One trait I talk about a lot on this site is adaptability. Adaptability is one of the most important qualities you can cultivate as a trader, and it is one that will serve you throughout your life in many different areas. It is in some ways a master skill which determines the usefulness of your other skills. It is important to develop long term, reliable strategies for trading, but is equally important to stay flexible enough that you can add and drop short-term strategies and changes as needed.
Why is it so important to stay flexible? The biggest reason is that the market itself is always adaptable. In a very real sense, that is what market movement is—adaptation. The market adapts based on a variety of factors, including economics events and trader sentiment. There are market cycles which happen according to clock time. For example, you can expect a fair amount of slippage coming out of a weekend pretty much every time. But there are also many market changes which are not related to clock time at all. Instead, they are related to event time, and are driven by real-world phenomena.
In some ways, it can be helpful to categorize what “type” of trader you are—a position trader or a daytrader, a technical trader or a fundamental trader. It can help you to narrow down your strategies and focus on what you do best, and can prevent you from getting distracted or following leads which are not going to help you out. But if you constrain yourself too much, you are in danger of defining yourself too rigidly. When you do that, it becomes harder to change when the market does.
In an ideal world, a binary options online trader would be as open to change as the market, and would adapt perfectly right alongside it. There is a danger which goes with that as well though, and that is the temptation to become too flexible. If you do that, you might start violating your trading system rules at the drop of a hat, and might not stick with the repetitious, deliberate processes that go hand-in-hand with success in binary options online trading. When you are trading at one of our recommended binary options online brokers, like our newest broker, GrandOption, you can burn through your investment quick when you start trading outside your zone. It is the crux of the challenge for many traders that these qualities tend to be inverse. The more flexible you are, the harder it may be for you to stay disciplined with tedious repetition. The more capable you are of sticking with a system, the harder it may be for you to stay adaptable. Both are critical for success.
How can you ideally balance these traits? There are a couple of possibilities. One could be to develop a long-term strategy which you can use for the indefinite future, but be ready to make adjustments as needed when the market changes. Another idea would be to simply become very good at developing short-term strategies, and find a way to streamline that process into something which itself becomes routine. You would still continue using long-term trading methods, but you might regularly bring fresh techniques into the mix.
This is one area where discretionary or mechanical trading can also come into play. Mechanical trading does work for a lot of traders, especially if they go over their systems and make subtle adjustments to their method now and again, and then simply stick with the new mechanical method. But discretionary trading is another way you can stay adaptable. If you can make smart discretionary calls on the fly, you can adapt to market changes day by day, trade to trade.
Never Forget to Test
Whatever tactic you use to stay flexible and disciplined, be sure to test your strategies when they change. That is one way you can remain rigorous and not starting making random moves or violating system rules pell-mell. Use your demo binary account and practice. Sometimes you can work on adapting your system and running tests while you continue to trade with your existing version. Other times you may find that profits are starting to lag behind or even that you are losing with your current system. When that happens, it is time to stop trading live, go back to testing and making changes, and jump back in to the live market with real money only when you know for sure you are ready to trade profitably again. Adaptability is not an easy trait to learn, but it is an essential one!