Consider 1% rule

Frequently Asked Questions (FAQs)

How do you use risk management when trading on Nadex?

Nadex binary options are specific yes/no contracts, so the bulk of your risk management should take place before buying an option. Once you’re in the trade, you can close out the trade to cut your losses.

Why are some trading strategies riskier than others?

In general, the higher the risk on a trade, the higher the potential reward. Options that are out of the money (OTM) are less likely to expire at the strike price—they’re riskier. However, if that strike price hits, then the OTM options trader will see a higher return percentage than the trader who bought a safer, in-the-money option. That’s just one example to demonstrate the most common relationship between risk and reward.

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