by Cindy Del Rio, Negosentro |
Granted, there is no perfect binary trading handbook. Whether you are a beginner or an expert, you are prone to making mistakes. All traders have numerous pitfalls and challenges to overcome, any of which could either lead them to success or failure. However, many traders end up losing because they commit basic mistakes that could be easily avoided. Here are 12 common mistakes first time binary options traders make.
Making Investments that Are Too Small
Although traders are constantly cautioned against making large investments, they should not be too shy at first. The rationale for trading in small amounts is usually to avoid encountering big losses. However, they forget that large investments come with larger rewards. You should not feel restricted in regards to how much should be invested, but stay within your budget. Most times, underfunding your account actually limits the opportunities to maximize a trade. It is always advisable to trade with more than the minimum required deposit.
Choosing the Wrong Broker
This is a very common mistake that many traders make when they are just beginning. When it comes to choosing a broker, one size does not fit all. After all, different people have different needs. However, with so much fuss about binary trading being the wave of the future, people do not have time to differentiate traders. They sign up with anyone who is affiliated with the business. Just because a broker says that they have standard digital binary options does not mean that they are the best in the field.
If you’re going to pick a platform, it’s always better to go with one that is beginner friendly such as Stern Options. A good platform should always have an educational component to it and a good demo account. Make sure you read as many reviews as possible before you choose a particular platform, it’s always better to get a second opinion.
Setting Unrealistic Expectations
Many people have unrealistic expectations when it comes to their return on investment. Some hope to get 100% profits on their investments and this is unrealistic. There are traders who get good returns but this does not mean that it will happen all the time. Once traders fail to get what they expected, they encounter a huge setback and become discouraged with the trade. Ask around and gauge what is usual for your particular situation from the opinion of other traders.
Executing Too Many Trades
In the binary trading world, more trades translate to higher profits. In fact, making many trades in a short time is usually a bad strategy. Many people over trade because of the notion that they will beat the market, or, in some cases, because of repeated failure. Either way, this is not a smart move that usually leads to disaster.
Binary trading is often compared to gambling but you should not take things overboard. Although these two things have similarities, binary options require a business approach. There are many methods and strategies that are inspired by gambling, such as the Martingale method, but you have to be very methodical in your approach. Before you choose to trade based on a particular system, make sure that you research it to the fullest before you implement it. Also try it with a few mock trades at first.
Opening Different Binary Options Accounts
Traders often feel flattered when every broker is asking for their phone number and personal details. At the end, it is very easy for them to get lost because all brokers seem to offer unique and interesting deals. It is very easy for new traders to feel confused because they will not have a clear picture of what they want. Many people fail to research different platforms before making a choice, which is a big mistake.
Poor Money Management
Many binary options traders fail because they spend too much time analyzing their assets and looking for new trade indicators instead of developing good trading skills. Therefore, a lot of people do not take the time to analyze their financial management strategies and try to focus on trading instead. This usually leads to failure.
Rushing to Make the First Trade
Traders who rush to make their first trade often end up getting burned. It’s not wrong to get excited but many people get over excited and open trades without any prior knowledge or experience. They do not ask for any training to polish their skills. Taking time before opening your first trade is important as it will allow you to do your homework and avoid making huge mistakes.
All binary options traders are taught the value of patience but only a few of them value this lesson. They are nervous, hasty and often end up making bad decisions. They make trades before waiting for signals to come. In the end, they end up losing a lot of money.
Thinking that Trading is Simple
Thinking that binary options trading is easy is a common misconception among many people. After all, you only have to rely on your gut feeling. Right? Wrong! Affiliate marketers and shady brokers always exploit people with this mentality. The truth is that trading is not easy, it takes a lot of time to learn the ropes. A successful trader knows that this is a challenging process that takes a lot of strategy and know how. Don’t fall for the trap and educate yourself thoroughly before you even start trading.
Getting Easily Discouraged
When it comes to binary trading options, getting discouraged is very easy. However, you should be prepared to lose money. Many people are not mentally prepared for this and as such, get overly frustrated when they encounter losses. As a trader, perseverance is key.
This may perhaps be the biggest mistake that most traders make. Binary options trading allows traders to quit easily and unfortunately, many of them end up taking the easy road. They do not have the willpower to push through and accomplish their goals. They fail to understand that quitting after a few losses is not a way to succeed in this business.
Whether you are a binary options trading beginner or an expert, you should learn to avoid these mistakes at all costs. Binary trading is only difficult when the proper steps are not followed. However, with the right tools and education, anybody should be able to experience some success with binary options.