Making Tough Trading Decisions. Not as Easy as Binary Options.
Pulling the trigger can be hard to do for some, a drug for others. Binary Options make trading easy, perhaps too easy. You don’t have to always trade in order to be successful. Know when to say when.
Trading is all about hard decisions. What to trade, when to trade, how much to trade. Simply being able to analyze a chart and predict a direction is one of the hardest things I have ever done. What makes it harder is the addition of emotion. Greed and fear are two of the most powerful emotions and the reason why most people who try to trade for a living fail. For some, pulling the trigger on a trade is the hardest thing in the world to do. The fear of losing is almost enough to keep them out of the market. For others, trading is like a drug. Some do it for fun and enjoy the high trading brings them, some trade because they have to. If there is one thing that sets the really successful traders from all the rest is knowing when to say when.
The best approach to trading binary options is to have a system. Systems are based on strategy, analysis, money management and patience. You have to know what to trade, how to trade and most importantly when to trade. Signals are one indication of when to take a trade, but they are not the only one. You must also take underlying conditions into consideration as well as trends, news, events and other market conditions. Not only do you have to be able to know yourself. You need to know when you are making clear decisions and when your judgment is being clouded by emotion.
The signals, this is what we are all after. Signals that indicate when to buy and when to sell. Learning to read the signals is a lifetime pursuit. Trying to weed out the false signals from the good, picking the ones that will result in profits and not losses. At face value, it seems like a no brainer to say “trade when there is a signal and don’t when there isn’t.” Unfortunately for some the compulsion to enter the market and trade is so strong that they will manufacture a signal. This can be done simply by talking yourself into it. Sitting there thinking to yourself I just know the market is going down in the next ten minutes. Some call it a gut feeling, others intuition. Usually it is indigestion, not a reason to trade an option.
Another way that some people manufacture signals is to adjust their indicators. Sometimes the indicators don’t tell them what they want to hear. Then they adjust their indicators, or maybe even switch to a different indicator, with the idea that they are “fine tuning” their strategy. Eventually any indicator can be adjusted into telling you what you want to hear. There is an old computer programer’s saying; “Torture the data long enough and it will confess to anything”. This is a big mistake. If you are not getting a good, solid, valid signal, don’t trade. Take a break, go for a bike ride or get some errands done. A signal will come eventually and that is when you should trade.
Market condition is another thing to take into consideration when deciding on a trade. Sometimes the market is calm and getting down to business as usual. Sometimes it is being bombarded by news, events or political activity which can cause a lot of volatility. Some strategies work well under one set of conditions and not in others. If you are using a long term strategy you may not want to trade when the market is volatile, if you are using a short term strategy that could be the perfect time for you. Knowing how your strategy works and what conditions are best is another tip to help you know when to say when.
Trader, Know Thyself
Knowing yourself is the hardest thing to do. We are emotional beings; fear and greed are strong emotions. They can easily cloud your mind and influence a trade. Imagine a winning streak of 10 60 second trades, you just doubled your account and are riding high. You decide the Dark Cloud Cover that just appeared on your charts is a good buying point and double down on your biggest trade yet. The next thing you know the market tanks, leaving you out in the cold. Why did this happen? Because instead of reading the signal, the emotions took over and led to a bad decision. If you think this is you, you don’t need to be trading Binary Options. If you can use a systematic approach that employs a strategy and utilizes strict money management rules then maybe you can trade successfully.
- To Trade or Not to Trade, That is the Question. Make Hard Decisions by Bogdan