Ever wondered why your binary options success is not as great as you would want it? Or why your success lacks completely? Well, there could be many reasons for that, but next I am going to highlight the ones I consider the most common. Knowing them will make it easier for you to avoid so take 10 minutes and read the about the next 6 key success breakers, in no particular order.
1. Treating Binary Options as Gambling
Ha! Trading is not gambling but I’ve heard so many times that binary options are gambling that I can’t even keep track of it. The thing is that no matter how many arguments you make for binary options, saying they are not gambling, some people will still say they are. And if they believe trading equals gambling, they treat it as such. Let’s take a look at the following scenario: price is in a strong uptrend and two guys, a Trader and a Gambler want to make money out of it. The Trader uses his price action skills, recognizes the uptrend and starts placing Calls. The Gambler is placing a Put because why not… he doesn’t know anything about price action or technical analysis. The Trader wins and wins and wins while the Gambler continues to accumulate losses because he thinks: “Hey if I flip a coin, after 10 Tails I will get 1 or 2 Heads so after so many losing trades, I will get a winner”. Well, LOL, Mr. Gambler, you will not get a winner until the trend stops. Then maybe, just maybe you will get a win on a Put. But on the other hand, maybe you will start placing Calls thinking “I have to change my luck. Puts don’t work, let’s try Calls”. But surprise: that doesn’t work either because now the trend has reversed. Guess what: the rules that apply to gambling don’t apply to binary options trading.
2. Too High Expectations
Most people come into the trading world thinking it’s a sure way to make extra income. Of course money can be made – that’s the point of trading – but when you hear someone asking “How much money can I make per month”, you know you are dealing with a guy who has no idea what he’s getting into. People think that trading success is on a clear schedule: study for 2 months and 15 days and then get 500 extra bucks from trading each month; study 6 months – get 3,000 bucks per month and so on. But in fact it doesn’t work that way. You can study for a whole year and still not make any money or you can study 2 months and become a relatively successful trader. Then there’s another thing: you can make profit one month and lose it the other. The market doesn’t behave the same every day, week or month, so you have to adapt; if you can’t do that, the profits are gonna start dripping form your pockets.
3. Lack of Common Sense
Yup, a bit of common sense goes a long way and the lack of it can lead to a trader’s failure. Here’s the thing that many new binary options traders don’t really understand: if something sounds too good to be true, it probably isn’t. I am sure you’ve heard that many times but it applies perfectly to binary options because this business is full of people promising things that simply sound too good to be true. An account manager says he’s been trading on Wall Street for the last 20 years and that he will trade your account, an autotrader vendor says his software has 99% accuracy, a signal provider promises he’ll double your account in 3 days – all these happen in the binary options world, but that doesn’t mean you should believe this stuff. People with not-so-good intentions make claims. That’s their business, but your business is to see past those claims, use common sense and don’t believe them. More importantly, don’t put your money on the line.
4. Lack of a Plan
When you go out the door of your house, you have a goal, a target: to buy something, to do something or simply to take a walk. Anyway, you have a plan. Some binary options traders lack that plan, they are not organized and all this results in failure many times. The thing is that you have to make a plan and more importantly, to stick to it. Set your objectives and once they are achieved, stop trading for the day or week. Plan the trade and trade the plan.
5. Revenge Trading
I have to admit I have been “guilty” of revenge trading myself. You hit a winning streak, feel invincible and then all of a sudden, you start losing. The first loss is easy to digest but the second one is starting to hurt your ego (and your wallet). No problem, I am gonna make up for the losses with the next one. Oh but this one’s a loser also. Now frustration kick in and you think: Darn you, Market, I am gonna take my revenge. And now you trade bigger sizes to recuperate all the losses but guess what… that leads to more losses and that’s how you finish a good day in negative territory. This kind of behavior can lead to bigger and bigger losses so if you sense you are starting to act this way, do everything possible to snap out of it ASAP.
6. People Don’t Listen
It’s no secret that scam is a part of the binary options industry. You have to keep your eyes open and your guard up. Almost all types of scams are already known and once they get scammed, people usually go online (forums, chat rooms, etc.) and share their experience. Now here’s the thing: if people would listen to what scam victims have to say and would stop falling in the same traps over and over again, scam could be a thing of the past. If you hear about 10 guys who were promised 50% Return On Investment by X account manager from Y broker but their account was blown in a week instead, WHY would you go to the same broker and make the same mistake of trusting an account manager with your money? Learn from the mistakes of others and listen to what others have to say before trusting people.
The Big Absentee
Notice I have left out lack of education as a reason why traders fail. I did that because we’ve talked about the importance of education so many times that it should be crystal clear for everyone that you need to learn before investing. If you simply jump into trading without basic knowledge, don’t expect to make any money unless you are incredibly lucky and if that’s the case, you are better off in a casino. Make sure you visit our Binary Options Trading School and erase lack of education completely from the list of reasons why traders fail. Maybe next I’ll write an article about ways to become a successful binary options trader. Trust me, education would be top of the list ;)