On the surface, trading Binary options seems very straightforward. However, the fact is that most of the binary options traders lose money. On some platforms, this can be up to 80%.
However, you can still profit by trading binary options. Avoiding the 10 common mistakes below will put you ahead of the competition.
- Lack of Research
You can train chimps to press two buttons. Because of this, options attract a lot of casual investors. They study without a plan or research and wonder why they keep losing money. It’s imperative that you do your research into financial markets. Use a test platform to develop your strategy without spending money. Plus, compare the most popular platforms to find the right one for you.
- Invest More Than You Can Afford
As with any investment product, there are winners and losers. The losers far exceed the number of winners. Does not depend on intelligence or strategy. Sometimes you will run badly. Therefore, trading money will cost you money.
- Chasing Losses
There are several similarities between gambling and binary options trading. In either case, some people are not mentally strong enough to leave. As a result, they continue to top up their accounts to “make back” what has been lost. Binary options are a fast way to make and lose money. Know how much you can afford to invest, and when it runs out, walk away.
- Believe in Pattern
There are lots of gurus on the internet who will encourage you to invest in their training programs or bots. They will tell you that there is a surefire way to make money trading options. With a potential return of 80% and above, anyone with a surefire strategy won’t teach it. They will use the power of compound interest to become millionaires very quickly.
There is no pattern. Every successful trader develops their own strategy which they adapt over time.
You will need a lot of resilience to trade binary options. Trading will not always go your way. When that happens, you need to stay calm. Most novice options traders panic; Hence, their strategy went out the window. They make risky choices and trade a lot at the same time.
Like any elite athlete, you must master your mind and stay cold as ice.
- It spends a lot of money on courses and equipment
Teachers know that there is a lot of money to be made from ‘teaching’ people how to trade. Therefore, they will offer you course after course. The best way to learn how to trade is by doing it. Sure, you can pick up some tips from the article, but don’t buy into courses all the time. Why should you pay for training when there are free guides?
- Unrealistic Expectations
Binary options have one of the highest potential returns on investment. However, most startups are hoping to sign up for the platform today and buy a Lamborghini next week. It rarely happens. However, it’s a better option than the low returns offered by a savings account – if you know what you’re doing.
The best traders have honed their skills through hundreds of hours of disappointment, education and persistence. If you want something that few people have, you need to do something few people are willing to do.
- Illegal Platform
Binary options is a largely unregulated industry. As a result, there are a lot of dishonest platforms. It is best if you do your research and due diligence before investing. Check if they are regulated in your country and for how long the site has been open for. Some owners plan to raise as much money as possible rather than lose.
- Gambling is not thinking like an entrepreneur
Gambling and bad options trading have several things in common. Once you start making random trades and hope for the best, you are gambling. In order to generate long-term returns, every trade must be counted. You have to stay disciplined and follow your strategy. Therefore, if you run out of money, stay away until you can come back with money you can afford to lose. Do some research on the breed you choose. It is better to know a lot about a little than a little about a lot.
- Borrowing Money To Invest
The high potential for binary options returns has led some people to use their credit cards or even take out loans. They see no possible loss. This is a stupid move. If the trade is unsuccessful, you lose all invested money. I repeat, use money you can afford to lose.
There’s a lot of money to be made, but you have to be smart and strategic. I hope you found this article useful and helped you to become a smarter binary options trader.