Choosing an Account Tier When Trading Binary Options
When you are signing up for a binary options trading account, most of the steps don’t take a lot of thought. Putting in your information to register is easy. Some binary options brokers however offer a series of account tiers, and it can be more difficult to choose between them. Your choice generally will impact your trading experience. The more money you deposit when you place your initial deposit, the higher your account tier will be. The result is often more benefits in terms of resources, tools, and superior customer service.
Banc De Binary Account Tiers
How do you decide which account tier to use? Let’s look at one of our favorite brokers, Banc De Binary, for an example. Banc De Binary offers a number of different account types, which you can view here on their website. The account types are labeled Micro Silver Account, Standard Gold Account, Personal Broker Reserved Account, and VIP Lions Club Account.
A Micro Silver Account is available to any trader who deposits $250-$2,500. Most new binary options traders will be placing a deposit inside this range. This is the most basic type of account, and gives you access to 24/7 customer service, daily market reviews, and radio market analysis.
The next level up is the Standard Gold Account, which is available if you deposit $2,501-$5,000. It comes with an optional 100% sign-up bonus and the same set of basic features.
The next tier up is available for customers who deposit $5,001-$50,000. This type of account is the Personal Broker Reserved Account, and comes with a 100% sign-up bonus, a direct line to a personal broker via phone, chat, or email, advice from financial experts, trading signals, account management, online trading classes, and priority access to the entire customer service team.
The highest tier, the VIP Lions Club Account, is open only to traders who deposit $50,000 or more. This type of account comes with a 100% match bonus and all the benefits that you can get at the Reserved Account level. On top of that, you get first access to all option contracts and no liquidity issues. If you deposit $100,000 or more, Banc De Binary will provide you with elite concierge services for travel and activities around the globe.
Banc De Binary is exceptional in many ways, and their account tiers are one of those ways. They do not represent a typical menu of options. Not a lot of binary options brokers will even take hefty deposits like $50,000, and generally, account tiers start at lower levels ($250, $500, $1,000, and so forth).
If you are trading on a site like Banc De Binary, you are trading with a first-class broker who will accept clients with very small trading accounts and are just getting started, as well as serious professional traders and even traders who work for businesses and have a lot of money to invest in their trades. This wide range should tell you how serious Banc De Binary is about doing good business.
If you are the average binary options trader, you probably have about $250-$500 to open an account with, in which case the most basic option, the Silver Account, would probably suit you best. The Gold account at $2,500 is well worth considering as well, however. In the grand scheme of things, this is not a large bankroll to start trading with. If you are using good money management principles and you actually sit down and calculate what kinds of profits you can expect, you will probably see the ultimate necessity in opening a Gold account or higher. Click here for good management tips
Why Start Out With More?
At that rate, if you are going to deposit a very small amount of money, it is best to at least start out with $500. Why? A reasonable amount of money to invest in your trades is about 2.5%. Maybe you are willing to go as high as 5% (higher than optimal, but still within a reasonable comfort zone). What is 5% of $250? $12.50. A lot of brokers will not allow you to even place traders which are under $20 (except on 60 Second options), so you would need to have about $500 in your account to even consider it. At many brokers, this also gives you access to a higher account tier and better bonuses.
Think for a moment about placing trades of only $20. See how that is not going to add up to a lot of profit fast? What if your trading method only gives you access to a couple of good trades each week? Your maximum profit per month would be less than $150. That is hardly anything, and it can cause traders to become impatient fast and start investing more money than they should, breaking money management rules, and doing other foolish things. This will blow your account.
Can you start trading with just $250-$500? Yes, it can certainly be done, but it is much more logical to deposit more money and trade larger amounts. Think for a moment about investing $2,500 instead of $500. What is 5% of $2,500? $125. On a good month where you win a couple of trades per week and suffer no losses, at a 75% payout ratio, you could make around $750 per month. That is still not that much, but it is enough that you can start building up your account over time, and within a year, you could be trading a lot more.
Compounding Returns
Think about how much money you hope to start trading with, and then do some calculations to figure out how much money you could eventually build that up to within a given length of time, assuming you always invest 5% of your account at any time (use the statistical returns which you can expect based off your backtests and demo tests).
Doing exercises in compounding returns like this can give you a notion of realistically what you could expect at best in terms of building up your account. It is best not to use those calculations to set goals or deadlines for yourself, however, since in real life, things rarely work out as cleanly as they do on paper.
Binary options trading is a great way to make some extra money, and in theory, you could eventually trade for a living if you take it seriously. Taking it seriously means actually thinking about how long it would take to compound your account while following intelligent and reasonable money management rules. You are not going to make it big by investing 50% of your account on each of your trades.
If you want to get in the game and stay in it, you will probably want to start with $500 minimum. $2,500 would be much better. Then you can invest about 5% of your account on your trades, instead of large chunks of your account. If you can invest even more or trade even smaller percentages, that is even better. By depositing more with a good broker, you also get access to all kinds of great benefits like those discussed above at Banc De Binary. Those benefits also will contribute toward your trading success!