The capital drawdown binary options strategy was created as a tool for defeating the period of getting stable losses. Such a period is well known to the most of the binary options traders. Some experienced traders explain drawdowns of the account balance by the so-called downstreak. They see binary options trading as a cyclical process of consequent downstreaks and upstreaks, where the most important part is the trend, which has to be always positive.
The beginning traders should be aware of the capital drawdown strategy due to the fact that most of them are often influenced by the consistent negative results of the binary options trading.
The beginning of the binary options trading gives every trader some kind of euphoria that results in successful trades and an increase of the account balance. This way the traders feel that they are doing the right thing and, hence, keep on trading.
The drawdown periods are perceived by every trader in different way, some of us are good in dealing with it and the others are not so good. Continuous decrease of the account balance is dangerous due to the fact that 10% loss of the balance requires 11.1% increase in order to achieve the balance before the drawdown. The other required percentages for the capital increase are presented in the table:
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The capital drawdown strategy was created as the tool made for dealing with the downstreaks.
The problem is that in the time of the downstreaks, traders not just continue to trade using the same methods and strategies, but also increase the amounts involved in each trade. You have to understand that if you continue to trade in the same way as you did before and increase the trading volumes – there is nothing good waiting for you. You simply will lose more and faster.
The capital drawdown strategy highlights that binary options trading is not gambling, you cannot achieve positive results without using proper analytical and technical methods in the long run. While this is true, capital drawdown binary options strategy mainly focuses on the money management.
The first point of the capital drawdown strategy is the change of your existing [intlink id=”13″ type=”page”]trading strategy[/intlink]. You have to understand that usage of your existing strategy will only worsen your situation and no positive results will be achieved. This is why we suggest that you check out our strategies and find the new one that fits your needs.
The second point of the capital drawdown strategy is the decreased usage of your account balance in the trades. Any trade made by you should not be for more than 2% of your existing account balance. Even if you are 100% sure in the trade – it is recommended by the capital drawdown strategy not to use more than 2% of your capital. You better earn less than lose more, this is the philosophy of the binary options drawdown strategy.
Also, in the times of the downstreak you have to be prepared for the situations that can require additional deposits as a key for not getting margin calls and ability to trade on the normal amounts for no more than 2%.
The capital drawdown strategy is a key to success in the times of the decreased capital at your account. So do not be afraid if you got into the downstreak, just implement the strategy and remember that Binary Options Hub is always here to support you.