slip past, but redeem your robot by clicking the button below and start effective money management with this automated trading software.
References and Further Reading
- Applications of Classical Mathematical Methods in Finance Theory and Practice: Alexander Lipton
- Bridging to the Trillions Market: Mazlan Abang
- Money Management: Investopedia
- The Basics of Money Management: Entrepreneur
- Strategic methods for automated trading in Forex: Pinto, R.M.C., Silva, J.C.M.
- Modern Approaches to Efficient Market Hypothesis of FOREX – The Central European Case: Petr Makovsky
- International Financial Markets: Exchange Rates and Inflation: Christian Wolfsberger
Written by Michael Allen