When it comes to binary options trading, people face a lot of troubles and the reason for that is a totally wrong approach to this activity. We’ve designed this article in order to make you fully aware of the most common mistakes usually beginning binary options traders. Hopefully, the information included in the article will make you more responsible and will also determine you to start developing new trading habits.
Overleveraging – one of the most common mistakes binary options traders make is the excessive use of leverage. Now don’t get us wrong, using leverage can be helpful, because it enables you to trade a higher volume, even though you have limited capital available, but you need to have a limit when it comes to that. If you open a 100$ account and use a 500:1 leverage in order to trade as much minilots as it can be possible, then the chances of you losing your entire account in just a few minutes, is very high.
Ineffective trading strategy – when trading binary options, you need to understand that the odds are in favor of the broker. Why is that? Because, if you place an options, let’s say for EURUSD and you are right and the options turns out to be profitable, you will make between 80 and 90%, depending on your broker. And if you lose, you will lose all your money at risk. You need to design a strategy that will have a high accuracy in order to overcome that obstacle and manage to generate profits.
With that being, these are the two most common mistakes usually binary options traders do and if you take them into account and manage to find a solution for each of them, you will most likely be one step closer to being profitable.
Risk Warning and Disclaimer
Trading binary options on margin carries a high level of risk, and may not be suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to invest in binary options you should carefully consider your investment objectives, level of experience, and risk appetite. No information or opinion contained on this site should be taken as a solicitation or offer to buy or sell any currency, equity or other financial instruments or services. Past performance is no indication or guarantee of future performance.