Things to consider before trading
Before you start trading we think it would be wise to read the following information associated with binary trading:
- This style of trading is recommended for people who like to take risks. When you purchase an option you are exposed to losing the entire amount paid except for the “out of the money” refund that some brokers offer.
- Since we are talking about derivative instruments that can generate returns of over 100% in a matter of minutes it is logical to assume that you can lose 100% of the money at stake in the same time frame. This is why it is wise to use bankroll management techniques in order to protect your bankroll from unlucky trades.
- Financial markets can be predictable in normal circumstances, but sometimes they just go the other way without much logical explanations. Even the most skilled traders may face unlucky strikes and have many consecutive losing trades. If you want to keep your bankroll safe you need to put only fractions of it at stake. You should be even more careful when the market is volatile as it is less predictable during those periods.
- Be wary of trading strategies that promise to make guaranteed money. There is no such thing as a winning strategy. Indeed, there are many bankroll management strategies or trading tactics but all of them have ups and downs. No matter what strategy you find and how infallible it may look you should keep in mind that anything can happen. If there would be a guaranteed winning strategy the big guys would use it and make billions.
- There is always a correlation between risk and reward. You cannot have high rewards with small risks. If you want to double your capital in one month you will also run the risk of draining it in the same period. If you are aiming for smaller yields your risk will also be smaller and the potential losses will be lower.
- Don’t trade if you don’t like to take risks. if you want safe money, this is not for you. Trading is for risk takers. Always remember the infamous slogan “never trade with money you cannot afford to lose”.
