How Much to Deposit? Size Matters when it comes to Binary Options Accounts
So you went through the School of Binary Options, you tested a strategy or several on demo accounts and you think you are ready for the Binary Options challenge. What’s next? Well, the first step should be opening an account with real money in it. It’s time to put your abilities to the test and see how well you can take everything the market throws at you. However, there are two ways of beginning your live trading experience: one would be to deposit right from the start the full amount you want to invest and the other is to start small, with a $300 – $500 account… to “test the waters” if you know what I mean. Today we are going to focus on the pros and cons of starting small.
Can I Make Money with a Small Deposit?
Although turning a small deposit into substantial profit is possible, the road is much harder and several things must be taken into consideration. If you respect traditional money management techniques and limit your risk per trade to 2% – 5% of your entire trading account, your profit per trade will be almost insignificant which can frustrate some traders and actually I can agree with them. After all, it’s annoying to see trade after trade finishing In the Money but your pockets remaining almost as empty as they were when you started trading. On the other hand, if you choose to throw money management out the window and trade big with a 300 bucks account, you will probably get burnt faster than you can say “Hope I don’t get burnt”. Either way, a small deposit doesn’t allow room for mistakes without taking away some of the profit potential and if you choose to start small, you should master a few conservative strategies which are easy to understand and profitable if used correctly. Of course the strategy should fit your own personality but here are some suggestions: Simple Balanced System, (a strategy which uses Stochastic and RSI, two of the most respected technical indicators) or Best MACD Entries Strategy. But no matter your size account, don’t use something like the 60 Seconds Profit Strategy and if you click on the link, promise me you do it just for some fun reading and you’re not actually thinking about trading it. Bottom line is that a small deposit will limit you in more than one way and if you need more info on the matter, here are some fine articles: The Nice Guy, and Deposit Minimum, Come collect your $100k’s in 24 years.
However, a small $300 – $500 account is good in some aspects. For example, it can help you test your broker’s reliability, professionalism and especially the withdrawal procedure. Try withdrawing profits made with a $500 account and if the request takes longer than it should, maybe it’s a good idea to choose another broker if you want to deposit a bigger amount. Also, if you are not confident enough in your trading skills, a low deposit is probably better suited for you because it’s a good way to learn the intricacies of the market without suffering a big blow to your capital. You can master your discipline and manage the emotional side better than you can do it with a demo account because no matter what anybody tells you, everything changes when your money is on the line and a demo account cannot give you a true representation of all the implications of trading. For these reasons, a $300 – $500 binary options account has benefits which cannot be denied.
The Bottom Line – Is the Glass Half Empty or Half Full?
I think it all depends on how you look at it: if you consider a low deposit such as $300 – $500 is just a way of improving your skills and don’t expect to make millions out of it, then go for that kind of deposit. If you feel confident and are ready to make the run for the Championship Belt a.k.a. big money that can make your wildest dreams come true, then go for a bigger first deposit. I’m not saying it’s impossible to make huge profits out of a 300 bucks account, but the guys with $5,000 initial capital already have a head start and more flexibility… after all, you need money to make money ;)