How to protect against losses when trading binary options?
If you already have a more or less complete understanding of the essence of the Binary Option and how to make money on them, let’s now familiarize yourself with important trading recommendations.
Rule 1. Download the MetaTrader terminal and view the history
What is the MetaTrader terminal? Wikipedia will tell you, and we won’t stop there. It’s just that most binary options brokers only show the current market situation on the chart, it is impossible to look into the history. In the history of the MetaTrader terminal, you can conduct trend and horizontal levels, use indicators, react to patterns if they appear, because the entire price history is at your disposal. Based on different areas of technical analysis, you will make more accurate forecasts, the number of loss-making option transactions will decline.
Rule 2. Do not use Martingale.
Martingale is a card game strategy, in simple words – “doubling a bet”. Amateurs use it in option trading: if they open for a fall and lose money, open again and double the bet. The market needs to be analyzed and understood. The problem with Martingale is that the trader may not have enough deposit or the maximum position volume will simply be taken.
Rule 3. Use binary options to trade on the news.
At the time of the news release, prices move very intensively. This is a good opportunity to make money, but it carries a high degree of risk (if the market does not go as planned, you will lose a large amount). Binary options are the most convenient tool for news trading, because the trader will not lose more than the value of the option. Yes, profit is limited, but risk is minimized.
Rule 4. Medium-term speculate.
To increase the “degree of control”, do not trade on small time frames (1 minute, 5-15 minutes), speculate in the medium term (on the “hour” or “day”). The older the time frame, the less noise on the graphs and the more accurate the forecast.
Rule 5. Do not forget about the principles of money management.
Calculate in advance the minimum deposit needed for trading. In such a transaction, the risk is equal to the option price, and according to the key principle of money management, a trader should not risk an amount exceeding two percent of the deposit in one speculative position. If the minimum option price is $ 1, put $ 200 in the account, if $ 10 – $ 2,000.