Why is it that we aren’t supposed to use stops for atm/otm binaries? If my profit target is 20-30 I would like that my stop to be around 20-25. It’s hard for me to buy an atm binary with profit of 20-30 with a potential loss of approximately 50. Could someone explain this to me? Darrell says the lowest capital to start with while practicing the best risk management is about 3000. But with the 5%/6 rule the risk should be about 25. That’s what I planned on having has my stop for all my trades (worst loss) but the whole not having a stop for atm/otm binaries totally confuses me.
Stop losses
skeltonmark
#2
With OTM you are looking for a one to one risk reward ratio, so if risk $25, exit when it gets to $50 value. So there is no need for a stop loss. With ATM binaries they can move very quickly and can drop down to $25 and then you get out and then they shoot right back up. So we only use Stop losses on ITM and DITM binaries. You are looking to keep as close to a one to one ratio as you can. You will find yourself exiting ATM trades that end up winning and you will be down in the end.