ChartMoney Management Binary Options

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Money Management for Binary Options

Hi everyone. I opened this new section to discuss the various Money Management used in the binary options field. In traditional trading, as well as in binary options, a trader can claim to have a complete strategy only and only when the technical / operational part with its rules generates profits constantly following a defined and precise MM. So in summary: Complete strategy = Technique + MM. Obviously there would also be to consider the emotional / psychological aspect but we keep this aspect momentarily aside. Of technical strategies on binary options and on any maturity, there are thousands more or less valid. But it is on the MM that most people fall. I find this aspect too underrated or otherwise snubbed. Personally, I believe it is the most important aspect. I myself shared a model that I use (Masaniello) which you can find here with files and explanations for use: viewtopic.php?f=578267&t=8467794&hilit= ... start=3000

In addition to Masaniello (which at the moment I consider the best MM at least for myself), I have tested and evaluated other systems: Martingale, Compounding, Fixed Amount, Various progression etc .. Obviously all with their own strengths and weaknesses. I must say that at least personally, if I consider the risk / return ratio as the main evaluation factor, Masaniello is what I believe to be the best. While being customizable in all its aspects to have more aggressive or conservative approaches, I realize that perhaps there are even better methods around.

I come to this first consideration after analyzing the IQ Option tournaments for weeks. I admit that the very first impact I had was that certain results were bogus and completely invented. So I decided to sign up and try it myself. Actually I managed to get up to 17th place and my name was on the list. This does not 100% rule out that some results are false, but at least I have ascertained that the process really works. I also admit that between my ranking and the first one, there was an abyss ....

The second consideration that I have extrapolated is the following: as some users do starting from a 100 usd account and taking it in 24 or 72 hours to figures such as 10'000, 15'000, 20'000 etc .. The first answer that I gave myself is: on a psychological level there is a huge difference between a virtual account and a real one. Exactly like a demo account and a live account in traditional trading. Ok, that's a fact but that's all? In fact, my third consideration was: virtual or not, however they succeeded and it is not a trivial fact. Maybe the result of a simple case? Or trading similar to reckless gambling? Maybe it would hold up to a certain point but to arrive at certain figures, which are the result of many operations, I would tend to exclude these two hypotheses. I also noticed that some are always in the top 10/15 positions. A Holy Grail strategy? We all know it's not possible. However good a trader is, everyone sooner or later experiences a black period. So going by simple exclusion, what really makes the difference is a decidedly solid MM.

I'm not a fan of trading tournaments. Neither those of binary options nor those of normal trading. But curiosity drove me to try and after what I saw, I understood that perhaps the discussion on the MM of binary options needs to be deepened.

Anyone who feels free to comment, share their experiences and models. Since this is a large community with truly formidable and competent people, we can also join forces to create something special. I only kindly ask the usual detractors of binary options not to comment with the usual story that it is impossible to make profit. As far as I'm concerned, the only impossible thing in this life is that Juventus manage to win a Champions League (but it will happen sooner or later ...). Seriously, I think a lot can be done about this. Much more than what is currently found around the web.
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wolfzeacker


Re: Money Management Binary Options

2
Money Management is crucial in Binary Options. You might have a series of wins in a row but with a bad money management all it will take is 3-4 losses to blow your account completely.

Tournament traders from my understanding use martingale + snowball MM. I never traded on tournaments but for my personal trading i only keep the amount fixed whether win or loss. This fixed amount trading ia actually very difficult for bins traders to stick with, since most of us are very impatient with nature and thats why they were drawn to bins in the first place.

I had also developed a 'rollback-snowballing MM' where one needed to win only the first trade of the session to end positive after the session. I can share it here at some point if required.
Know Thy Setup. Know Thyself.

Re: Money Management Binary Options

5
In addition to the Masaniello, I also share this excel file which I worked on together with a friend. The file is in Italian and the operation is quite simple. The aim is to try to put multiple winning operations in a row in steps of 3 with targeted provisions. The yellow fields are those to be modified in addition to the "quota" column. The blue ones are the visual ones that change automatically. We will need them to understand what's going on and how to move during the progression.
Operation:

1. the first thing to do is to set the amount with which to start with the progression. By default, 80 euros is set in the "Capitale iniziale" cell. Personally I use a very simple technique to basically risk my total capital 1 time only. Example: if I have a capital of 1000 euros, I divide it into 10/15 parts (of your choice) and we will therefore get: 1000/15 = 66. 66 I don't write it in the file! This figure will be the one with which I will do my first operation. If the operation is wrong I will go on with the same amount. If it is correct, I will go on with the net and that will be the amount that I will insert in the "Capitale iniziale" cell. So let's assume a payout of 80%, 66 x 80/100 = 52.80. In this case I risked 66 euros only once and since the transaction was successful, the capital is safe and I can only focus on the net earned. For simplicity, I never carry the cents back so I will enter the amount of 52 in the cell.

2. Since you write the amount in the cell and press enter, all the amounts will obviously change according to the amount you entered. So you have a general overview of where it is possible to go. Once this is done, the "Puntata" column will tell us the amount to be entered for the progression. Obviously the first result will be identical to the figure entered previously and therefore in this example it is 52. The "Vincita" column will show us how much we earn for each operation while the "Attivo" column will show us how much we have gained overall.

3. If the operation is correct, in the "Quota" column, we must write the payout. Attention, the amount is written in decimal format: therefore if we closed the operation at a 90% payout, we must write 1.90. By default everything is set to 1.80 and therefore 80%. At this point we continue with the second and third amounts and assume two payouts still 90%. We will therefore have invested in sequence: 52, 98 and 186. The "Vincita" and "Attivo" fields will show substantially the same amounts.

4. Once you get here, we have 3 possibilities: stop and start again with a new progression, continue the progression without provisions or continue the progression with personalized provisions.

5. If we stop, with the net profit of 1/15 of our total capital (1/15 = 66 - net = 52), invested 3 times at the 90% payout, we cash in about 35% of the entire capital , or 354.80 euros. If you want to continue without setting aside, just follow the amounts in the table and update the "Quota" column with the payout.

6. Since the progression has been built in 3-step cycles, once we have reached the first cycle, we have the possibility of setting aside part of the gain so as not to lose all the good things we have done but continuing the progression anyway. In the "Accantonamento" column, in the first cycle reached (yellow fields only), we can specify how much to set aside in%. The scale ranges from a minimum of 10% to a maximum of 80% (the amounts that can be entered are described in the "Accantonamento in%" column. Amounts not described in the table, will not work). Let's assume a 30% provision. The "Fort Knox" column will show us what 30% corresponds to. In our example it is 106.02. If we continue the progression, these 106.02 will be secure gain and will no longer be capitalized. The new amount to be invested will be 247 euros. It goes on until the next cycle of 3 etc. .. etc. .. You can also insert the provisions before starting the progression to get an idea of the path to follow that best suits you.

Advantages of the system:
  • simple to use file (it is more complicated to write it than to use it)
  • even if you put together a few operations in a row, you get very interesting earnings
  • customizable according to your strategy and risk
  • EXTRA: if you divide the capital into many parts, you will only need to earn the first operation to avoid risking anything since you will use the net for the progression

Disadvantages of the system:
  • no errors are allowed during the progression. An error immediately leads to the end of the progression

Guys, I'm not a native English speaker ... I hope my explanation is clear. If not, let me know. In the meantime, I wish you much fun and I hope you find it useful!
These users thanked the author Barons1 for the post (total 2):
pacois, Jimmy


Re: Money Management Binary Options

6
First I would like to thank the post, very interesting, I had never heard of the Masaniello MM. What I use is based on the general probability of the move, with a decreasing scale based on the payout.

I use the 60/40 ratio, in it any open position uses the premise that in all cases you will have a maximum of 60% chance of getting it right and consequently 40% of getting it wrong and vice versa. a calculation using the payout, the risk (calculated based on the "final gain average") and the current probability of the movement (60% or 40%) gives you the value of the entry, if everything works the way we would like, used if the profit of this operation to open the next one,
for example:

Entry : 10 USD
Payout : 80%
Win : 8 USD
Next Entry : 8 USD

This scale makes each win, protect the entire sequence, if I lose in the 3rd sequence, all I need to do is go back to the second sequence.

The adaptations are all made taking the risk of the operations, if your analysis points out that the market probably has a 60% chance of entering a bullish trend, but you have some indication that the operation should be PUT, then you is assuming that your chances of winning are 40%, that is, there are 60% chances of your money going away, to cover this risk you can take two paths, in the first you will be conservative and risk very little, you will probably want to be at the end of a long sequence mentioned above. In the second, you don't want to take that risk, in these cases, only if your reading of the market points to something really strong, then, observing these things, you make a bigger entry than usual.

The adjustments are made considering the risk of the operations, if your analysis shows that the market probably has a 60% chance of entering a bullish trend, but you have some indication that the operation should be PUT, then you are assuming that your chances of winning are 40%, in this case, there are 60% chances of your money going away, to cover this risk you can take two paths, in the first you will be conservative and risk very little, you will probably want to be in the end of a long sequence mentioned above. In the second you do not want to take that risk unnecessarily, in these cases, you will only enter into this type of operation, if the market is showing some very strong signal supporting your decision, something pre established and well known to you, after considering these things, a larger operation should be performed, larger than you normally would, even in operations with a 60% probability in your favor.

the formulas used and the calculations we discuss afterwards, I don’t know if this will help, but it’s how I perform my operations, I hope it helps someone.
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Barons1


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