Money Management is important in trading

Money Management is a key fragment!

Why behind every successful binary options there is always a proper money management?

Why money management is important?

There is a very disturbing rating score that no one speaks about in the industry. Because its ugly but the truth can be hard sometimes. Let me tell you that 95% of the newcomers to the binary options and forex trading are losing all their accounts at certain point. Of course there are many factors responsible for this record score like lack of knowledge, consistency, discipline and patience but one of the biggest reasons is the bad or even worst the non-existing money management. Reaching the success in trading overall you need proper money management. It’s like a key for unlockable door, you can’t unlock it if you don’t have the exact key!

There are different money management types for every single trader, they can vary depending on the budged that this trader features. But I`ll target the lower budget people who start with $250-$500 initial deposit. I feel they struggle the most. First if we talk about day trading and really looking at the trading like a reliable monthly income on which we can rely on, we need to create proper trading environment around us. As I said trading rely on many factors which we need to consider but I’ll talk for those who are connected with the money management in this article.

First to keep your mind fresh, you need to have sharp sessions and in hard discipline mode. I advise sessions to be small to a maximum of 10 trades and with 3 out of the money stop loss. If in some great day you manage to pull out 10 in the money trades you can continue till you lose one trade or just stop at 10 it’s your personal call. I advise small amount trading sessions in order to not drain your whole energy if you keep pushing 20 – 30 trades per day there is big chance at some point to struggle with your focus and stamina and that will lead into bad decisions and eventually losing money situation! Of course after you gain enough experience in order to decide well enough for yourself you will not need anyone to tell you how to do your money management.

Traders with lower budget around $250 should sign with brokers like TopOption, they allow trading with investment of $10, which is relatively safe. Of course when you double your account and reach $500 you can start trading with $25 per trade which I consider as the best trading amount for accounts under 1000USD. It’s safe it will not affect your decision making in any way and it’s healthy for your account ad for the days when you will lose money! Yes there are bad days who walk hand in hand with every trader it’s just part of the game. But with proper money management as I said and stop loss of 3 bad trades you will lose maximum of $75 USD in a bad day. If you don’t control that you can blow your account really quickly.

Martingale system implemented in money management is good? No I strongly encourage you to stay away from the martingale or the double up the investment after you lose a trade. Using this system can lead you into losing all your account for like few hours and you really don’t want that. The system works only with experienced traders who have the psychics and are capable of taking hard decisions in the right moment!

Can I rise my trading investment during the NonFarm Payroll trading? Well I personally increase my investment during the NFP because I can control myself why I say control? NFP news date can be released in 3 ways as it follows: bullish, bearish and doji. If, we get doji or indecisive news I just skip the NFP yes we waited 1 month and we are excited but if we get mixed results we can lose so it’s better and safer for your account to skip the NFP. We must look at the Non-farm payroll as a long term opportunity, since the news is released every month and it’s a trend following news I make my conclusions based on yearly stats. This year we have 7 Trend following news 1 doji and we Lost 1 NFP for now due to unknown reason. If you cover all the NFP during the years it’s nearly impossible to lose money. If, your budget allows it I think you can slightly increase your investment during the NFP trading. I trade with $25 x trade and during the news I increase my investment to $100, but not that I have 4 accounts on different brokers with $500 in each of them! That reminds me to tell you that having few accounts with different brokers is always good for your money management, take it like security measurements.

Conclusion: Having proper money management is a must. Keep your trading investment around 5% of your budget, this is considered wise and safe! Make sure to not let your emotions get over your trading mind and stay away from doubling your lost in order to recover it faster, keep in mind that there is always chance to lose more and eventually all your account. Important note, do not trade with money that can damage severely your personal status or money you can’t afford to lose, EVER! Trade safe and smart leave emotional trading out of your sessions!

For further questions please contact me at: binaryoptionsspot@gmail.com

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One thought on “Money Management is important in trading

  1. Really nice written and understandable article Velev. As new trader my self i feel that those guide lines are going to improve my success rate as soon as i implement more conservative trading habits in my trading sessions regarding the money management. I can admit that i have lost more than i needed in certain days!

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