Binary Options Trading on a Budget

Written by Miro Nikolov

Miro Nikolov

Miro Nikolov is the co-founder of TradingPedia.com and BestBrokers.com. His mission is to help people make profitable investments by giving them access to educational resources and analytics tools.

, | Updated: October 30, 2024

Introduction

Binary trading has already proven to be a great way to make money, especially if you have the knowledge and dedication required to be a successful trader. However, starting your binary trading career can be a difficult task, especially if you can’t invest a large amount of money in your account. Trading with smaller sums is not necessarily bad, but it does carry some limitations that may disappoint traders who have expectations for high profits.

Binary options trading is not easy and in order to make money out of it, you have to be patient and capable of controlling your emotions. This is one thing that most traders fail to do – they let feelings prevail and this usually leads to bad decisions. One of the key rules which every trader must learn is that they shouldnt trade under the influence of their emotions.

Trading on a budget, how to do it

Trading on a budget isn’t as hard as you may think. In fact, trading with less money is the best way to learn proper bankroll management and to control the risks you take. Of course, trading with less money will also result in lower profits, but as a beginner your primary goal should be to learn and improve your skills instead of trying to reap higher profits on the back of greater risk.

Let’s say that you have made an initial investment of just $200. This is not a lot of money and you can lose it quickly, if you don’t create and follow a good trading strategy. Since you are on a budget, it would be wise to come up with a good money management plan. The best thing you can do in such cases is to set a maximum amount of money you are ready to place on a single trade.

For example, many traders set their limit to 10% of their current bank balance – therefore, if you have $200 in your account, you’ll place a maximum of $20 on a single bet. Of course, you can be even more cautious and set this limit to 5%, but this entirely depends on your personal preferences and trading style.

Check the terms offered by your broker

If your plan is to trade with smaller sums, then you should try to find a broker that offers an above-average payout ratio, while also being regulated. For example, you should look for a broker that offers payouts of up to 80%. Of course, the rate of returns is not the only thing you should take in consideration when selecting a brokerage firm. We have outlined some of the key requirements you should look for in our articles “Important Characteristics of Binary Brokers” and “Choosing the Best Broker”