1.Fundamentals of Money Management or Secrets of a Legendary Trader
2.Formation of Principles of Deposit Management
3.Empire Collapse or Dangers of Money Management Ignorance
4.5 Pillars of Modern Money-Management
5.Talking Simply about Difficult Stuff: Deposit Management in Binary Options Trading
6.Money-Management in Practice: Step-By-Step Safe Trading
A dated proverb of Spanish seafarers says an experienced pilot can handle the vessel without any route. But they will for sure reach the bottom only this way. Money management are the basic rules of maneuvering in the stormy sea of option trading. Mastering this “map” of reefs and shoals, even a beginner trader will steadily come out in the open and calm sea of stable income at the market.
The founder of the term “money management is legendary Jesse Lauriston Livermore (1877-1940). He was first who formulated the main principles of managing the capital. Even sharks of Forex name him with excitement: this man has shown in practice for several times how can an office clerk rise from tiny savings to the very top of financial prosperity. He has earned a million dollars for a day and more than 100 million dollars for a year. Livermore was called the most significant trader ever. His “ghost” follows US financiers till nowadays. He is the obvious proof that a man without atomic bombs and high governmental duties can demolish currency markets in several hours and cause the strong crisis of the “selected” country.
There is nothing fantastic or extraordinary in talents of “Boy Plunger” and “Wonder Boy” who started gaining solid money. The ability to transform a dime into 3 dollars can’t be called even luck. The boy was dreaming of wealth, writing down quotations while on duty. Realizing he doesn’t have funds for the second attempt, he was developing and processing a simple and safe algorithm. Livermore has formed his knowledge when grew adult in a small but priceless set of rules for traders. Actually, by this time press has changed its attitude to this founder of technical analysis.
He was buying limousines and yachts just like socks, while Wall Street was flushed by the wave of bankruptcies and suicides. “Financial Devil” and “Minute Millionaire” was seriously accused by journalists in demolishing financial system and the beginning of the Great Depression in US. But these very words of the brilliant trader’s biography can let us confidently state: the structured money-management and cool head is not only the opportunity to remain afloat, but also to get solid incomes with any character of the chart. The detailed and worked technique of deposit management doesn’t give a chance to panic and lose funds because of emotions.
This thing is quite common for unprepared traders. So, I strongly recommend to be trained before diving into the market. And this training should be started with the article “TOP-5 Tips to Make Money with Binary Options – The Step-By-Step Instruction for Trading”.
A novice can be probably wondered: what will happen if they ignore orthodox principles of money-management and look for other ways. Livermore has answered this question himself given the last lesson to his successors. “Unsinkable Jesse” has fallen for liquors by his old age and began to conflict with his own rules. He has broken laws which have become the Bible of traders and has wasted the whole fortune. The end of a legend’s biography was the shot in the temple.
A novice drowned in tons of literature and recommendations about deposit management can think this business is too complicated for them. Just not to be like authors of boring morals, I will try to pick out 5 main rules of proper money-management. They must run through like a red thread of the work. The technique fits for aggressive and for conservative trading strategy.
So, pillars of reasonable trading are:
Before dissecting each point, I must pay precise attention at the word “risk”. It can be regularly met in principles of money-management. The continuous talking about risks is not the attempt to scare a novice searching for their way or make them betray the selected strategy. This is the simple ascertaining of the situation: any order can be either profitable or failed – it’s inevitable. The try to forget about risk is the straight way to bankruptcy, but if you always think about it, then you are likely to go nowhere. Risk must be realized, perceived and fixed. And then, you should never break its limits. In our very case, risk is the antonym of profit.
Unfortunately, unsuccessful traders often forget about it and then accuse everybody and everything in their own failure. That’s why, to get rid of waste-words, I recommend you to study the article “Who gains stating binary options scam? Professional Opinion of Financiers!”
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And now, let’s talk about numbers and step-by-step instructions:
Let’s start from the basics, writing down our own current situation:
Let’s determine the plan of actions and solemnly swear to stick to it:
The mistake often makes a novice panic and pushes to do unreasonable actions. But money-management includes this situation. Rules of managing the capital lets us bet another $25 maximum at the same period of time. This gives the opportunity to turn this situation in our behalf.
Averaging principle works for a trader facing a situation of a wrong forecast. There is a $5 put option bought. All the signs forecasted the fall but the chart steadily runs up. It’s incredible but even such a situation can lead to earning. Waited for a serious rise, make a double purchase in the direction same to the first one, i.e. for a fall. A correction drawback is inevitable: a slight fall of price will take place. It’s usually not enough to cover losses of the first order but profits of the second one will compensate the loss add give income of 35-55%.
Principles of trading with binary options are quite simple. Unfortunately, this first-sight simplicity and high profitability cause euphoria among beginners. The need for the momentary income, try to get a big bank – are the most common reasons of bankruptcies. Only money-management, the strategy and reliable broker selected together guarantee profits. Though, these tips are followed by just 10% of those who enter the market. All the rest, amateurs don’t have anything but tell about their attempts to work with binary options and how they got worn out by this fierce sea.
for binary options
|Moving Averages:||Buy (9) Sell (3)|
|Indicators:||Buy (9) Sell (1)|