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Can You Afford to Lose?

Written by: Sophie May

Never invest more than you can afford to lose

Binary options can be a profitable and secure investment plan. However, as with any type of derivatives trading or financial investment, there is always an element of risk. Markets can react unpredictably or respond to global crises with dire effect. Traders can limit risk and protect their capital by implementing a long-term money management plan and diversifying their trades. That said, it is still advisable never to trade with more than you can afford to lose. Indeed, it would be foolish to invest money in any financial market if you are totally dependent on that money and require it to pay your bills.

Trading Bonuses

Binary options brokerages often offer bonuses to clients who deposit. This is essentially free money, giving you greater leverage and opening the doors to a more advanced trading strategy. However, firms who make their money by your continued trading can only afford to give free bonus money to serious and long-term investors. It is normal for traders who receive a bonus to be asked to agree to a set volume of trades and to sign terms that they will not withdraw until their trading turnover is reached. If you sign such terms, it is vital that you are not reliant on the money invested. If there is the slightest chance that you will need to withdraw your funds in the short-term, simply refuse the bonus.

Learning Curve

How many lessons did you take before passing your driving test? How long after passing your test did you feel totally at ease driving long-distance and in any conditions? Binary options trading is as accessible and learnable as driving. You are capable of mastering the skills you require to succeed. However, these skills will need practice and fine tuning. Many traders choose to start with a demo account as they become familiar with trading strategy and the binary platforms. Yet even so, when you begin trading with your own money, you are probably still in the learning stage. You may know the basics but require greater experience to consistently be able to interpret the markets. Expect loses. Be patient and stay calm even if your first trades are not successful. A good broker will be able to guide you through this process and give advice on how you can improve.

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Trading Binary Options is highly speculative and carries a high level of risk. It is possible to lose all your capital.
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