Have you tried being in a situation wherein you had a strong feeling that a certain currency pair will be behaving in a specific manner but you were not so confident about playing it? When the prices did not move as you have assumed, were disappointed that you did not even trust your instincts?
If you are an experienced binary options trader, you may have gone through this dilemma at some point of your career. You may have also wondered is trading is based on hunches and if it would lead to profits or losses. After all, many traders will tell you that purely relying on your feelings or guessing your trades is not that positive.
However, the contrary thought would be beneficial at some points. Trusting your gut can sometimes be good in trading. Trusting your instincts means trusting yourself. But this does not go to say that you will disregard all technical analysis and basic processes and instead simply trust your feelings on the markets movement.
As mentioned in most trading articles, trading intuition is a trading element that has been created through time and through experience. If you have used up a lot of your screen time and done correct practice, then you will be able to understand the market and how it behaves at specific moments thereby allowing you to have a clearer view on price movements.
Normally, traders become a bit uncomfortable when it comes to entering a certain trade using their instincts. If you are one of these traders, then it is ideal that you keep track of your hunches and if is spot on or not. By doing so, you can develop trust and you can also have me confidence in making future profits. You can also think about having a smaller position based in the feel of the prices. Just put in mind that you need to apply the right risk management system and always have an exit strategy just in case it does not go to the direction that you predicted.
So, realizing that trusting your instincts in trading is a bad idea and you should be more like a trading robot it means you have to take a closer look at mental approach in trading and psychology, so i would suggest you to take a closer look at this piece that was written specifically for this, binary options trading psychology.
Learn to control yourself is important part of trading process which you will learn only through practice and expirience that you will get on daily basis of trading. Learn basics and then try to apply them yourself in real world first through demo account and then on live trading account until you are profitable. Even Rome was not built in one day.
Are you prepared for another year of trading? Not too fast! For binary trading amateurs and pros out there, you need to put in mind some useful reminders so that you can successfully create new trading goals. Here are some tips for newbies:
BINARY TRADING IS NOT A MEDIUM FOR EARNING QUICK CASH
It is always possible to make quick cash but in the world of trading this can be totally possible when you are a financial wizard. The truth to the matter is that binary trading is a business and just like any trade out there it has its ups and downs. You position your capital. You make some money and then you lose some while on the process of improving your skills. And then you can slowly and most likely, surely learn how to regularly profitable.
TRADE THE MONEY THAT YOU CAN AFFORD TO LET GO AND LOSE
A very typical mistake that amateurs have is risking cash that they cannot afford to lose in the first place. If you are a newbie you need to let go of your fear from losing cash so that you can concentrate on your skills for trading. If you do not have a lot of principal investments yet, you have to begin with smaller accounts or probably try out your trading skills on the demo.
ALWAYS HAVE A TRADING JOURNAL
The fact that you are new makes you prone to numerous trading mistakes which take experience in order to overcome it. Just a small trading journal can help you monitor your improvements or your mistakes. A journal can help you keep track on what is working and what is not and if the changes you are making are correct. Remember that what you cannot measured can’t be managed.
ASK FOR HELP IF THE NEED ARISES
Remember that you are still new in the business and you need all the guidance in the world. Even professional traders asked for help so there is no reason for you not to. You can go to trading forums and as from binary options junkies.
Here are some tips for professionals:
NEW IS NOT ALWAYS PREFERABLE
Sometimes, it is important to look at the past. In trading, you can also learn from the past and assess if adjustments in position sizing, stop losses, and indicator settings may have altered your trade’s outcomes. New is not always better. You can look at your journal regularly to know if you have properly carried out your strategy. Think about it, even with a good strategy, you can still fail because of poor execution.
HAVE EXPECTATIONS THAT ARE REALISTIC
It doesn’t mean that you gained higher rewards than risks last year you can target a thousand percent account increase this year. You need to have your expectations and goals set with regards to your average performance, capital limitations, and available trading time.
WINNING IS MORE DANGEROUS THAN LOSING
Losing is not the only aspect that can give you psychological problems. Winning too can lead to such demise. When you have constant winning streaks you can develop overconfidence which can lure you towards overtrading and lack of preparation. This is actually worse than just being afraid because you will most probably be welcoming useless risks. It does not matter how many times you have won, but you need to be consistent.
KEEP YOUR EYE ON THE PROCESS AND NOT ON THE PROFIT
This is practically the summary of everything discussed in this article. Binary options is a trading race. Just like any useful activity, having consistent income also needs consistent self development and of course, practice. You should not distract yourself from single losses or earnings. Always maintain your target at the prize and be focused on doing things right.
These are the tips that you should have in mind at all times. You can write them down or print because they are the basic if you want to ever become successful trader in binary options.
Even when you are still trying to test and assess your new strategies as one of your trading resolutions for the year, you must safeguard yourself from some vital things that will lure you towards abandoning your plan. These factors are distractions, loss of confidence or self esteem and overconfidence, boredom, and fatigue.
One common culprit of bad trading decisions is distraction. This can come in any form – big or small. Even when you are around a lot of excitement you can still be distracted. When you want to have a comfortable trading atmosphere, make sure that most of the things surrounding you are positive. This means that you must be around things that help you maintain your focus. One way to get rid of distractions is by changing your workspace. For example, if you have a television near your PC then you better move your PC or television. Moreover, even when you only have your PC with you but you find yourself looking at social networking sites, then you might try to block these sites for a moment.
You have to put in mind that market does not wait for anyone and you have to keep your attention to it. When you are busy checking other websites you might end up veering away from useful market signals. The worse that could happen is that you may end up having huge losses because you were too preoccupied doing some other stuff and end up missing your cue exits.
The good news is that there are so many ways to limit distractions. As mentioned before, you can block unnecessary websites or restrict them at trading hours. You can also tell your family and friends not to disturb you during those times.
LOSS OF CONFIDENCE AND OVERCONFIDENCE
If you trade you must learn how to accept losses because the marker is very unpredictable. You will lose your confidence when you have a continuous losing streak. The fear of losing again would haunt you and you will find it difficult to climb back up. Your emotions will get the most of you and in the end you will end up quitting or you will be afraid to take risks and close winning trades earlier. One way to avoid such frustration is to take things one step at a time. Make sure that you focus your attention in a single trade before moving on to another. If you lose at a trade then ponder on it and assess your moves. It is always better to work with a clear mind than with a foggy one.
On the other hand, overconfidence is another factor that can lead you towards abandoning your trading plan. When you win one trade after another, you will feel like a king. However, you have to remember that you should not be too soaked with your success because you will not notice that you have already totally ditched your trading plan. You begin to trade carelessly and make bad decisions thereby jeopardizing your trading plan.
Yes, it is always common to feel good and confident after a winning streak but this can be dangerous because as you become too confident your judgment can be clouded.
It is a fact that even though the binary trading market does not sleep you are not guaranteed to have a whole day action. There are moments when there are lesser chart activities and it can be so boring waiting for a suitable set up to come to life. Regrettably, a lot of traders deal with boredom in a negative manner – they force a trade just for the sake of excitement. They stray from their plan and make strange trades. It is not surprising though that trades from impatience are done out of impulsion and can lead to bad decisions in trading.
When you feel bored trading, you can break the ice by simply giving yourself a break. You go to trade forums, learn from trader’s blogs, or any other productive things. Veering away from your trading plan is not the answer.
When you are mentally and physically not fit to do anything, then do not trade at all. You might have tried studying or taking an exam after partying the night before. This can be a recipe for disaster. Just like trading, it is not good to make Calls when your body and mind are fatigued. You will surely have slower reaction times and your brain is not that sharp. With a slow mind you will most likely move away from you trading plan. If you do not want this to happen, you can take a rest first before you make critical trade decisions.
Make sure you are prepared for the markets because they will not give you any mercy, happy trading!
Some people say that binary options trading is a very hard market to master. Just like a savage creature that never sleeps and wakes up the whole day, the market may be cranky and unreasonable. And with just a bit of disturbance, this creature can simple go in an unpredictable manner from submissive to unstable and then go back to its previous state in a second. Based on the reality that we are in an ever changing environment and uncertain events, it will always seem like this growing vagueness will just make a fiercer creature.
As the world economy is facing the probability of being sluggish and as leaders fight with each other to solve such economic conflicts, what can traders like you do to stop this ambiguity from crippling you with fear? The good news is that there are two easy ways to battle such uncertainties and do away with your fears. The first way is by accepting reality and the second is by preparing for it.
As stated by Birdgewater Associate’s founder Ray Dalio, “No matter how hard you work, you can still b wrong.” His quote has a very literal meaning and this applies to all of us. It does not actually matter how long and hard you have been in the business, you cannot escape mistakes. Errors are natural phenomena. In trading, this phenomenon can happen every second which is why acceptance is necessary. Otherwise, when you do not accept the fact that you can always lose or make mistakes, you will go crazy from trying to make the perfect move.
Even if you think you have great skills in analyzing trends and that you have the right mathematical formula towards tan unblemished trading record then you might want to think twice. The truth is that unless you are a clairvoyant and can see what is up ahead then you will cannot predict and assume market movements perfectly. You will have losing trades. If you cannot put deeply in your mind Dalio’s principle, then you will always be blind about reality and you will not be able to adjust to shifting conditions.
However, not all people are the same. Thus, the vehicle towards a shift to accepting reality can occur at varied moments for all of us. Nonetheless, it is more than a reality that this realization will not come until after the last experience.
When you want to minimize risks you have to prepare. If you are serious about what you are doing then you need to plan seriously. For example, your physician would say, “I think you are going to die. But let’s see what I can do with your body before it gives up.” This a statement that can lead to numerous lawsuits not unless the doctor has a better way of saying it and a better plan of action. However, truth be told, it does not matter how many years of practice that physician has, he would still need to have a plan by stating with some tests and doing necessary procedures. Just like a typical medical operation or procedure, trading is also very serious. And since unforeseen elements will always be there, improbability will notably be minimized through the right planning. Taking time studying and controlling things that you can, will help minimize uncertainties. This is because you have already assessed and prepared for the worst. If you have already assumed your trade outcomes regardless of market increase or decrease, then you will not be very afraid.
Preparation and acceptance seem like too easy to understand and too easy solutions for overcoming feelings that you get from facing unknown factors. However, it is always easier said. Doing it can do away with the principle that if you work harder and realize the reasons that made the market move, then you can make it as your edge. Yes, the binary trading market can be quite illogical and this can stay this way longer than it can be solvent.
Being a trader can be lonely. Trading is a lonesome industry not unless you are working for a bank or a huge financial institution or you control an investment firm. This is probably the closest experience you can have with other traders but other than working for banks or firms, you work alone. Most traders rely on themselves especially when it comes to finding a mentor that can guide them on the journey towards becoming a constantly profitable trader. If you are one of these traders you might need to scan through trading books, look at blogs and forum posts in order to look for the right mentor and information.
Dictionaries commonly describes mentor as a trusted guide or counselor. However, this definition is not enough because there are some qualities that mentors should have other than being just a guide. Here are some of the other qualities that you should look for from your binary options trading mentor:
Trust is always the key to any profession. If you do not trust anybody around you then it is hard for you to understand your environment. This is why it is ideal to have a trustworthy mentor. Your mentor should be someone whom you can open up to because you will not only be following his or her trading style but your mentor will constantly assess your skills. If you do not trust your mentor’s critiques or judgment, you will find it hard to have an open mind. Without an open mind, you will not grow as a trader. Moreover, on your trading journey, you will surely do live trading. Ask yourself if you fully trust your mentor to teach you so that you will not throw away hard earned money, effort, and time.
Besides trusting your mentor, he/she has to be someone that inspires you. This is way beyond the trading scope but an inspiring mentor can be a good influence on your part. Trading should surpass the binary options market. Discussions with your mentor should include subjects like relationships, faith, and of course, goals.
This is probably one of the most important qualities that every professional should have. This goes side by side with being trustworthy. As mentioned in so many trading articles, the binary options market is unforgiving. If your teacher makes you a promise that you can be a hundred percent successful you have to think twice about it. He/she has to be realistic and must able to let you understand reality and tell you that binary trading is not a simple business. As a mentor it is part of his job to get you ready for rough times.
A trustworthy mentor must have proof that he/she knows everything that he is talking about. When choosing a mentor, you must look at his/her track record most ideally having at least three years of experience along with a complete record that talks about his trading strategies and processes.
5. ENCOURAGE INDEPENDENCE
In trading, it is hard to find mentors who stick with you until the end. Thus, you need to find one who will be with you until you trade live but at the same time encouraging you to trade on your own. A good teacher must be able to allow you to recognize and become confident that is ideal to trade alone because in the end you will rely on yourself to make the calls.
With all of these traits present in your mentor, you can be successful in your binary trading venture. All you have to do is be careful and be keen on the prices that they offer.
The Swiss proverb says, “ Greed is the most dangerous emotion.” This is very true for most traders. It is an undeniable fact that a lot of traders have suffered a lot due to greed. This is actually were the famous trading saying “Bulls and Bears make Money and Hogs get slaughtered” came from. Hogs are the greediest of the animals an in trading there is no mercy for traders who embodies hogs. Because of the risk for people falling into the pit of greed, it is pretty much ideal to understand what it truly is.
WHAT IS GREED?
Common dictionaries describe greed as a selfish and extreme longing for more of anything (including money) than what is needed or necessary. This sounds familiar right? Yes, many of us are guilty of being greedy. It is our longing to get more returns that push us to trade and such desire is no longer healthy and then become dangerous when done excessively. This is why it is often deemed as a very dangerous emotion for anyone involved with trading. This is considered as something worse than fear. Fear paralyzes you and keeps you away from trading however; you still have your capital preserved just as long as your hands are in your pocket. On the contrary, greed lures you towards acting in times and even in ways that are not good. This is why greed is dangerous.
WHAT ARE DANGERS OF GREED?
Greed can let you act in an irrational way. As a trading greed may come on various ways including, overtrading, market chasing, and over leveraging. These are things that you should exit once you know it is happening to you already. As a matter of fact, greed is similar to alcohol and drugs. It allows you to do foolish things especially when you have too much already. When greed has already clouded trading judgment, it is then that you are drunk with it.
HOW TO OVERCOME IT?
Just like other necessary gestures, conquering greed needs more discipline and effort. It is not that easy but overcoming it is possible. It’s just about how to tame the ego. You need to accept your fault and admit that every call is not always right. There are times when you cannot grasp the full move of the market. There are also times when you will miss out on a good set up.
This is how trading is. The moment you learn how to accept that you are smaller than the market and that you will surely commit errors, it is by then that you can be more focused on following your plans and not submitting to greed. Many successful traders believe that it is better to be lucky rather than simply be good. For these traders, it is better to depend on luck rather than trust on their capabilities. This is not good for the ego, but it is great for the trading psyche. Don’t let trading be a blame game because of greed but rather make it a thinking an analysis game.