The most common mistakes of binary options traders
Once I tried to understand what lies behind the failure of binary options traders and what helps them to succeed. I realized that the many reasons I have heard in private conversations and read online can be classified into four main categories. We'll talk about each, and try to figure out how not to make the most painful mistakes.
Excitement and self-confidence - the worst assistants
These qualities of newbies are based on general information and aren’t supported by fundamental knowledge, often resulting in losses and thereby forming a false belief: "It’s impossible to earn with binary options." To understand the binary options market, you must read some books or take a couple of lessons from experienced, successful traders.
In order not to repeat the mistakes of other traders, you should learn how to make fundamental and technical analyses of the market, learn to choose the right binary options strategy, and learn to understand the basic principles of the behavior and reactions of particular assets. Intuitive trading is like a lottery: One chance in over a million that your ticket will win.
The main mistake of all traders is to ignore studying.
Just think and analyze
When trading binary options, you shouldn’t let your emotions change the logic and calculations. During a sharp rise or fall, it is not necessary, without analyzing the situation and taking into account its further development, to immediately buy CALL/PUT options. Even when trading with a demo account, experienced traders advise treating the virtual money as real.
With this practice, you can improve your trading skills and forecasting and also psychologically prepare yourself for possible future losses and income. You’ll learn the main thing: To manage your emotions. You’ll feel the "price of money" and learn how to balance risks and returns.
Inability to control emotions is the second most common mistake among traders, for which they pay in their hard-earned money.
Lack of own trading strategies
One of the most common mistakes is to follow the crowd. "In the forum, somebody wrote that he buys CALL, so I’ll do the same." First, remember that the forums are viewed by exactly the same traders with exactly the same knowledge as you. If you don’t trust you, how can you trust others.
Moreover, the market reacts to an increase or decrease in demand with a certain inertia. When entering the market based on listening to the crowd, you can be late and get into the market just before trend reversal or when the market reacts to the news and the activity begins to fall.
Before entering the market, analyze the market and understand why you need to buy CALL or SELL. If you aren’t confident, verify your assumptions with experienced traders who have personal blogs or publish their forecasts on the broker’s website.
You must have your own personal trading strategy (plan). It will allow you to consider all possible scenarios and your reactions to them from entering the market to closing.
A trading strategy will help you eliminate the first two common trader mistakes. Moreover, when having a trading strategy, you'll know what to do after you make a profit. Without a strategy, after the first profit, traders immediately try to earn more but usually have losses.
The presence of your own trading strategy will save you from the first two mistakes, and thus increase your chances of success.
Choosing the right Broker
It would seem that there is nothing difficult in choosing a broker; there are thousands. However, your broker plays a key role in your trading. Your broker determines the assets, transactions, your deposit, trading platform, and withdrawal. Yes, that's withdrawal. To get money with options is not easy, but sometimes, it is even more difficult to withdraw your money.