Money Management

Money Management in trading is one the most important things there is. If a trader doesn’t have a money management plan then they are simply gambling their money. Look at the best traders in the world, If they are so good at trading then why do they use a Stop loss??? Surely they could predict the markets every move and win every time. Wrong! Even some of the best traders in the world won’t get it right every time and this is why its virtual you use a money management plan to control your losses and wins.

In Binary trading, we don’t use a stop loss or take profit like we would in Forex as we either win or lose, but we can still control our results.

Below is a simple money management plan that I want you all to follow when you start your journey into Binary Trading. When I first started my journey I remember watching a professional Binary trader use this plan and it kept him in profit every week and it has stuck with me ever since. Looking back now he wasn’t even a very good trader but it was this money management plan that kept him in profit.

Trade Time – 1-2 Hours a day

5 trades a day

Stop Loss – 2 losses walk away

Take Profit – 2 wins walk away

Each day you trade no more than two hours a day. This has been proven that if you sit focused on your computer for longer than two hours then your brain will start to lose concentration, and you will make uncalculated decisions.

The amount of trades you take are capped at five trades. This means if you get five trades in the first 30 minutes of  your trading session then that is your trading session complete and you should walk away.

This will teach you the importance of decision making and selecting your trading carefully. A lot of beginners have this idea that the more trades they take, the more money they make. Wrong! We are here to make money not take trades. If you can make one trade a day and it will 100% be a winner every single day then you will become a millionaire very soon.  This trading plan will teach you the importance of being patient, disciplined and having the power to walk away.

Unlike Forex where you have a stop loss, in Binary its a little but different. If you hit two losses in your trading session then I want you to walk way. After a loss too many beginners will start chasing their losses and over trade. This is the quickest and easiest way to blow your account! By capping your losses it teaches you the importance of walking away and accepting a loss.

The same applies to Take profit. Walking away after two wins is important to protect your profits and over time this will show. Greed and over trading is another way to loosing your profit, chasing trades and then blowing your account.

At the end of each trading session, you write down your result in the table above and over the week it will give you your weekly result. This will show you that trading is a marathon and not a sprint.

Let me show you something that I’m sure will blow you away when it comes to long term trading profits.

Imagine for a minute we deposited £500 into a Binary broker and placed £10 trades at 75% pay-out.

Using the trading and money management plan above we did two wins and one loss every day. Yes we might win two trades in a row and yes we might lose two trades in a row, but lets say on average we managed two wins one loss.

If we win two trades that means we have won £15 profit.      £10 trade with a 75% pay-out equals £7.50 x 2 = £15

If we lose one trade that means we have lost £10.

£15 profit – £10 loss = £5 PROFIT

Now if we did that five days a week over a month we have made £100 profit. £100 extra income from doing 1-2 hours worth of trading a night.

It gets better though.

If we carried on doing that we would double our £500 deposit within the first five months and over a year we would have a balance of £1200

You tell me a bank or savings account that gives you a 140% return on your money?

If you then were to start compounding an increasing your trade sizes then the numbers get even bigger.

Those numbers are based on the minimum average so some weeks you might make even more profits if you get a 100% strike rate. The important thing here though is to remember that trading is a marathon and long short term.

Now lets look at what currency pairs you should be trading.