The first way to reduce the potential for losses is to trade with a strategy, rather than simply gambling in the markets. Strategies offer you a methodical and tested approach to trading where, generally, the risks can be calculated from the strategy’s historical performance.
Binary options have the added advantage of enabling traders to know exactly how much they may potentially lose before even entering the trade which will protect traders from any nasty surprises.
Other, more practical ways to minimize losses including choosing a broker offering both a decent protection rate and also the ability to close positions early. In terms of the protection rate, this is the percentage of the initial investment that the broker will return for positions closing out of the money.
This can be anything from 5-15% and can be an excellent way to make sure that not everything is lost through losing positions. The ability to close early is similar to this as it allows losses to be reduced or even winning positions, which may soon be turning negative, to be closed profitably before expiring out of the money.