I have analyzed binary options trading a lot. I analyzed binary strategies and signals, looked at my daily trades and explained in my thoughts the process of everything that happens during trading. But, to be honest, I did not find any reasons why many traders cannot constantly, regularly earn, even despite the lack of a more or less decent strategy (although it is extremely important to have a strategy), but the main reason is the inability to overcome mental obstacles that can destroy trading in the literal sense.
I truly believe that the main trait that separates a successful trader from an unsuccessful one is the ability to remain patient and coolly wait for the right moment. During my Forex trading (trading for four hours and in the daytime during compression), I try to avoid this problem, I determine the limit on orders, the limit on losses, a certain level of restriction on profits, on all predetermined points that can be during trading. However, in the case of binary options with brokers working at the entrance to the strike, I do not have such a favorable opportunity, so I have to trade and look closely at the charts so that the trades lead me to where I want to be.
This, in my opinion, makes binary options trading much more difficult, making it much more difficult than Forex trading. But in my mind, I don’t have such an approach to binary options that they are supposedly fundamentally different from Forex. In terms of the judicious use of the strategy, Forex trading can be significantly different, since I am waiting for confirmation when trading will go at my binary options price level, but in Forex I simply enter a limit on the order price, and trading occurs automatically if the market moves to that level. But with this psychological approach in mind, I always have to plan something – especially the level that I set for a certain call option, and the level of Put options. Sometimes I take into account only one option (put or call) if the trend moves in one particular direction.
I may not consider trading at all if the market behaves completely unpredictably (for example, when important macroeconomic news is released). But if the market moves to the level at which I work, I do not just look forward to when I can press the button in order to start trading, but rather wait for the price to leave the previous level and touch the next candle. Then, and only then do I start trading. I always remain patient during trading, even if patience means just looking at the charts for eight hours and not seeing anything worthwhile that could make me trade. The exercise in patience is the same as the exercise in the rational sense, since it is an exclusively human property, and not a more primitive part of the brain that works when the trader succumbs to emotions. Trading too enthusiastically is a problem for many, and perhaps the number one problem related to trading, which prevents many from becoming successful traders. That makes sense.
People want to make money quickly, and binary options at first glance seem to be the perfect way to improve their financial situation quickly and easily. Thus, it turns out that traders trade a lot, trying to beat the market and pull money out of it. In order to understand that you will not become rich immediately, with a swoop, you need to go through a period of growing up, and especially since traders who earn little or no money at all are novice traders. And again, if you are aiming for a certain price level, you need to be sure of such settings.
On the other hand, if you are too patient, you undertrade – for example, if there is a chance to earn, you may miss it – this is another problem that surely affects the success of trades. In fact, in many cases, a trader faces both problems at one stage or another of his career. But when you’re trading with a logical, sound strategy, you should always plan for the value level of your asset far in advance, and start trading only if you’ve received confirmation that a given price level will last for a certain amount of time (similar to the touch-refuse-re-tap strategy, I’ve already described it in recent publications). And, of course, make sure that your bids are small enough, so much so that the result of the auction does not cause you any emotions at all.
If you are worried about what the result of the auction will be, I can assure you that you have invested too much money in the auction. When you make a decision about how much to invest, it should be so small that you should feel like you’re just wasting time starting trading. What I mean by that is that you should try to invest less than 1% of the amount you can afford to lose (profit balances) for each individual trade. Also, you should never set a certain amount of profit as a goal for each day. Either a week, or a month, or a year. It never ends well, it is inevitable that such a goal is never achieved, since people in such conditions trade emotionally, since money – and not trading, as it should be – becomes the main center of your thoughts. An attempt to compensate for previous losses by doubling, tripling, quadrupling, and so on, according to the Martingale system, will eventually lead to disaster, sooner or later it will happen.
I believe that the best strategy for a trader is to invest relatively small, fixed amounts of money in each trade. As you learn, when you are more likely to evaluate the functioning of the market and the outcome of trades, then you will be able to afford some deviations and increase the amount from time to time. But since you are trading binary options, you should focus on the percentage of earnings (60% of the deposit is a realistic goal). If you reach the set percentage (which, of course, should be above the break-even level) and adhere to the strategy of managing funds in the form of investing fixed amounts, so that, following this rule, you can earn consistently. It is quite obvious that there are several emotional and mental obstacles that a trader faces during his journey in the world of trading.
Of all the problems that I have previously described, I personally experienced each of them, in the process of solving problems that arose in a certain period of time one after another, I wasted money from several accounts. But, to be honest, the main problem was not the search for effective strategies. After some refinement of my trading practice, I still used the same basic strategies that I used when I first started trading seriously, and this happened about two years ago. There are many excellent strategies, such as technical analysis, but the number of traders who earn consistently is very small, despite the strategies. This, needless to say, confirms the fact that a trader must first learn to control the emotional side of his personality, and only then can a trader become a good trader. The good news is that learning all these things isn’t that hard. The fact is that after reading everything I’ve written, you’ve probably taken it for granted.
The truth is that each of us has succeeded in a particular activity or profession. But whatever skills we need to succeed in that field, they make little difference in achieving success as a trader. This takes time, practice, and the right way to think about the market. If a person can refine and absorb these seemingly simple and ordinary psychological moments, and combine them with an effective strategy and money management plan, then he/she can eventually become a trader who earns.
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Tagged with: The Psychology of Binary Options Trading
