M$ney Management Math Matters...

FX:USDCAD   Dolar U.S/Dolar Kanada
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When trading binary options- why are you trading? for fun, hobby, part time for a supplemental income or because you want to be a full time professional binary options trader. It doesn't matter if you have a couple hundred dollars or several thousands in your binary option's trading account to trade with, money management is your main priority.
*new trading account with $250-$500, using the 2% to 5% rule of trading, should you be doing $20 trades or higher? or $5 and $10 trades, until your account is large enough to cover increasing your trade amount. What is money management? This is a mind set of slow growing of your account, not doing large trades of $100.00, if you have $500.00 in account. Is it to grow your $250 to $500 trading account into hundred's of thousands overnight in quick, risky & half-haphazardly way or a long slow 26.2 mile marathon approach, by using sound trading principles and strategy that will consistently grow your account, which helps you sleep at night.
Can you be a f/t binary options trader in following example : Will keep it simple, with round numbers. Let's say that you do 5 minute trades with all trades/bets at $10.00 & all itm (in the money) trades or wins give your back 70% or ($7.00) & otm (out the money) you lose 100% or ($10.00). Yes, that is 5200 trades in a year. Is it feasible to do 100 trades of 5 minutes TF in a week? If you are a f/t binary option's trader, I don't see issues with doing 100 trades minimum per week, why- because this is your job or business. These are high quality trades-NOT- quantity trades to just be trading without having any clue or idea of why, where, how,etc....
If you average a 70% itm out of 5200 trades in 1 yr or itm 3640 & otm 1560 what is end of yr profit? Let's break it down here: itm 3640 x $7.00 (70% return on itm trades) = $25,480.00 - otm 1560 x $10.00 (100% loss otm trades) = $15,600--WOULD equal total gross on trading only of $9,880.00. You need to grow account slowly to where you are doing $20 trades,$50 trades or $100 trades. Remember to trade using the 2% to 5 % rule for money management, per trade.$10.00 trades with a return of $7.00 on itm , doesn't add up to enough profit, even with 80% success rate to trade full time binary options professionally & cover taxes & bills .
If you live in USA, does state have a capital gain tax? Depends on state you live in, can be ZERO to 32%. Let's say you live in California which is highest capital gain tax w/ 32% on all trading profits, so $9,880.00 - 32% = $6,718.40, then does the federal want some taxes/money too--YES?
Is 70% itm average going to cover all expenses? or do you need to find a strategy that you are itm 80% or higher, or winning 8/10 trades entered. I believe to be a professional f/t binary options trader, keep trading as simple as you can & make sure money management is priority, if you want to be part of the 10% of all new traders whom make a profit and don't lose all of their money in the 1st year and then disappear to never trade binary options again. This business is not only about trading, but all facets of trading.
My point is you can't be a f/t professional binary option's trader by making a return of 70%, because you have life's bills to pay. Money management is a mind set & philosophy which needs to be learned & ingrained in your brain, not just used when you want or don't want to use it. If you want to do this as a business or f/t J-O-B at home instead of going to a 40 hour job- you need to do this in a business fashion & two sides: 1) trading side & 2) financial side. You need to understand the whole picture to trade successfully and slow prosperity in this trading world.
Great explanation. I am new to binary. Coincidently, I was wondering about money management which you explained very well. thanks.
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