Top 10 the most frequent mistakes in trading binary options

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Top mistakes in trading binary options

All types of trading, including binary options trading, have a lot of common ground. Whether it’s ordinary trading or forex trading. Everyone, who has been involved in any of the types of trading, knows about the risks that each market participant will bear. But without mistakes, a trader can not get valuable experience and develop his winning strategy. In spite of that, there are still a lot of accompanying factors that will influence your trading. To reduce the damage from trading binary options, check out our top of the most common mistakes that traders make. After reading this information, review your trading methods.

Avoid mistakes in trading is almost impossible, because they are an invaluable experience. The more experience you have, the easier it will be for you to trade in binary options world.

But there are many, so-called, typical mistakes that traders make in the process of trading. They need to be minimized. And trading binary options will be much better.

Our hit parade consists of the most common mistakes:

Making big deals or waiting for a miracle

Almost all novice binary option traders make this mistake. Some of them try to break a big jackpot after a series of winning trades. Others, on the contrary, want to return the lost money. All these operations, as a rule, go beyond the scope of their trading account. In trading binary options, you always need to follow the plan of your actions. Long-term planning of your trading operations, skillful management of your risks and capital will give you a much better result. Avoid transactions that carry greater risks and amounts of money that go beyond your trading strategy and account. The probability of success in such transactions is extremely small. To prevent loss of capital, study management methods. Risk management, hedging, also, no one has been canceled.

Carrying out trading operations through unverified brokers

To start successful trading binary options, each trader faces a choice of a broker. But not everyone pays enough attention to this. How to check the broker. First, you need to see if this broker has a license to carry out its activities in your country. But the broker may lose the license, so this factor should be taken into account together with others. One of the most important is the age of the broker. The longer the broker in the market, the safer it is to deal with it. You have to read a lot of reviews about the broker you are interested in. You have to trade on a demo account, check the level of support. Do not immediately rush to invest your money. Test everything before you get started.

Promotions and bonuses

Market counts a lot of brokers who provide bonuses or additional insurance for your investment. Most often this type of insurance is applied from a certain amount of the transaction. All these tasty things should encourage you to start trading. Often this is the main case to hurry up and immediately start trading. First of all You need to focus on the process of trading. To begin with, you will need to learn the basic things in this branch. For such purposes, it is best to use a demo account. So you can save the broker’s bonuses and extract from them the maximum benefit with real trading.

By focusing on getting bonuses you will have the risk of losing your initial deposit. That’s how to appear another disgruntled man trading binary options, which will run to write an angry response, feedback or comment.

Lack of concentration

Many traders in pursuit of money try to master all the strategies in one day. And then they run to apply them in practice. As you probably already understand, it is unlikely that they will succeed. Haste in this matter is not needed. The key aspect of trading binary options is the definition of specialization. To do this, you need to stay on your favorite asset, learn about it all the necessary information and become an expert on this asset. Only in this case can continue to study other assets, strategies and other training materials.

Remember always, in trading with binary options you do not need to hurry. You will have plenty of time to try all the strategies and types of assets.

Trading on emotions

Self-control is one of the most important qualities of a trader. But sometimes everyone is inclined to make emotional decisions. And, as you understand, this will be badly damaged by the result of your binary options trading. If you notice that you have got into excitement or have opened a position in the hope of seeing a miracle, then you will not see a miracle. Moreover, often so traders spend all their invested money. Remember, trading binary options is not a casino. Here luck accompanies those who are able to make decisions with a cold head. The market does not understand the language of emotions. To succeed in trading, always keep them away. This will give a chance to trade much better. Also you can avoid unnecessary losses in the process of trading.

Trading to the last cent

The feeling of excitement of many traders contributes to their rapid failure. Since many of them consider it a matter of principle to bring the trading process to the end. A large percentage of traders do this on emotions. Many of them do this under the influence of Martingale’s strategy. But this strategy is not appropriate using it for gambling on the part of the trader. Apply this strategy, like all others, with the mind. Many binary options traders also begin to trade until the last after a series of successful deals. Because they think that they will be lucky this time too. This kind of trading sooner or later will lead to the ruin of the trader’s trading account.

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The lack of a logical structure of the trade process

Set up the logical structure of trading at first glance is not difficult. But the trader will face many difficulties, namely the emotional side of each person. Reactions to positive and negative results affect the course of trading, as they affect the emotional makeup of each person. To adjust your plan to the trader, you will need to perceive the trading process as a job that he must learn to perform perfectly. And as we know – all our mistakes are nothing else but an experience. Building a logical structure will make our trading even more profitable.

Insufficient market analysis

To obtain a stable profit at a high level, you need to constantly analyze the market. The best way to analyze it will be daily market reviews. This will help you always be aware of what is happening with your assets. Actively follow the latest news on the analysis of the markets you need. This daily “communication” will give you the opportunity to acquire a lot of ideas, and discipline and patience will help you to succeed in trading with binary options.

Chaotic actions

Money loves silence. Everyone knows this proverb. In trading, the same rule applies. To bring bright thoughts and images into your head, you need to surround yourself with an atmosphere of tranquility. This will give you the opportunity to take action according to the plan by which you are bidding. In this case, you will not have to wait long for the profit.

The use of questionable strategies

Strategies for trading binary options are quite a lot now. It is difficult for a novice trader to choose the right one for himself. Many traders actively use independently developed strategies. Some of the traders willingly share and exchange them. It is necessary to understand the moment that those strategies that work for some traders may not work for others. Since each trader has his own strategy. Ideally, you will need to learn and test strategies in order to build on their basis a successful and profitable strategy.

Be ready to work hard. Do not be in a hurry to get upset after the first failure. Remember that all strategies behave differently with a certain type of assets and in a particular market.

Conclusion

There is no limit to perfection. Trader binary options need to work well before finding a good strategy. It takes a lot of time for traders to find and improve trading strategies for binary options. All beginners need to remember that there are no ideal strategies. We need to constantly work on them, so that strategists are always relevant. Do not be afraid to make mistakes, this is an experience that in the future will bring you money. Revise your binary options trading process after reading our top of the most common mistakes. Preventing them will help you succeed in trading binary options much faster.

Common Investor and Trader Blunders

Words of Caution for the Novice

Making mistakes is part of the learning process when it comes to trading or investing. Investors are typically involved in longer-term holdings and will trade in stocks, exchange-traded funds, and other securities. Traders generally buy and sell futures and options, hold those positions for shorter periods, and are involved in a greater number of transactions.

While traders and investors use two different types of trading transactions, they often are guilty of making the same types of mistakes. Some mistakes are more harmful to the investor, and others cause more harm to the trader. Both would do well to remember these common blunders and try to avoid them.

No Trading Plan

Experienced traders get into a trade with a well-defined plan. They know their exact entry and exit points, the amount of capital to invest in the trade and the maximum loss they are willing to take.

Beginner traders may not have a trading plan in place before they commence trading. Even if they have a plan, they may be more prone to stray from the defined plan than would seasoned traders. Novice traders may reverse course altogether. For example, going short after initially buying securities because the share price is declining—only to end up getting whipsawed.

Chasing After Performance

Many investors or traders will select asset classes, strategies, managers, and funds based on a current strong performance. The feeling that “I’m missing out on great returns” has probably led to more bad investment decisions than any other single factor.

If a particular asset class, strategy, or fund has done extremely well for three or four years, we know one thing with certainty: We should have invested three or four years ago. Now, however, the particular cycle that led to this great performance may be nearing its end. The smart money is moving out, and the dumb money is pouring in.

Not Regaining Balance

Rebalancing is the process of returning your portfolio to its target asset allocation as outlined in your investment plan. Rebalancing is difficult because it may force you to sell the asset class that is performing well and buy more of your worst-performing asset class. This contrarian action is very difficult for many novice investors.

However, a portfolio allowed to drift with market returns guarantees that asset classes will be overweighted at market peaks and underweighted at market lows—a formula for poor performance. Rebalance religiously and reap the long-term rewards.

Ignoring Risk Aversion

Do not lose sight of your risk tolerance or your capacity to take on risk. Some investors can’t stomach volatility and the ups and downs associated with the stock market or more speculative trades. Other investors may need secure, regular interest income. These low-risk tolerance investors would be better off investing in the blue-chip stocks of established firms and should stay away from more volatile growth and startup companies shares.

Remember that any investment return comes with a risk. The lowest risk investment available is U.S. Treasury bonds, bills, and notes. From there, various types of investments move up in the risk ladder, and will also offer larger returns to compensate for the higher risk undertaken. If an investment offers very attractive returns, also look at its risk profile and see how much money you could lose if things go wrong. Never invest more than you can afford to lose.

Forgetting Your Time Horizon

Don’t invest without a time horizon in mind. Think about if you will need the funds you are locking up into an investment before entering the trade. Also, determine how long—the time horizon—you have to save up for your retirement, a downpayment on a home, or a college education for your child.

If you are planning to accumulate money to buy a house, that could be more of a medium-term time frame. However, if you are investing to finance a young child’s college education, that is more of a long-term investment. If you are saving for retirement 30 years hence, what the stock market does this year or next shouldn’t be the biggest concern.

Once you understand your horizon, you can find investments that match that profile.

Not Using Stop-Loss Orders

A big sign that you don’t have a trading plan is not using stop-loss orders. Stop orders come in several varieties and can limit losses due to adverse movement in a stock or the market as a whole. These orders will execute automatically once perimeters you set are met.

Tight stop losses generally mean that losses are capped before they become sizeable. However, there is a risk that a stop order on long positions may be implemented at levels below those specified should the security suddenly gap lower—as happened to many investors during the Flash Crash. Even with that thought in mind, the benefits of stop orders far outweigh the risk of stopping out at an unplanned price.

A corollary to this common trading mistake is when a trader cancels a stop order on a losing trade just before it can be triggered because they believe that the price trend will reverse.

Letting Losses Grow

One of the defining characteristics of successful investors and traders is their ability to take a small loss quickly if a trade is not working out and move on to the next trade idea. Unsuccessful traders, on the other hand, can become paralyzed if a trade goes against them. Rather than taking quick action to cap a loss, they may hold on to a losing position in the hope that the trade will eventually work out. A losing trade can tie up trading capital for a long time and may result in mounting losses and severe depletion of capital.

Averaging Down or Up

Averaging down on a long position in a blue-chip stock may work for an investor who has a long investment horizon, but it may be fraught with peril for a trader who is trading volatile and riskier securities. Some of the biggest trading losses in history have occurred because a trader kept adding to a losing position, and was eventually forced to cut the entire position when the magnitude of the loss became untenable. Traders also go short more often than conservative investors and tend toward averaging up, because the security is advancing rather than declining. This is an equally risky move that is another common mistake made by a novice trader.

The Importance of Accepting Losses

Far too often investors fail to accept the simple fact that they are human and prone to making mistakes just as the greatest investors do. Whether you made a stock purchase in haste or one of your long-time big earners has suddenly taken a turn for the worse, the best thing you can do is accept it. The worst thing you can do is let your pride take priority over your pocketbook and hold on to a losing investment. Or worse yet, buy more shares of the stock. as it is much cheaper now.

This is a very common mistake, and those who commit it do so by comparing the current share price with the 52-week high of the stock. Many people using this gauge assume that a fallen share price represents a good buy. However, there was a reason behind that drop and price and it is up to you to analyze why the price dropped.

Believing False Buy Signals

Deteriorating fundamentals, the resignation of a chief executive officer (CEO), or increased competition are all possible reasons for a lower stock price. These same reasons also provide good clues to suspect that the stock might not increase anytime soon. A company may be worth less now for fundamental reasons. It is important to always have a critical eye, as a low share price might be a false buy signal.

Avoid buying stocks in the bargain basement. In many instances, there is a strong fundamental reason for a price decline. Do your homework and analyze a stock’s outlook before you invest in it. You want to invest in companies that will experience sustained growth in the future. A company’s future operating performance has nothing to do with the price at which you happened to buy its shares.

Buying With Too Much Margin

Margin—using borrowed money from your broker to purchase securities, usually futures and options. While margin can help you make more money, it can also exaggerate your losses just as much. Make sure you understand how the margin works and when your broker could require you to sell any positions you hold.

The worst thing you can do as a new trader is become carried away with what seems like free money. If you use margin and your investment doesn’t go the way you planned, then you end up with a large debt obligation for nothing. Ask yourself if you would buy stocks with your credit card. Of course, you wouldn’t. Using margin excessively is essentially the same thing, albeit likely at a lower interest rate.

Further, using margin requires you to monitor your positions much more closely. Exaggerated gains and losses that accompany small movements in price can spell disaster. If you don’t have the time or knowledge to keep a close eye on and make decisions about your positions, and their values drop then your brokerage firm will sell your stock to recover any losses you have accrued.

As a new trader use margin sparingly, if at all; and only if you understand all of its aspects and dangers. It can force you to sell all your positions at the bottom, the point at which you should be in the market for the big turnaround.

Running With Leverage

According to a well-known investment cliché, leverage is a double-edged sword because it can boost returns for profitable trades and exacerbate losses on losing trades. Just as you shouldn’t run with scissors, you shouldn’t run to leverage. Beginner traders may get dazzled by the degree of leverage they possess—especially in forex (FX) trading—but may soon discover that excessive leverage can destroy trading capital in a flash. If a leverage ratio of 50:1 is employed—which is not uncommon in retail forex trading—all it takes is a 2% adverse move to wipe out one’s capital. Forex brokers like IG Group must disclose to traders that more than three-quarters of traders lose money because of the complexity of the market and the downside of leverage.

Following the Herd

Another common mistake made by new traders is that they blindly follow the herd; as such, they may either end up paying too much for hot stocks or may initiate short positions in securities that have already plunged and may be on the verge of turning around. While experienced traders follow the dictum of the trend is your friend, they are accustomed to exiting trades when they get too crowded. New traders, however, may stay in a trade long after the smart money has moved out of it. Novice traders may also lack the confidence to take a contrarian approach when required.

Keeping All Your Eggs in One Basket

Diversification is a way to avoid overexposure to any one investment. Having a portfolio made up of multiple investments protects you if one of them loses money. It also helps protect against volatility and extreme price movements in any one investment. Also, when one asset class is underperforming, another asset class may be performing better.

Many studies have proved that most managers and mutual funds underperform their benchmarks. Over the long term, low-cost index funds are typically upper second-quartile performers or better than 65%-to-75% of actively managed funds. Despite all of the evidence in favor of indexing, the desire to invest with active managers remains strong. John Bogle, the founder of Vanguard, says it’s because: “Hope springs eternal. Indexing is sort of dull. It flies in the face of the American way [that] “I can do better.'”

Index all or a large portion (70%-to-80%) of your traditional asset classes. If you can’t resist the excitement of pursuing the next great performer, then set aside about 20%-to-30% of each asset class to allocate to active managers. This may satisfy your desire to pursue outperformance without devastating your portfolio.

Shirking Your Homework

New traders are often guilty of not doing their homework or not conducting adequate research, or due diligence, before initiating a trade. Doing homework is critical because beginning traders do not have the knowledge of seasonal trends, or the timing of data releases, and trading patterns that experienced traders possess. For a new trader, the urgency to make a trade often overwhelms the need for undertaking some research, but this may ultimately result in an expensive lesson.

It is a mistake not to research an investment that interests you. Research helps you understand a financial instrument and know what you are getting into. If you are investing in a stock, for instance, research the company and its business plans. Do not act on the premise that markets are efficient and you can’t make money by identifying good investments. While this is not an easy task, and every other investor has access to the same information as you do, it is possible to identify good investments by doing the research.

Buying Unfounded Tips

Everyone probably makes this mistake at one point or another in their investing career. You may hear your relatives or friends talking about a stock that they heard will get bought out, have killer earnings or soon release a groundbreaking new product. Even if these things are true, they do not necessarily mean that the stock is “the next big thing” and that you should rush into your online brokerage account to place a buy order.

Other unfounded tips come from investment professionals on television and social media who often tout a specific stock as though it’s a must-buy, but really is nothing more than the flavor of the day. These stock tips often don’t pan out and go straight down after you buy them. Remember, buying on media tips is often founded on nothing more than a speculative gamble.

This isn’t to say that you should balk at every stock tip. If one really grabs your attention, the first thing to do is consider the source. The next thing is to do your own homework so that you know what you are buying and why. For example, buying a tech stock with some proprietary technology should be based on whether it’s the right investment for you, not solely on what a mutual fund manager said in a media interview.

Next time you’re tempted to buy based on a hot tip, don’t do so until you’ve got all the facts and are comfortable with the company. Ideally, obtain a second opinion from other investors or unbiased financial advisors.

Watching Too Much Financial TV

There is almost nothing on financial news shows that can help you achieve your goals. There are few newsletters that can provide you with anything of value. Even if there were, how do you identify them in advance?

If anyone really had profitable stock tips, trading advice, or a secret formula to make big bucks, would they blab it on TV or sell it to you for $49 per month? No. They’d keep their mouth shut, make their millions and not need to sell a newsletter to make a living. Solution? Spend less time watching financial shows on TV and reading newsletters. Spend more time creating—and sticking to—your investment plan.

Not Seeing the Big Picture

For a long-term investor, one of the most important but often overlooked things to do is a qualitative analysis or to look at the big picture. Legendary investor and author Peter Lynch once stated that he found the best investments by looking at his children’s toys and the trends they would take on. The brand name is also very valuable. Think about how almost everyone in the world knows Coke; the financial value of the name alone is therefore measured in the billions of dollars. Whether it’s about iPhones or Big Macs, no one can argue against real life.

So pouring over financial statements or attempting to identify buy and sell opportunities with complex technical analysis may work a great deal of the time, but if the world is changing against your company, sooner or later you will lose. After all, a typewriter company in the late 1980s could have outperformed any company in its industry, but once personal computers started to become commonplace, an investor in typewriters of that era would have done well to assess the bigger picture and pivot away.

Assessing a company from a qualitative standpoint is as important as looking at its sales and earnings. Qualitative analysis is a strategy that is one of the easiest and most effective for evaluating a potential investment.

Trading Multiple Markets

Beginning traders may tend to flit from market to market—that is, from stocks to options to currencies to commodity futures, and so on. Trading multiple markets can be a huge distraction and may prevent the novice trader from gaining the experience necessary to excel in one market.

Forgetting About Uncle Sam

Keep in mind the tax consequences before you invest. You will get a tax break on some investments such as municipal bonds. Before you invest, look at what your return will be after adjusting for tax, taking into account the investment, your tax bracket, and your investment time horizon.

Do not pay more than you need to on trading and brokerage fees. By holding on to your investment and not trading frequently, you will save money on broker fees. Also, shop around and find a broker that doesn’t charge excessive fees so you can keep more of the return you generate from your investment. Investopedia has put together a list of the best discount brokers to make your choice of a broker easier.

The Danger of Over-Confidence

Trading is a very demanding occupation, but the “beginner’s luck” experienced by some novice traders may lead them to believe that trading is the proverbial road to quick riches. Such overconfidence is dangerous as it breeds complacency and encourages excessive risk-taking that may culminate in a trading disaster.

From numerous studies, including Burton Malkiel’s 1995 study entitled: “Returns From Investing In Equity Mutual Funds,” we know that most managers will underperform their benchmarks. We also know that there’s no consistent way to select, in advance, those managers that will outperform. We also know that very few individuals can profitably time the market over the long term. So why are so many investors confident of their abilities to time the market and/or select outperforming managers? Fidelity guru Peter Lynch once observed: “There are no market timers in the Forbes 400.”

Inexperienced Day Trading

If you insist on becoming an active trader, think twice before day trading. Day trading can be a dangerous game and should be attempted only by the most seasoned investors. In addition to investment savvy, a successful day trader may gain an advantage with access to special equipment that is less readily available to the average trader. Did you know that the average day-trading workstation (with software) can cost in the tens of thousands of dollars? You’ll also need a sizable amount of trading money to maintain an efficient day-trading strategy.

The need for speed is the main reason you can’t effectively start day trading with the extra $5,000 in your bank account. Online brokers’ systems are not quite fast enough to service the true day trader; literally, pennies per share can make the difference between a profitable and losing trade. Most brokerages recommend that investors take day-trading courses before getting started.

Unless you have the expertise, a platform, and access to speedy order execution, think twice before day trading. If you aren’t very good at dealing with risk and stress, there are much better options for an investor who’s looking to build wealth.

Underestimating Your Abilities

Some investors tend to believe that they can never excel at investing because stock market success is reserved for sophisticated investors only. This perception has no truth at all. While any commission-based mutual fund salesmen will probably tell you otherwise, most professional money managers don’t make the grade either, and the vast majority underperform the broad market. With a little time devoted to learning and research, investors can become well-equipped to control their own portfolios and investing decisions, all while being profitable. Remember, much of investing is sticking to common sense and rationality.

Besides having the potential to become sufficiently skillful, individual investors do not face the liquidity challenges and overhead costs of large institutional investors. Any small investor with a sound investment strategy has just as good a chance of beating the market, if not better than the so-called investment gurus. Don’t assume that you are unable to successfully participate in the financial markets simply because you have a day job.

The Bottom Line

If you have the money to invest and are able to avoid these beginner mistakes, you could make your investments pay off; and getting a good return on your investments could take you closer to your financial goals.

With the stock market’s penchant for producing large gains (and losses), there is no shortage of faulty advice and irrational decision making. As an individual investor, the best thing you can do to pad your portfolio for the long term is to implement a rational investment strategy that you are comfortable with and willing to stick to.

If you are looking to make a big win by betting your money on your gut feelings, try a casino. Take pride in your investment decisions, and in the long run, your portfolio will grow to reflect the soundness of your actions.

Avoiding Beginners Mistakes

Avoiding Beginners Mistakes

Even though binary options trading is popular and plenty of people around the world as well as in South Africa are interested in this online trading opportunity, not all of those who try their hand in it will be successful for the simple fact that they often make beginners mistakes.

This is precisely the main topic of this article, or to be more precise, avoiding beginners mistakes.

In order to help all aspiring South African traders on their binary options trading journey, we shall try to point out those beginners mistakes which are most frequent and which traders keep repeating, even when they do have some experience.

The traders who take part in binary options trading have, as a rule, a desire to be successful and make their investment profitable. In order to secure that, there are certain mistakes which should be avoided and which, with a little bit of practice, can be easily revoked.

Absence of Money Management Plan

Lack of sound money management is one of the primary beginners mistakes. While investing time to study underlying assets, trends on the market, trading options and looking into strategies is an absolute must, disregarding the money management plan is not likely to lead to a successful trading experience in binary options.

South African traders looking to trade binary options should set their budget intended for the trades then continue to make an outline of how much they wish to invest in a particular trade. Experts suggest that it would be best to invest between 2- 5%. In adopting this approach, traders are also minimising the risk as it is hard to lose all your funds with this balanced and organised approach.

It is also important to stick with the money management plan as that will provide traders with a clear overview of their trading activities.

Irrational Trading Expectations

Yet another common pitfall which is also placed in the avoiding beginners mistakes list is the fact that many traders who enter binary options trading do so with unrealistic expectations. Yes, it is possible to make a great profit with binary trading as the returns may range from 65-85%, but traders have to work toward that goal.

To expect amazing results from the offset, especially if no preparation or education has been done can only be a huge disadvantage for novice South African traders. It will also lead to disappointment and that is never a good combination to reach goals.

Therefore, traders are advised to set realistic goals, put together a sound plan and slowly but persistently progress toward it. Losses will happen, as they always do, even to the professional traders who have an abundance of experience. But, if traders learn from their mistakes and improve their skill, then they are one step closer to their profitable trading expectations.

Operating with a Minimal Investment

While the fact that potential South African traders needn’t have millions on their bank account in order to invest into binary options trading is a huge advantage and one of the most appealing aspects of binary options it can also be a problem too.

It is always advisable to be rational with investment and the amount of money traders deposit on their account, but sometimes a more can mean precisely that – more. If traders constantly only the minimum amount necessary, it may limit their profit-making opportunities.

And while it is great that binary brokers do impose the minimum amount that should be deposited and with some brokers like IQ Option that amount is only $10 which truly makes it accessible to traders from all walks of life, investing a bit more also has its advantages.

It is easy to understand that beginners feel reluctant to invest too much, however, after some initial period and a bit more experience and knowledge, investing higher amounts might mean the difference in achieving the goal and constantly being on the verge of achieving it but never actually getting there.

Carrying out Too Many Trades

Avoiding beginners mistakes also means not slipping into the habit of careening out too many trades. It’s easy to see why inexperienced traders might come to the conclusion that placing numerous trades just might be a secure path to monetary success but that is more tricky than it seems.

Actually, in stretching yourself thin and placing too many trades in a short time span might lead to failure. It is easy to get carried away, especially if traders are experiencing loads of success and profiting, but curbing that enthusiasm a bit and carrying out the trades according to the plan can be a better approach in the long run.

Another reason why so many newbie traders both in South Africa and around the world start over-trading is when the opposite happens and their investments are not being successful. In wanting to reverse the loss, traders place too many trades which, mostly, just lead to more losses.

Binary options trading is a blend of discipline, balanced approach, learning and keeping a watchful eye on the market, not about rushing in and hoping all will simply fall into place and the end result will be a fat bank account.

Gambling Approach Instead of Trading

One of the misconceptions about trading binary options is the one where traders see it as gambling. While it is possible to argue that any sort of business dealing has an element of gambling present, there is more to binary options than simply relying on luck.

Luck, or the lack of it, is a province of gambling.

In order to have a profitable binary options experience all interested South African traders will have to invest time into studying available educational materials, monitoring the events taking place on the market, understanding the underlying assets and trading options. Also, it is of essential importance to select a binary options broker which will satisfy traders’ needs and expectations.

In short, binary options trading is a business venture and should be treated as such in order to obtain satisfactory results which, in this case, means healthy profits.

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