How Much Should I Trade

How Much Should I Trade With Binary Options

How much should I trade with binary options? Hmmmm, this is a question asked by traders all the time and can be answered in a couple of different ways. The two first answers that pop into my head are always actually more questions. How much can you afford and how much will wipe out your account. The first question begs two more. How much can you afford to deposit with a binary options broker and how much can you afford to put on a trade. If you haven’t figure it out yet what I’m really getting at is money management. However, before we tackle the question of how much to trade let’s take a step back and come to an understanding about what binary options are. They are a financial instrument, but they are not an investment. They are a derivative trading vehicle with no underlying value and meant purely for fun. If you are planning on building some wealth over time with trading binary that’s fine, if you think binary options are how to invest for your future you are wrong. Now, with this in mind we can now step forward and address the question at hand.

How Much To Invest Determines How Much You Trade

Binary options are not investing. They are an easy to use, short term, highly speculative bet on a moving market. They are meant to be an easy way to enter the market because they are also meant to be fun. They are short term and speculative for the same reason. By no means is trading binary investing so the first step in knowing how much to trade is to only trade money you can lose. Binary is not the place to keep your savings, those belong in a real bank, and it is not the place to invest for the future. By extension, it is also not the place to put your rent money, especially if you need it to pay the rent. Simply depositing money into a binary options accounts means it could be up to a month just to get it back. This is the place to put your fun money. Money that has no other purpose than to provide you access to the market because trading the market is what you like to do.

It is a mistake to think you can’t have fun with the minimum deposit or making the minimum trade. If you can only afford to spend $100 to get started that is fine. It may limit your choice of broker but there are lots of good ones. If you can’t find one you like then save up for another month and get another $100. Then you can go find a broker with a slightly higher minimum. In either case you can still start trading. You just have to be responsible about it. Trading is trading and when you use the right approach to your trades it won’t matter if you lose $10 or $1,000 so long as the % is right. The key is never to trade too much, never so much that it hurts your ability to trade again. In order to do this you have to stick to money management rules, % rules. This is why it doesn’t matter how much you lose in terms of money.

Rules To Guide The Amount You Trade

Having rules to guide the amount you trade are the best way to know how much to trade. Money management rules, % rules, mean you always trade a certain percent, never a set amount. I like to use 5% for binary options trading. This means I only ever risk 5% of my account balance on any one trade. This amount means I can have up to 20 trades open at any one time and no one of those trades will ever be big enough to hurt my account. I also never have to waste time trying to decide how much I should trade. I just do it. 5%. It’s that easy. And the best part is that as my account changes in size so will my 5%. If I have a few losses my 5% gets smaller, if I make some profits my 5% gets larger. This way I am sure to maximize any potential profits and limits losses at the same time. My broker allows my to trade any dollar amount I like, over $50, so I can trade exactly as much as I like. Some brokers only allow certain increments of amounts so you will have to round to the nearest allowable amount. If you like a little more risk maybe you round up, if you want to be a little safer you round down.