Mistakes to Avoid in Binary Trading
Since binary trading is a highly individualized way of making money, it’s also an equally individualized way of losing money. The mistakes which you should avoid in your trading are largely going to involve your personal approach to the markets you’re participating in. If you make reckless decisions and don’t treat binary options trading as a business, you’re going to blow your account. If you don’t follow your method or learn how to adapt to changing conditions, you’re going to lose money. If however you take a disciplined approach to managing your money and your risk, you have a chance to succeed as a binary options trader. Here are some pitfalls to avoid:
- Do not trade randomly. Since binary trading is the newest trendy thing in trading, a lot of people are attracted to it on the basis of believing they can make huge returns very quickly. This attitude is the perfect way to lose money fast. You must have some kind of tested method for your trades which has a rationale behind it and a proven track record before you trade with real money. Then you have to actually follow that method and not violate it.
- Do not make the mistake of thinking that this is not a business of risk. Even though you absolutely must treat binary trading as a business in order to succeed, you also do need to acknowledge that there is an element of risk every time you place a trade. Is it possible to make relatively predictable, reliable positive gains? Absolutely—but only by first acknowledging the fact that no method is infallible, and that there is always the chance you’re going to lose. Neither you nor your system is foolproof.
- Do not stop learning and adapting. You need to follow a trading method to succeed, but you also need to realize that your method isn’t foolproof. How do you balance these two realities? By realizing that market conditions change with time, and that there is no method which doesn’t need adjustment now and again. If you make adjustments randomly, you will fail. If you make them carefully by testing changes before implementing them, you can keep trading profitably.
- Do not invest huge or random percentages of your bankroll. Most successful traders never invest more than 2.5–5 percent of their accounts on their trades. Do some people do well making massive trades with leverage? Sure, but the reality is that most do not.
As you can see, these are very broad mistakes to avoid—but that’s because more specific mistakes to avoid will depend on your chosen method. For one person it might be a mistake to trade during a financial report release, but for another person that may be the basis for a trading system and so on. If you have the right attitude going into trading, you’re far more likely to make it, regardless of the system you choose to dictate your binary trades. The worst mistake you can possibly make is to approach binary options without discipline.