Common Mistakes Binary Options Traders Make

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Four Common Mistakes Of Successful Binary Options Traders

First and foremost I want to point out that trading binary options is not a mistake. This does not exclude binary options traders from making mistakes. Especially successful binary options traders. There are numerous pitfalls and challenges to overcome, any of which could turn you from the path to success. This is a look into some of the common mistakes made by successful binary options traders.

The HMAS Success steams ahead no matter what hurdles it faces.

Choosing The Wrong Broker is a very common mistake. I know, I’ve done it. There are just so many to choose from and many of the ones you find are simply full of crap. There is so much glitz and glam about how binary trading is the wave of the future, easy to do and a sure path to making thousands of dollars or euros in the blink of an eye. Once you get past that the task only gets harder because you have to wade through the mire of regulated/unregulated along with the differences between different platforms and brokers. Just because a broker says “hey, we have standard digital binary options” doesn’t mean squat until you dig deeper and find out three things; what assets are actually traded on the platform, what expiries are available and if there is an early out feature.

Thinking that trading is easy is a common misconception and one thoroughly exploited by affiliate marketers and shady brokers. Trading is not easy, it takes time and knowledge to become successful. This does not mean it is impossible, if it were impossible no one would do it. In the same vein if it really were easy then everyone would do it and everyone’s not doing it right? So, trading is fun and can be fun but if that’s all you think you are going to have a really bad time. By bad time I mean lose all your money. A successful trader will know going in that trading is a challenge, or quickly realize that it is. This knowledge, self awareness, is one of the motivating forces that spur the successful trader to apply themselves to the task at hand.

Losing patience is a lesson taught to every trader. Too bad they don’t all learn it. Patience is that act of waiting for a set of predetermined conditions to happen. Sounds familiar right? That could be found word for word in an article on strategy right? “These are the predetermined conditions, now wait for them to happen”. Losing patience means becoming angry, unnerved, anxious or hasty of decision. It means not waiting for the right conditions and allowing emotion to dictate your actions. It means making bad trades because you don’t wait for the signals to come, in effect when you lose patience you lose money and having patience means having money.

Getting discouraged is also very easy to do. Trading is hard and you will lose money. For some more than for others but the fact remains, you will lose money. Losing money leads to frustration and even more losses if left unchecked. The fact also remains that no matter how much you lose, you can come back, with perseverance. Regardless, successful traders may get discouraged but they do not quit, they may take a break to regroup or save another stake but they do not quit. Quitting means the market beat you, it won, if you quit you can never be a winner.

Quitting Is Not An Option

I’ve been trading a long time, a lot of different types of instruments, even the option to quit. It is there every day, at every juncture, you could just throw up your hands and give it up. Successful traders feel this feeling the same as unsuccessful ones, they just handle it differently, they don’t quit because it is not an option for them. There are many mistakes you could make but so long as you learn from it you win in the end. It is not a mistake to choose the wrong broker if you learn from it and then pick the right one. It is not a mistake if you start out thinking trading is going to be easy and then endeavor to master it when you learn otherwise. It is not a mistake to get discouraged if you lift up your head and march back into the fray. It is not a mistake to quit for a time, if you come back and kick the markets ass. The only mistake is to let the market beat you because if you do that you will never be a winner. Successful traders make all the mistakes that unsuccessful ones do, they just bounce back in a different way.

Common Mistakes Novice Traders Make

Many novice and experienced traders think that reading enough trading books or attending one or two training seminars is a recipe for success in the market. However, this is far from being true. You don’t have to be a beginner to make mistakes trading in the financial markets. A lot of advanced players make errors too, especially when they’re distracted or undisciplined. Still, there is a difference between the mistakes that novice and advance traders make. Beginners often set their trading strategies on wrong criteria or don’t have their priorities sorted. They are also more prone to giving in to emotions, which does more damage than good and ends up in poor trading decisions.

The first step to becoming a better trader is to first identify what mistakes you’re making and seek out ways to correct them. Most professional traders have gotten where they are because they’ve made a lot of mistakes but took the time to understand why they made them and continuously sought to better themselves.

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Let’s take a look at 5 of the most common mistakes made by novice stock traders.

Unreasonable Expectations

Most novice traders dive head first in the market with high profit expectations, believing they’ll get rich in no time. This is simply not the case. Yes, there are people who are very successful in trading Forex, but the majority lose their money. In any case, success takes hard work and a lot of time. It can take years to build up experience and turn Forex trading into a profitable full-time job.

Uncontrolled Emotions

In trading, your worst enemy is yourself. A lot of people can’t control their emotions when a trade is going in the ‘wrong’ direction and make spur of the moment decisions to close it and open a new one. This can wipe out your entire trading capital within minutes. Market orders are generally not a good idea for novice traders who don’t have a good understanding of how the market works and what indicators to base their trading strategy on. Sometimes, all you need to do is wait a trade out even if it doesn’t go in the direction you thought it would and this requires a lot of patience and self-control.

Inability to use a stop-loss and a take-profit

Placing a market order and leaving it open to ride puts your entire trading account at risk. Advanced traders almost never place market orders but instead put a stop-loss on a long position. This way, a Buy order will automatically close if the price falls below a certain level. This allows you to limit the amount of losses for each separate order, which is convenient as you can’t monitor the market all the time. A take-profit order works the same way: it secures profit by setting a level at which your position will be closed.

Trading based on news

A lot of novice traders believe that if they trade right after major economic or political news, they will be able to predict the direction of their selected currency or commodity. While there is some merit to following the news to stay informed on central banks interest rates, new emissions, new political alliances and other events that affect the market – you can’t manage your risks effectively if you solely rely on this information.

Overtrading

This comes in several forms: keeping too many open positions, setting excessive leverage and holding losses for too long. It’s natural that you want to diversify your trades to maximize your chances of profiting but a lot of open positions make you unable to respond to all the events properly and quickly. Beginners are more likely to take greater losses as they lack the experience to see when a loss trend is not going to reverse. Hoping for the better is not a sound strategy and you need to learn to take a loss and close an order. It’s the same with excessive leverage, which can be a double-edged sword. Apart from improving returns from profitable trades, it also increase losses on unsuccessful ones.

There are other mistakes novice traders make when they first start trading in the financial market but these are the most common ones. Remember that no amount of books or seminars can turn you into a successful trader if you don’t exercise self-control and discipline in applying everything you’ve learnt. Use this information as a baseline to identify your weak points and make smart decisions about how you can better yourself and start trading successfully.

NOTE: This article is not an investment advice. Any references to historical price movements or levels is informational and based on external analysis and we do not warranty that any such movements or levels are likely to reoccur in the future.
In accordance with European Securities and Markets Authority’s (ESMA) requirements, binary and digital options trading is only available to clients categorized as professional clients.

GENERAL RISK WARNING

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage.
87% of retail investor accounts lose money when trading CFDs with this provider.
You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.

Common Mistakes Binary Options Traders Make

When it comes to binary options trading, people face a lot of troubles and the reason for that is a totally wrong approach to this activity. We’ve designed this article in order to make you fully aware of the most common mistakes usually beginning binary options traders. Hopefully, the information included in the article will make you more responsible and will also determine you to start developing new trading habits.

Overleveraging – one of the most common mistakes binary options traders make is the excessive use of leverage. Now don’t get us wrong, using leverage can be helpful, because it enables you to trade a higher volume, even though you have limited capital available, but you need to have a limit when it comes to that. If you open a 100$ account and use a 500:1 leverage in order to trade as much minilots as it can be possible, then the chances of you losing your entire account in just a few minutes, is very high.

Ineffective trading strategy – when trading binary options, you need to understand that the odds are in favor of the broker. Why is that? Because, if you place an options, let’s say for EURUSD and you are right and the options turns out to be profitable, you will make between 80 and 90%, depending on your broker. And if you lose, you will lose all your money at risk. You need to design a strategy that will have a high accuracy in order to overcome that obstacle and manage to generate profits.

With that being, these are the two most common mistakes usually binary options traders do and if you take them into account and manage to find a solution for each of them, you will most likely be one step closer to being profitable.

Risk Warning and Disclaimer

Trading binary options on margin carries a high level of risk, and may not be suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to invest in binary options you should carefully consider your investment objectives, level of experience, and risk appetite. No information or opinion contained on this site should be taken as a solicitation or offer to buy or sell any currency, equity or other financial instruments or services. Past performance is no indication or guarantee of future performance.

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  • Binomo
    Binomo

    Good Broker. Only For Experienced Traders!

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