Five Most Common Mistakes Made by Binary Options Traders
Five Most Common Mistakes Made by Binary Options TradersApril 9, 2013
Recently I have been receiving more questions about how to start making money trading binary options. Assuming the person who is asking already has some background in trading online, I usually respond by saying it’s less what you do and more what to avoid. In other words, once you get your basic strategies down and start executing trades in a systematic yet versatile fashion, all you have to do is steer away from making mistakes.
Remember, it doesn’t matter if you’re experienced or an amateur basement trader, everyone miscalculates or makes a bad call every now and then. It’s called being human, and it’s OK as long as you are aware of the risks and take the necessary preventive measure.
Below you will find a short list of the 5 worst mistakes any trader can make:
1: Choosing the Wrong Broker
This is by far the most common mistake and the one that will cost you the most money as well. Remember, its not only about finding the best or most reputable broker, it’s also about the bonus structure and trading requirements as stipulated in the bonus terms and conditions.
2. Lack of Proper Research
The most obvious advantage we have when we trade from the comfort of our own homes or businesses is that we can take all the time we want in order to conduct proper and in-depth research and analysis or charts, news, and various stats & figures. Failure to do this will result in immediate loss of money.
3. Inferior Trading Software and Charting Tools
Choosing the right trading software is crucial to your success, and I’m not referring to the trading platform (i.e Spotoption or Tradologic for example) . There is a lot of freeware out there, however the best candlestick and charting software will cost you anything from $100 to $400 monthly depending on the merchant and the package you are buying.
4. Indecisiveness and Lack of Focus
Just like the battle field, this type of behavior can get you killed. If you have your charts and candlestick analysis down the most important thing to do is stick with your strategy and remain consistent. Unlike emotions or body language numbers don’t lie, it’s just up to you to interpret them correctly and execute your trades just like you would breath air or drink a glass of water. It should be a type of second nature or automatic reflex that occurs when the numbers indicate an entry signal.
5. Not Having an Exit or Reversal Strategy Ready
What happens if you start losing trades and expire out of the money too many times? Your balance starts to shrink and you need to re-invest in order to continue trading. If you have lost around 65% of your original investment plus bonus its time to think about a reversal strategy. I usually make a very aggressive move on another undervalued stock or alternatively start taking a lot of short positions for small amounts and alternate between stock very quickly depending on the level of performance.
To summarize, being a successful binary options trader doesn’t always mean knowing when to invest and on what asset, it also has to do with understanding trading basics and knowing how to spot pit holes and obstacles from a distance and overcome them by having the right type of counter measures in place.
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