When you Snooze, You Lose. Prepare Yourself for Trading!
I was relaxing with a drink at my house, imagining the next car brand that I was going to use to paint the town red. This had to be the move to do it. I was trading using a strategy that had worked for me so many times that I had lost count. This time, I was going for the kill and nothing was going to stop me. It was 2AM local time, and although I was sleepy, I couldn’t seem to rest. Several times, the trade went a long way into profit territory and I was tempted to take advantage of the variable option to sell the trade. Then, I decided to double up the trade to stretch the profit. This had to be my trade, based on the strategy that had worked for me so many times before. Then it happened.
In what seemed like seconds, I opened my eyes and looked at the clock in my room. It was 10 in the morning. In part panic and part consternation, I rushed to the computer which had hibernated since, turned it back on and checked my positions. I was alarmed with what I saw. My account balance was half what it was before I entered into what was supposed to be my killer trade. I quickly scanned the charts and found out that my position which had been in profit had reversed wildly against me. In my tired state, I had dozed off on the table where I was watching the charts and did not notice the surprise 75 basis points interest rate cut by the Feds in late January 2008. In one single move, my trade portfolio, which was heavily geared towards the US Dollar, had reversed on me and because I was dead asleep after having had just 9 hours sleep in 3 days, I had lost all the money I had made during my 3-day night vigil. Unfortunately during my trading marathon, I kept opening trades in the same direction when I saw that the original trade was going my way. This heavily increased the risks but all I could think of was the reward. When it all blew up in my face, my dreams of a new car went up in smoke!
Tips for Good Binary Options Trading Preparation
So what went wrong? Oh, what didn’t? Starting with my inability to stop when I was in profit, trading while barely being able to keep my eyes open and basically, my lack of preparation. Knowing what went wrong in the past means you can prepare for it in the future so here are some tips on how to do that:
- Sleep deprivation and trading NEVER go together. A sleep deprived brain cannot think straight, is easily distracted, lacks concentration and is prone to bad judgment. Yes I had made money staying awake for three consecutive nights, but then lost it all on the fourth night. So was it worth it? Nope, so don’t do what I did and make sure you include sleep in your preparation for trading Binary Options.
- Greed. I had several opportunities to take some profits off the table and split. But I got greedy. My dream car kept calling me, talking to me, goading me into staying on for more, and more and just a little more, and yet some more, until I dozed off. An important part of your preparation should be putting together a plan for trading. Don’t just wing it, plan it and then do exactly as you had planned. If your plan tells you that the target for the day is reached, close down your platforms, give yourself a nice pat on the back and go do something else, something fun.
- I forgot a very important trading mantra: anything can happen in an instant. In this case, I got taken out by an unscheduled, surprise FOMC meeting that decided to cut interest rates in the US. Don’t be like that! Always be prepared, be on your toes. As long as you have money in the market (open trades), you are at risk – well, not you, but your wallet – so act accordingly, watch your back. And don’t forget that in trading, watching your back means paying attention to live news feeds, economic calendars, forums, etc.
- Be prepared with some food, coffee, fruits, chocolates – whatever you need to keep yourself fresh. Make sure you bring your snacks with you to your computer station, anything could happen in a minute. Ok, ok you can leave them in the kitchen, just make sure you don’t go out to the grocery store or the supermarket while having open trades. Yea, sure your binary option will expire regardless of you being there or not and you cannot do anything about it (assuming the Close Early is not available anymore). But if something important happens in the market and price changes direction drastically, you can maybe take the opposite trade, hedge the existing one, it depends on that particular situation. Being present when something major happens is the first rule of being prepared.
- Close all unnecessary programs, especially software that requires internet access, or just heavy ones. Make sure your computer runs smooth. Most binary options platforms are web-based, so your internet speed will directly affect the responsiveness of the platform. If you are watching Youtube videos, browsing for cooking recipes and motorcycle parts while opening trades left and right, don’t expect lightning fast speeds.
The Conclusion: Learn a Lesson from My Errors
If you want to be a successful binary options trader, you have to treat this business like a job. Would you go to your job with sandy eyes because you didn’t sleep last night at all? Would you go into office hungry? Would you go without knowing what you have to do and what the plan is for the day? I don’t think you would, so why treat binary options differently? Be rested, well fed, with a clear mind and a clear plan. Be prepared and always try to accumulate new skills because skills are worth money! And use common sense, don’t trade 3 full days like a maniac… like me.