6 (Too) Common Mistakes Traders Love Doing
Trading is tough and failure is always lurking in the background, one little mistake and it will cost you money $$$ you can’t afford to lose! Learning from your mistakes is really good but how much are you willing to pay for them? Well, I can tell you I paid thousands for my many misconceptions. Fortunately for you, I will gladly share them here – for free! I’m going to tell you about some of the mistakes that I believe are very common among beginners. Read them, avoid them and hopefully, you won’t have to pay for them too. But before we continue, a very special friend of mine wanted to say something for the nation:
Dear Traders, It’s OK to Make Mistakes, But Not Too Much. OK?
All people make mistakes. Every single day, ALL people make mistakes. It might be a silly mistake and harmless like buying the wrong kind of milk, it might be something annoying like getting on the wrong bus and feeling like an idiot 2 minutes later, or it might be a life-changing mistake like forgetting your newborn baby in the duty free of New-Delhi and getting on a flight without him. I hope that never happened in this forum… I’m also very sorry and see your comments, but I’m not here to help you solve your personal problems (I don’t have time for it and I’m not getting paid for it) but read this carefully to avoid sad, dumb, annoying mistakes when you start trading Binary Options.
In Binary Options, I see mistakes happen every day. Some of them are lightweight, some are pretty bad. Then, you have 2 types of people; People who want to learn, those are the type of people who could admit a mistake and have no problem saying “I was wrong, let’s fix it”, and the other kind (my least favorite), the ones who insist they know it all and are not capable of accepting any kind of criticism or advice. Here are my most seen mistakes in the binary options:
Opening an Online Trading Account – All for One (Account), and One (Account) For All
Ladies, gentleman, and traders do yourself a favor and don’t open an account on every platform you come across. I know you feel flattered when you see that for once someone is interested in your personal details and is asking for your phone number, but you need to understand that every platform is now going to try to hunt your soul with endless phone calls The more you play it hard to get, the more it excites them!
Also, from experience, being in touch with a few platforms at the same time is confusing, you end up getting lost, everybody offers you something unique and at the end, you’re not sure of anything anymore. Besides, you can get all the information needed from the platform by simply logging on the chat or sending them an mail, this also lets you test their customer service speed and efficiency. After researching a few platforms, choose 1 or max 2-3 platforms to open an account with. Not more. Better if they have different returns and refunds, then you could play with the outcome. Here are some tips on how to choose a broker.
The Ultimate Question – How Much To Deposit??
Well dear friends, this is a good question. It’s important to put enough but not too much into your account, depending on your capacity. You need to understand that a trader’s safety net is the capital on his balance, a bigger balance is more safety, but can also be more risk. Depositing 200$ when the minimum per trade is 25$ is too risky, it leaves you no room for mistakes. 2 bad trades and it will be hard to get back onto your feet, might as well open your window and throw your money outside. Depositing 20k on a platform you don’t know if you can trust is also pretty stupid (I don’t care if you can afford it, it’s still stupid).
If you are a beginner, and the platform offers you a good education package (1 on 1 lessons, demo, webinars and a money management course) for a 1k-2k-3k deposit, in my opinion, don’t go for it. Many brokers offer you education for free, no strings attached. You don’t have to pay for your education. Nevertheless, good education will increase your chances of making good trades (in interesting terms it means money) by hundreds of percent, so if you’re 100% sure you’re depositing over 1K-2K for a good reason then go for it. But don’t say we didn’t tell you education can be received for free. Any deposit between 300$-1500$ for a new trader is a fair amount to start with, but make sure the min trade is not 50 or higher. Regardless, always remember that how much to deposit can only be based on how much you have to lose.
Account Managers – Who’s Trading Here?
Go ahead, take my money. This is what you are basically saying when asking a platform if they can trade for you. Some platforms actually make money when you lose, so obviously they will be more than happy to trade for you and lose it all. Really. Seriously now, a good platform will offer you excellent training, a great escort thorough your trades and space to come and make profits on but in no case will agree to trade on your behalf because it is a huge conflict of interest.
Having an account manager can be a good thing, but NO PLATFORM can offer you a steady income, or any sort of guarantee on your money, so why let them trade for you? Who can take care of the best of YOUR money? Only YOU. Remember that. Use all the tools and the training they offer, and go get some profits on your own, don’t count on someone else doing it for you.
Trading Bonus – Do You Still Believe in Santa Claus? (Don’t Let the Kids Know)
Bonus. Getting gifts, money, cash, more than you need, just money coming down the chimney, and nobody is paying for it. Bonus. Such a nice word, means good, even sounds good to the ear but can be lethal in online trading, no matter if it’s Forex, CFDs or Binary Options. ALWAYS check bonus terms and conditions. Most platforms will add the given bonus (if you accept it) to your balance, there it will get mixed with your money. On a quick look, it just seems like your balance has magically increased. Woo hoo! Not! Get that smile off your face. The bonus ties your money to the platform.
Every bonus comes with a trading volume necessary to unlock it meaning, if you make profits when you start trading, you can’t touch them because you made them with the bonus, so in order to withdraw them you will need to make the volume (total gains and losses) necessary in trading. If you lose money, it’s your real money you are losing, not the bonus. Sucks eh?
Some new and improved platforms offer you a good bonus on a different balance (it’s the safest bonus that exists) that doesn’t tie up your deposits and profits. It doesn’t get mix with your real money, and more importantly, it doesn’t tie your money to the platform. It’s like a pending bonus, based on your volume. You can trade, win, lose, withdraw or whatever, and whenever you reached the volume necessary the bonus is added to your real money balance. This is liquid money you can withdraw or keep trading with. Make sure what type of bonus you are accepting, and whether or not you will be able to reach the volume requested. Higher bonus = higher volume. Remember, not all bonuses are the same, sometimes a bonus can be a big help to your trading, not mention increasing your opportunities for profits. Read this to learn if a Binary Options Bonus is right for you.
The First Trade – Relax Honey; It Just Came Out the Oven… You Don’t Want To Get Burned
Once you deposit, don’t be silly and start opening trades right away. It’s true that even without any experience or knowledge you’ve got a 50/50 chance of making a good trade. But imagine what a little bit of training can do to your skills. Just taking time and hearing out your account manager/analyst or junior broker (it’s all the same for me) can do wonders.
Opening a clueless trade right after your deposit funds on your trading account will result in loss and endless cursing. Take it easy, be cold, calculative, that how you make money. You can even wait a day or two before opening your first trade, so what? It’s for your own good. In the meanwhile, get used to the markets, read some economic news and follow economic calendars. Do your homework and use a demo account. Demo trading is a key element of any education or trading strategy.
Online Brokers – Check It Out Before You Jump Into It!
Right, Jah blessed us, we are traders now, everything is good, we are making money and now we want to roll with the big dogs. All platforms offer you premium accounts for high deposits. Some of them are really good and get you higher returns on trades, cash back at the end of the month on losing trades and sometimes even the latest Ipad with the platform’s application so you can even trade from your toilet seat.
Before going on to open a premium account, if you still haven’t withdrawn any funds from your first account, make sure you do! Check if the platform is reliable, and if it doesn’t take too long for them to transfer you the money. Up to a week is really good. Up to 2 weeks is slow but still acceptable. Over 2 weeks they really need to have a good excuse like a group of deadly dolphins attacking their financial department otherwise it’s really dodgy. Once you have your withdrawal you can make a move on to find the best bonus for your money.
My Biggest Trading Mistakes – Trader Persona Style!
The Market Adapter
One of the most common mistakes traders make; attempting to adapt the market to their own strategy! Thinking they’ve found the ultimate & most unbeatable strategy in the world and the entire market should bow before them. Yes, thinking the candlesticks MUST dance in whichever direction their strategy indicates they should move towards. This leads to picking lousy trades because not a single scrap of thought was given about what the market was actually doing. Trading is much like fighting, you have to adapt to your opponent or you’ll get crushed.
Remember this famous quote by Bruce Lee; “…You put water into a bottle and it becomes the bottle. You put it in a teapot, it becomes the teapot. Now, water can flow or it can crash. Be water, my friend.”
Meaning you have to adapt in order to succeed. The same goes for trading; alter your trades according to the market and shape your strategy likewise – not the other way around!
Skill Level-Up Cheater
Oh man, if only you knew how much time I spent Googling profitable strategies, thinking I only needed to find a and copy a profitable strategy. If I had spent that time studying the charts instead, I would’ve had my own office in Wall Street by now… OK, perhaps not, but hey, at least I could’ve gotten to where I am today much faster! To use a profitable strategy, skills are required. You can’t cheat your way up to getting skilled. The only way is the hard way, it takes time and effort. Although it’s not a bad idea to learn from other trading strategies, you should not expect them to be as profitable for you as they are for their creator. The reason a strategy works for someone is because of the trader’s personal experience and skills. You can’t pick a strategy and start trading live the first day, believing it will lead to success. Focus on studying the tool or the strategy you like, try to understand it and eventually and gradually you’ll level up, getting skilled! Maybe you’ll even create your own mega-profitable strategy.
“Absorb what is useful, discard what is useless and add what is specifically your own” – Bruce Lee
I remember that during a period I had about 16 charts open in MT4 at the same time, I didn’t want to miss one single trade! So many opportunities, why miss a winning setup? It didn’t take much time before I realized why multitasking was a stupid idea. Allow me to explain. Trading is about making money, you want to win as many of your trades as possible. We are not looking to break the record for the number of trades in one day! The more assets you trade, the less you know about one specific asset. Why? Because you’ll never have the time to patiently analyze 10, 15 or 20+ assets. Before you are done drawing your trend lines and S/R-lines on one chart and one-time frame, all the other assets have moved millions of pips away from where they were before. You’ll get stressed out keeping up with all that is happening in all of the different markets, you’ll get careless and the mistakes will just pile up one after another. Start with one or two assets, get familiar with them and I can guarantee you’ll reach a much higher success level in far quicker time!
Do you know how much it sucks to lose something valuable you just paid lots of money for? It’s obvious isn’t it, it really sucks! The same goes for making a costly mistake and then ignoring the reason behind the failure. I mean, you just paid for it, so at least take a moment and look at what you paid for. Keep avoiding why you lost trade and you’ll end up paying for the same mistake over and over again! So stop being ashamed of admitting you made a mistake, analyze them and learn from them by keeping a journal. Don’t know how to start? Read my article about why you should start a trading diary.
“Mistakes are always forgivable if one has the courage to admit them” – Bruce Lee
The Win-Rate Chaser
I had 8/10 wins today with this new strategy I found! I have an 80% win-rate!!! Really? So if I win 10 trades in a row, my win-rate is 100%? I guess I never ever lose then. What if I win 1 out of 1 trade, that’s 100% too! Wow, so many times I can remember that I have been winning 1 trade out of 1 trade, my win-rate must be like 100000% by now… Seriously, just stop chasing win-rates. Know this, a win-rate just depends on how many trades you choose to take into consideration, under an X-day long period. Your win-rate will always vary, ALWAYS! Stop chasing win-rates and focus on money-management and as I mentioned above already; get skilled. Furthermore, whatever you do, you will just have to face the fact that some days, weeks and months you’ll end up having bad trades and horrible win-rates. However, what never fails you is a good plan for money management. So stop with the pointless rate chase!
You’ve Done It!!!
Congrats for making it to the end of this loooong article! Hopefully, you’ve learned to stay away from making these silly mistakes. “Listen” to what the market is trying to tell you, take your time getting skilled, focus on fewer assets, learn from your mistakes and stop chasing ghosts. In time, your trading will improve, you will adapt to various market conditions, have a working strategy that will generate a steady and profitable win-rate and you won’t repeat previous mistakes. Don’t forget, “Be water, my friend!” Adapt!