A binary option is a market where a trader either earns a considerable profit or loses their investment. It’s an all-or-nothing kind of trading market.
So, even if you have a good knowledge of options trading, it’s better to fix an amount you want to trade.
How much should you invest?
Fixing an amount is the right way of trading in this moving market. But how much amount should you keep for trading? The trading amount differs for each trader because everyone cannot handle a similar amount of loss.
You should never invest a considerable amount in binary options trading because you can either win or lose all the amount. Also, it would be best if you did not treat binary options trading as your savings. Additionally, this market is not a reliable option for earning for your future.
Rules for selecting trading Amount
When trading in the options market, you can remember the 5% rule. This rule says that each trader should only trade a small amount of what they have in their bank account. This way, you can trade safely without putting your financial situation at risk.
What amount can a trader risk on each trade?
The amount should not be more than 1%. For example, if you are trading using $100, you can risk between $1 to $2. Risking more than 5% will only bring loss.
Trading in the binary options market is not a form of investment but betting on a moving market. That’s why you should analyze the market and fix an amount before trading.