Do you want to maximize your profits? Trading binary options with low risk for maximum profit could be your key to financial independence.
Every trader wants to increase their profit without taking additional risks. In this article, Trading binary options with low risk for maximum profit, you will learn three ways to accomplish this goal. These three ways are:
- Understanding risk correctly,
- Managing your option types effectively, and
- Picking the right broker.
Combined, these three tips can maximize your profits while keeping your risk low.
Trading binary options with low risk for maximum profit – The guide
1. Understanding risk correctly
The first and most important thing you have to understand about risk management is that you should never think about risk in terms of your chances to win a single trade. Such a concept of risk can be misleading and cause you to make bad decisions.
To assess your risk accurately, think of risk in relation to your payout. Having a 50 percent chance of getting a 300 percent payout is less risky than having a 60 percent chance of getting a 70 percent payout.
Many traders get this wrong. They think that the trade with a 50 percent chance of winning is riskier than the trade with a 60 percent chance of winning. Over ten trades, however, your chances to make money with the first type of trade are much higher than with the second type of trade, which is why the 50 percent chance can be less risky – if it has the high payout to justify it.
All you have to do to make this leap in your trading career is get away from thinking about a single trade and start thinking about your trading as a repeatable system that you will use for hundreds of trades in the future.
2. Managing your option types effectively
Understanding the connection between risk and profit can also help you to pick your binary options types more effectively.
Most traders use high / low options as their go-to tool. Hoping to keep their risk low with this type of option, they always invest in high / low options, regardless of the market situation.
As we have seen in the example above, this strategy sometimes increases their risk. In a situation where these traders expect a strong market movement, for example, the odds of winning a one touch option might be almost equal to the odds of winning a high / low option, but choosing the one touch option would significantly increase the payout if the prediction comes true.
Investing in a one touch option in this situation would reduce the trader’s risk and maximize their profit.
As you can see from this example, risk and profit are intertwined. The option type that allows for the most profit when repeated at least ten times also is the least risky option type.
3. Picking the right broker
The easiest way of reducing your risk while maximizing our profit is picking a broker with a high average payout.
Many traders pay too little attention to their broker’s average payout. They assume that the difference between brokers can’t be that big and that there is no need to be concerned about a few percent here or there.
This attitude is a misconception. Because you make a lot of trades with binary options, and because you keep reinvesting your profits, even a small difference in average payouts can make a huge difference in your profits.
Assuming 6 trades per day, 20 trading days per month, and a winning percentage of 60 percent (average numbers), an additional average payout of only 1 percent would result in a profit of 541,585 percent of your original investment in one year. If you invested $10 on your first trade, you would end up with $54,158,500 in additional money.
As this example shows, picking the right broker can make a huge difference, even if there is only a slight difference in payouts.
To find the best brokers, we recommend taking a look at our top list. We have listed the best binary options brokers with demo accounts. By signing up for a demo, you can test the broker’s payouts first hand and test for yourself whether you like the payouts you get.