An Investment Amount is the sum of funds an investor places in a single option when trading binary options.
The Investment Amount must under no circumstance be confused with the Deposit Amount, which is the sum of money one must place into one’s binary options trading account, through a variety of payment methods, in order to be able to perform trading activities.
Every binary options broker usually has its own requirements for a minimum and maximum Investment Amount that their clients need to adhere to.
Certain brokers set a minimum amount which is usually no lower than $5, and the maximum normally does not normally exceed $15,000 – though it is important to note that the amounts may vary according to the currency the trader’s account is in.
The reason for which most brokers set a minimum is to promote risk management amongst their clients, making the minimum investment roughly 5% of their portfolio. This allows beginner traders to improve their trading strategies by training with small amounts until they are comfortable with trading in live conditions, ultimately resulting in a higher chance of maximizing one’s profits.
The reason maximum amounts exist is also so that investors don’t trade all of their capital at once.