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Cheapest binary option broker
These types of stories tend to fuel the fire of motivation for traders; but there is another side to big gains, and that is big risk. As we gain more experience we realize that the best traders are the ones that control risk. One well publicized trader once said his largest losses came right after his biggest gains.
The emotional stimulation from big profits can be a double-edged sword, and often leads to a decreased emphasis on risk management. This is unfortunately a true story. Experience also teaches us that the most important element to trading is managing risk.
The earlier example illustrates the idea that without risk management, the ability to sometimes score profits becomes far less effective when combined with subsequent losses. The best traders are risk managers who take care of risk first. When it comes to trading, longevity is key; and a trader can survive longer with proper risk management.
The idea was for the equity indices to have limited gains yesterday; however, the stock market had its own mind. While it was going higher, some traders were tempted to short and were getting beat up by a market that was climbing almost non-stop. The unfortunate thing is that in order to handle trades that are not going their way, many traders have to negotiate stops, decide where they want to get out, and debate whether they should give trades more breathing room.
This means that traders do not have to decide whether to widen their stops and take on more risk; if their market view ends up being incorrect, they can toss that idea, take their loss, and move onto the next idea.
Of course, this is not suggesting that binary option traders are perfect risk managers just because of the built-in stops in these products.
Binary traders still have to control their trade size and impulses just like everyone else; but there is a strong opinion that the limited risk nature of these options help traders control emotions and assists them in becoming better risk managers. Davin Blythe FairValue Trader has been a full time options trader since and has actively traded binary options since The information contained above may have been prepared by independent third parties contracted by Nadex.
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