Trading To Win Or Not To Lose
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Risk management is an important aspect of binary options tradingthe Catch 22 is too much management, or the wrong kind, can manage you out of your profits. The stock is market trading binary options for fun and profit compounding very risky and risk takers are rewarded with profits.
The bigger the risk the bigger the profits. These profits, the lure of these profits, attracts millions of people to the investment world each year, and each year most of them barely make any money, and many of them lose their asses. For those who chose to let others invest for them, laws in place limit the amount of risks that average people can take and by so doing, limit the amount of profits they can make.
For those who chose to invest and trade for themselves poor money management, excessive risk or black swan events keep them from making profits or worse, wipes them out of the market. My point is that there is a fine balance between risk management and handicapping your ability to make money, a balance between playing to win and playing not to lose.
How does this apply to binary options? In a couple of ways and the first I want to bring up is the old Martingale strategy. What many fail to recognize is that when applied to binary options Martingale may keep you from losing, but it also prevents you from making profits.
When you trade binary there is no big win, all wins are the trading binary options for fun and profit compounding, or basically the same, whatever your brokers average payout is. By using the Martingale you can delay taking the loss on one trade, but you will never hit that big win. You may have a streak of wins, but that streak could just as easily become a string of losses trading binary options for fun and profit compounding leads to a big trade, one big enough to wipe you out.
Clearly Martingale is not the best method here, it is playing not to lose. By using a percent instead of an amount the size of the trade will grow as the account grows so that your profits grow in tandem. Losses suck but what can you do, everybody makes losses some time, the percent rule prevents them from growing out of control. So long as your win rate is above the rate needed to be profitably you are in good shape, no single loss will prevent you from making the next trade and the net amount of wins will more than offset the losses.
Basically, it will ensure long term success, profitability and trading. No matter your approach you need to take a step back and ask yourself the question, am I playing to win or playing not to lose? In the end, it is far better to accept each loss as it comes and move on to the next trade rather than compound those losses with additional losses and allow emotions to cloud your judgement.
Risk Management Or Profit Block Risk management is an important aspect of binary options tradingthe Catch 22 is too much management, or the wrong kind, can manage you out of your profits. Martingale is a betting technique that starts out at a set trading binary options for fun and profit compounding, X, and keeps all bets at that figure, X, until there is a loss.
The next bet is then 2X so that a win will cover the loss on the first trade and produce a win of X. Each time a loss is incurred the next trade is then doubled to cover the loss of the previous trade and all others before it, and a win of 1X.