7 Ways You Are Making Trading Harder Than It Is
When you were fresh and new to binary options online trading, you probably thought to yourself, “Wow, this is really easy. All I have to do is choose ‘up’ or ‘down,’ and wait for the money to roll in.” It is much easier to understand how to trade binary options online than it is to learn how to trade the stock market. This lulls new traders into complacency, and usually into monetary loss as well. There are few more painful ways to learn that something is harder than you thought than losing lots of money.
But is trading hard because it is complicated, or because you are making it that way? Yes, trading binary options online is challenging, but there’s a good chance you are making it more challenging through your choices. Here are 7 common mistakes that traders make that make their lives more difficult.
1. You are chasing perfection.
This is a common trap that traders at all levels often fall into. New traders may be searching for he perfect system that will give them wins 100% of the time. Veteran traders may also keep chasing after the holy grail. One of the reasons that this is such a common behavior pattern is false advertising. When you are learning about binary options online, you are going to see tons of videos and banner ads promising you riches beyond your wildest dreams. Systems and signal services may promise you wins 100% of the time. It is very important to realize that these ads are lying. If someone actually had a system that could win 100% of the time, do you really think they would bother selling it to you? They would already have all the money they needed.
2. You are using too many indicators or techniques.
It is natural to believe that the more signals you are using, the stronger your results will be. There is some foundation for this. This is actually called confluence. If two or three signals all are telling you “buy!” you are looking at a more solid trade than an entry where only one signal is telling you to trade. If you keep adding more and more indicators or signals, however, you are going to get fewer and fewer clear signals to buy or sell. With a dozen indicators on your charts, the odds of all twelve telling you the same thing are quite low.
At this point you start generating confusion. You no longer are sure which signals to believe and which to ignore. Your trading system begins falling apart. The temptation arises to start adding or removing components at random, ignoring an indicator one day, following it the next. At that point, you do not even have a trading method.
Keep your charts simple! Choose just a handful of indicators, at most. A lot of really powerful trading systems use just one to three indicators or techniques. Combine those to your best advantage, and resist the temptation to keep adding complexity.
3. You are skipping the basics.
Nope, I am not talking about “press ‘up,’ enter a number, and hit ‘trade.’” Those are the basics of how to use a trading platform, not how to actually trade! Maybe you read a few dozen articles about different chart patterns, indicators, and fundamentals, and now you feel like you are ready to trade, because you went over the basics. But did you learn them in detail? Did you practice them? Did you look at example after example?
This goes back to learning how to do a few things really well, and forgoing the temptation to learn everything. If you find a trading system that has promise, focus on the following:
- Ideal examples of each indicator as part of an “A” trade setup.
- Identifying market trends, reversals, flat conditions, and choppy conditions.
- Excellent contexts for fundamental trades (if you place them). Driving economic factors.
- Ideal price patterns (if you use them).
Literally go back in time historically and circle great examples. Save those charts in a folder so you have them for reference when you are examining a possible trade setup later. Do not just go back in time and test your full system. Check each component separately, and learn all the nuances of each. Then go back and test the system. This can be very time-consuming, but worth it.
4. You do not manage your money well.
There are a lot of ways you can go wrong with money management. Here are some common mistakes:
- Investing arbitrary amounts on your trades, and wondering why your money is going down the drain.
- Trading with real money when you should still be in , trading with virtual money. Trying to take shortcuts usually has no other result than losing money and taking the long way around. One of the key tricks to managing money properly is not to spend it at all when you do not have to. That includes when you are learning, and when you hit an unexpected losing streak and need to figure out what is going wrong.
- Not managing your household expenditures and budgeting well. How much money do you have available to trade with? That depends on how well you manage to save with the rest of your budget. The more you save on food, utilities, and entertainment expenses, the more you will have available to trade with, and the faster your account will grow. See if you are spending money you do not have to, and cut back as necessary to help fuel your trading account.
Actually financing a binary options online account can be one of the most difficult obstacles standing in the way of a new trader. This is true with all trading, but most especially with binary options online, because binary options online attracts traders with small accounts. Just because you can get started with $100 does not mean you will not do much better starting with $500. Give yourself the best chance you can at success by conserving your finances and .
5. You are refusing to ask for help.
Trading is seldom a solo journey, even though you probably will spend the majority of your time trading alone. There are an abundance of resources online that are completely free and which you may avail yourself of at any time. . Other traders want to share their experiences with you. If you cut yourself off from their help out of pride or nervousness, you are putting obstacles in your own way.
6. You are trying to do too many things at once.
Are you trying to learn three or four trading systems, test two others, read a book about trading, and keep up on your favorite trading forum every day? You may be taking on too big a workload, which can lead to confusion as well as burnout. In order to really soak up the details and become an expert at anything, it is necessary to focus. Try doing just one thing at a time and see how much it helps you.
7. You are not being honest with yourself.
Perhaps the single biggest way you can hold yourself back and make trading more difficult than it needs to be is by lying to yourself. There are a lot of different lies that traders tell themselves. Here are some to watch out for:
- Telling yourself that you are doing better than you really are, or that you will soon make a comeback when you know that you are stumbling.
- Trying to convince yourself that you have different strengths and weaknesses than you really do.
- Deciding a certain system or a certain type of trade is right for you when another would be more suitable.
- Persuading yourself that you are studying and testing and trading with discipline when you really are not.
- Telling yourself you are moving forward when you are actually walking in circles or even backwards.
- Convincing yourself you are making responsible money management choices when you are not.
- Lying to yourself about your emotions and the impact they may be having on your trading.
- Prioritizing tasks out of order because you have not been honest with yourself about your goals.
There are a lot of potential snags when you are trading binary options online, and no trader is going to manage to navigate the route without taking a few wrong turns. By avoiding the mishaps above to the best of your ability, though, you can at least make sure that you are not stacking obstacles up in your own path. That way you can focus your energies on conquering the obstacles you cannot avoid.