Binary Options Minimum Deposit is Very Low. Is it Less Risky?
Most binary options brokers require a small deposit amount. And this feature makes the binary options trading more attractive for the investors and traders. But the question is, does a low or minimum deposit amount mean less risk for the trader’s account? This is a valid question and you need to know the answer. You must have to know if you choose to make a low deposit, how it affects risk in your trading account. At the very first insight, I probably say yes, a low deposit amount carries less risk for you, but it relies much on your trading style.
For example: a trader with an account of $10,000 has much more potential risk because there is the possibility to lose $10,000 versus only $200. However, it does not mean that, there is less risk in the smaller account. The risk depends to the individual traders and how they approach the trading market.
How Do You Measure Your Account?
Don’t measure your account in terms of dollar value and it is the best thing I can recommend. It does not matter if your account is small or big. You need to measure your account in terms of percentage of profit and loss. Most professional or full time traders will only risk a small percentage of their trading account on any single trade. In Trading, the term known as “Money Management”. The professional or the typical trader will risk only in the range of 1 to 5 percent on any single trade.
Let’s look back at the example above. The trader with the small deposit account is making the minimum 2.5% (or $5) on each trade. And the other one is trading same as the smaller account. If they both experience a loss in one single trade, what will happen? The trader with the small deposit amount will lose $5 but the trader with $10,000 account will lose $250.
Even with an effective money management system you must have to think that, can you afford to lose $200 in trading? If the answer is “No”, then a $50 deposit is too risky for you.
Minimum Deposit You Should Make
Depositing a minimum amount in your account does not mean that you are running at lower risk. However, if you don’t have enough money, then a minimum deposit is still risky for you. But is it true that you have to take risks in order to make real money from trading markets? The best thing is to know about the good risks and bad risks. So, now you have the answer. You should make deposit according to your ability or what you can afford or what you feel comfort to deposit.
It is essential to believe that, if you are unable to afford minimum deposit you should not spend money in trading binary options. Since no one will spend their rent money in the casino. If you can afford $200, then there are brokers that can provide accommodations for you. And you need to build an effective money management system, follow trading rules, and make trading plans and stick onto it until you are not able to make good profit.
You will be amazed how quickly $200 will turn into $2000 and more maintaining a good trading strategy. But you need to be dedicated and have to spend time to achieve success.
Don’t think much about how much you have deposited in your trading account. Don’t measure your account with dollar values. Instead of thinking about the deposit amount, try to build a perfect and effective strategy so that you can make money from binary options.