There is no denying that there is no risk involved with binary options trading. In fact, you cannot find a form of investment that does not carry an inherent threat. The possibility of jeopardizing all of your savings does seem to be amplified with binary options, nonetheless. Fortunately, there are so many different ways to reduce the risk of losing your money with binary options trading. Simply follow the strategies below and you will providing yourself with an ample amount of security:
Make Sure Your Broker Offers Certain Features
There are two ways that a broker can help you out if it seems as though have made the wrong call on a trade. The first is known as an out-of-money rate. As you are probably aware one of the biggest issues with binary options trades is that you can lose all of your investment. Fortunately, there is a way to ensure that you get some of this amount back.
The out-of-money feature is one where the broker returns a small percentage of your investment. This tends to be about 10 percent. Get yourself a broker that gives you one of the highest rates around and you will be able to make some money back.
The other service is known as the sell back feature. This is something that you can employ if you notice that you have made the wrong call and are about to lose your money. This feature allows you to exit the trade before the expiry time. By doing so, you will be forfeiting between 40 to 60 percent of your initial. When considering the alternative, however, this is quite a good option.
Utilize the Straddle Strategy
Volatility in an asset can prove to be disastrous for a trade. That is, however, unless you use the straddle strategy. With this strategy, you are almost literally hedging your bets. This is because you put both a call as well as put option on the same asset.
This way, regardless of the way that the asset moves, you are bound to be right. Of course, there is a caveat with this. As you are both predicting that the value will rise and drop, you are bound to be wrong on one occasion. This means that you stand to lose some money. To utilize this strategy properly, you will have to ensure that you are making more money with the trade that you will win.
Manage Your Money
In the end, perhaps the easiest and best way to minimize your losses is to manage your money well. This means creating a plan for yourself even before you start trading. In order to do so, you will have to come to the conclusion that regardless of what an experienced trader you are, you are going to lose. Sometimes, you may encounter a series of losses. While you cannot control this, you can control how much you will exhaust in the process.
It is up to you, how you decide this. For instance, you can decide that you will stop trading once you have lost a particular amount. Or, you may decide to take a break once you have reached a set win/loss ratio. All that is important is that you know when to stop.
This is how to reduce the risk of losing your money with binary options trading. These are not foolproof methods but will certain put the odds in your favor.