Trading forex binary options can be a lucrative proposition. The important thing is to have a trading system that gives above 90% winning predictions. When we trade binary options, we have a fixed return that is 70-80% of the investment depending on the broker. For our purposes, we take it as 75%. So everytime you have the same fixed return 75%. The risk is your investment. Risk management is as important in binary options trading as it is in forex trading or for what matter stock trading. Don’t try to risk 10% of your account equity on a single trade. Do that and you only need 10 losing trades to completely wipe out your account.
Never risk more than 2% of your account equity on a single trade. Trading is a long term game. You need to take it like that. With 2% risk, you can lose 50 trades in a row before you have your account wiped out. The probability of losing 10 trades in a row is very low what to talk of losing 50 trades in a row. So practically with this risk percentage, you are always safe. Take a look at the following chart.
Just above the 2 up red arrows you see big candles. These are hourly candles. If we can predict these big 1 hourly candles we have a solid binary options system that we can use to make our fortune. In the next couple of posts we are going to discuss in detail how to develop a binary options trading system that can predict 30 minute and 60 minute binary options with above 90% accuracy. Once we have that system, we will post live trading examples about that system so stay tuned.
As said above risk management is a very important component of a trading system. With poor risk management you lose as compared to using a poor trading strategy.
Trading Strategy+Risk Management=Trading System
This is definition of a trading system. So stay tuned, we will discuss our binary options system in great detail in the next series of posts.