Here are some basic tips for every newbie trader to follow. They will guide you in the jungle of binary options trading. Some of them are easy to follow, some of them are more difficult but at the end all will save you tones of money frayed nerves. By focusing your efforts you will be able to trade stress free and learn faster than ever before. These tips are selected from the best practices of many professional traders and based on hundreds of cumulative years of market trading experience.
- 1. Don’t put all your eggs in one basket! Having all your money in one account is never the way to go, before you know it you might end up with no money at all. Try to separate your finances into few accounts so you don’t risk them all at once.
- 2. Do Take risk control seriously. Take care that all your trades are less or equal to 5% of your invested capital. Yeah, this way you won’t make huge money from just one trade, but you won’t lose a pile of dollars either. As your account grows so too will the 5%, maximizing your potential profits.
- 3. Do Trade only when you are calm and relaxed. Don’t trade if you are angry or very tired. Have you ever tried to study at night after an entire day of work? See how you read a single sentence 10 times in a row before you start grasping the point? It is same with analyzing a chart. You’re much slower when you’re not relaxed and trading requires both quick and accurate reactions.
- 4. Do Always check the economic calendar to see what news or earnings are scheduled to be released. Trade only after the data is released and the potential affects have occurred. Trading the news can be profitable, being able to predict the reaction of the masses towards a specific event, however, is something reserved for pro traders. It is not that you’re stupid or your strategy sucks, but that you lack experience. It takes a lot of knowledge and experience to predict what the market will do before it does it.
- 5. Do Stick to your trading plan and strategy rules; trade only when the conditions required are met. I mean, if you didn’t mean to follow your own plan, why did you create it the first place? You had a goal and you wanted to make it work, the rules are meant to help you meet those goals. You’ll never know if your plan is right if you don’t give it a chance.
- 6. Don’t fall into the bonus trap, you might never manage to withdraw your money. Think about it for a second; The brokers don’t want you to win. They want you to trade, trade a lot. Why would they just give you money as a present, because of their loving nature and altruistic beliefs? Think again. There are strings attached to bonus, such as turnover minimums and time limits, and the more bonuses you take the harder it is to clear the requirements and free your capital for withdrawals.
- 7. Do not over trade. Trade only according to your plan, only follow your rules and never place aggressive trades based on your emotional state. We all know that feeling – you just made a very bad deal and you lost a lot of money. You know you should stop right now and consider your new money balance, but this little tempting thought spreads through your brain: “What if the next trade is that great winning ITM that will bring me back all these lost money?” Kill that thought. You’re stressed. See number 3 because that next trade could be the one that wipes you out of the market.
- 8. Do Keep track of all your activity in a trade diary. Always keep a clear journal of all your trades including the reasons you entered the market and the final outcome you achieved on each trade. This is a great way to see your mistakes from another angle and will help you adjust your strategy in the future. Also you can compare your Today self with the Yesterday you and get a glimpse of how much progress, or not, you have made.
- 9. Do Use multiple time frame analysis. Always check the higher and lower time frames before placing an order. Otherwise you might miss the trend or fail to recognize important price levels that could hurt your trades chances for success.
- 10. Do Take into account the opening and closing hours of the asset you are trading. Some assets trade around the world, around the clock, but that does not make them good to trade 24 hours a day. Focus on times when major markets are open in order to get the best signals.
- 11. Do Stop trading if you experience a series of 3 or 4 consecutive losses. At that time take a step back, clear your mind and start trading again only after you are fully refreshed even if that mean to stop trading for the day. Now, refer back to tip #7.
- 12. Do Follow market volatility and trade only when it is good for your strategy. Sometimes the market is quiet, sometimes the market is active, both times can be good for trading but each requires its own strategies. Try to recognize market trending and ranging conditions and select strategy appropriate to each of them. News can have a big impact on volatility, refer back to tip #4.
- 13. Don’t never ever make an attempt to use a martingale style strategy. It will destroy your account in less time than you could imagine. Yeah, I know it’s become popular lately, fame doesn’t make it any better, it is not money management.
- 14. Do Keep the conversation with your broker representative to the minimum. Talk to him only on serious cases and don’t follow his tips to deposit more or trade more. Always follow your own plan not the plan prepared by the representative or broker’s staff. Why, conflict of interest. The brokers want you to lose so they can win, following tips from the brokers is like giving them your money without any fuss. Refer back to tip #6.
- 15. Don’t believe blindly on signal provider’s promises. Always ask for free trial and check if the performance results are real. There is too much scam out there and even here on BOTS we can’t catch them all. We recommend you avoid in all cases following autotraders and robots, even if they are third party and not in partnership with a broker.
- 16. Don’t quit your day job when you decide to become a full time trader. You will need a lot of experience and serious capital to rely entirely on trading income and that takes time. It is always best to have a second source of income too. Besides, making trading your main business will put a lot of pressure on you especially if you have a family to take care of. Pressure will make you afraid and stressed. Again, see number 3.
- 17. Don’t be shy. When you don’t understand something, ask the community. It is better to show that you are a newbie than to make a big mistake and be sorry for it later. In the end you’ll look stupid if you lose because you didn’t ask a question. BOTS is created for people who need help and advice to become better in trading binary options. We are here for you. And we’re friendly. Promise we won’t laugh at you no matter the question. . . unless of course it’s meant to be humorous.
- 18. If you are a successful trader and would like to become a signal provider or money manager, do prove your trading results in CommuniTraders. Only verified results matter at the end and no other claims will be taken seriously without proof in the community. Even worse – if you just come out with great promises and no proof traders will stay further away from you.
The tips I have provided here are a road map to your success. If you are wise to take these tips seriously they will help you improve your trading skills and make you a better, well informed trader. Follow me at our forums!