One of the things that probably attracted you to binary options trading was potentially large returns and you were right, there are substantial profits to be made. It is possible though that things haven’t been going according to the plan and the profit you’re making is not as high as you hoped for. It may also seem that everyone else is earning more money than you. Here are some of the tips that experienced traders have shared about large profits in the long term.
Set Up a Money Management Plan
The reason a lot of the traders see low profits is because their losses are too high, but don’t worry, this is an easy fix. The easiest way to minimise losses is investing a smaller amount of money in each trade. It’s understandable why new traders tend to do the opposite. They are hoping to cover their losses with a huge gain and that’s why they keep raising their limits and investing larger and larger sums.
It is recommended by the experts to invest less than 2 percent of your account balance in every trade you make. It may sound like you can’t make any money this way, but think of this: a trader who risks 2 percent every time he trades and loses just 9 percent of the account balance versus a trader who risked 10 percent and experienced the same 6 losses – the latter lost fifty three percent! The trader who ends up with more money in the long term is the one risking less.
Develop a Good Trading Psychology
There are some things that investors who don’t succeed at binary options trading have in common. Their investments are more emotional and mostly based on guesses and not legitimate strategies. Even when their losses are substantial, they keep throwing money in their accounts and they don’t stop to think why they’ve been losing or how to counteract it.
Traders who are successful have mastered control over their investments. They trade with prevailing trends and continue with research so their trades are not based on stress. Traders who make the most profits keep their heads clear and don’t lose control. Trading should be approached with a mindset of a series trader and not a gambler.
Master Trading Losses Management Strategies
Besides managing your money wisely and having control over your trades, it’s also important to master a couple of techniques to improve earnings. Consider hedging a shaky call option with a put option to offset your losses. Here’s an example, when trading currencies, we know that the value of USD/EUR is tied to the Dow Jones average. If you are hoping the price is going to fall and it looks like it’s rising as the expiry time is nearing, put a put option on the Dow Jones.
Or if you have invested in Apple computers, for example. When you hear an announcement from the company about bad reviews of its newest tablet or computer, it will send the stocks in a fall. Place a put option on the stock to offset the losses of the call option trade. This is what experienced traders do all the time.
Keep It Simple
Successful traders will not chase after the latest strategy they believe to be the new magic approach. They stay with a couple of old but tried and true strategies that have worked for them in the past. They know a sure thing in trading doesn’t exist. They accept the fact that you can’t win all the time and that losses are unavoidable. As long as your money management plans are smart, a few losses will not make you poor.
Once you have mastered good money management, put your mind in a good place and have employed some smart strategies, you too will see greater profits when trading binary options.