Blast Money Management is designed to help protect you from over leveraging/over stacking trades by giving you parameters to control your downside. If you use multiple signal providers or scale/stack your trades this could be a very useful money management formula for you.
Getting to the nuts and bolts. So let’s start with a $1k investment you have for a new binary options broker you want to trade with and also a signal provider you wish to follow. First we cut the $1k into 2 parts of $500 as our Bank funds and $500 as our Trading funds. From there we will focus on our Trading funds because this is where we will decide the leverage we use. .5% 1% or 2%? This is going to be up to you, though as a guideline you have to really focus on the amount of variance you might incur. If you get a very heavy set of traders doing 20-50 open trades at a time you may wish to drop down the leverage to 1% or less.
1st Month – $1k turns into $2.5k
You have a good month using a few providers trading is active and growth is good trading 2% of $500 = $10 a trade. You get 449 wins 205 loses = 300% ROI on your trading capital. So you end the month over $1,500 in profits. At the end of the month you take your totals and reconstitute your funds over $2,500 in total split in half $1.250 Bank / $1,250 Trading and start all over again next month. This time though you add two new providers to the mix @ the same 2% now = $25.00 a trade.
2nd Month – $2.5k turns into 5k
We did not grow as much on raw % basis this month but because we added 2 new providers and still had a good over all month of 200% ROI! So now we have grown our 2.5k into around 5k and we keep it going. Again we split our capital into 2 parts 50% Bank 50% Trading and than use our decided % from .5,1% or 2% which we will use that as we are very aggressive and want big returns fast!
3rd Month – We doubled our providers again and the number of trades is off the charts as we do over 1000 trades for the month with an almost 72% win rate! Trading is off the wall and we have taken our 1k in 3 months added provider after provider and are now up over 19x or 1,900% ROI for the past few months and again we keep it going once again.
I wrap this article up with a “WARNING”
One thing I have seen with most signal providers are clients/users using far too high % per trade with how the providers trade. The 2% I demonstrate here is very high and I only use it because I have a buffer of 1x to reduce the overall true exposure to 1% or less and less is what you should likely start off with. This is very true also if you notice a provider taking many stacked trades at one time leaving you with greater exposure. Providers do not always win and some depending on how they trade will be more or less active along with their results varying. The key is to get a good mix and diversify in order to stabilize your growth. It likely will sloooow as you grow larger as this is natural and the advantage of starting small in size vs having larger pools of money. One thing to note is accept your losses ahead of time. Think about it! Really THINK! I am not just saying that. If you notice most providers holding above 60% or greater for above average periods does it matter you had a bad month if the other 2-3 or more are profitable? Most NooBs wish to fight their losses and only end with a ZERO balance as they BLOWUP instead of accepting a smaller loss. Sometimes the market is unkind to a method/provider and we have to just look to stabilize/diversifying our growth. Good money management is the true hallmark of a great trader 😉 People who only focus on profits generally never have any…