Seven Deadly Sins of Binary Options Trading you shall not commit! What’s the first thing that comes to your mind when you think about the “Seven Sins”? The Bible may be, perhaps a story or a movie that you can relate to? Personally, I remember the movie Seven (Se7en) with Morgan Freeman, Brad Pitt, and Kevin Spacey. A good movie for sure that was giving me flashbacks the other day. So I asked myself; “what are the Seven Deadly Sins of Trading?” and “what are the treatments?” – Well, this is what I’ve come up with so let’s take a look!
Image source: Bibleinfo.com
Lust – Uncontrollable Passion or Longing
The first deadly sin of trading is lust. You are driven by an uncontrollable need and longing to trade! Even on the weekends when the markets are closed – you rather trade a computer generated market on any broker that offers it rather than resting and waiting for the real market to open. And after that, you may even sit up on a Sunday night and calculate the minutes before the market opening so you don’t even miss the smallest volume tick or pip move in the market. I have seen this behavior in many inexperienced traders. These driven-by-lust traders can’t control themselves when it comes to set strict rules like when to trade or when to not trade. Obviously, it’s needless to say that trying to trade every market condition and setup at every hour will most often result in losing than winning.
The “cure” or the solution? Set strict rules for your trading, choose a trading period during which you really have time, energy and a clear mind. Most importantly, see if those market conditions fit your trading strategy and knowledge. The best results however will come if you are able to wait for the perfect times to trade, when the market is really moving, and only trade then.
Gluttony – Excessive ongoing Consumption
The second deadly sin of trading is Gluttony – closely related to Lust. Simply put, your desires and goals are excessive when it comes to trading and money. You are over-trading and you often trade too many assets simultaneously and use too many indicators, thus confusing yourself. If there is a news announcement coming, you have to trade it too, even if you don’t know how to do it! Why not trade after the news when it is safe to trade again? Because this may be a chance to make MORE money so you have to jump in – “just can’t miss that NFP my account manager mentioned”. I have also witnessed that they often switch from one trading strategy to another because they think the new strategy will result in more trading opportunities and a higher win rate. In conclusion, nothing can glut their need for more money and more trading signals.
The solution? Limit your analysis to the assets you understand and don’t over-trade! Stick to your working strategy and hone those skills until they are razor sharp! Remember, pigs get fat and hogs get slaughtered!
Greed – An Excessive Pursuit of Material Possessions
The third sin is Greed and it needs no introduction. Every trader is familiar with greed. For example, taking too much risks, bad money management like using Martingale systems. There is never a limit to what is a good turnover on your investment. “Can I deposit $100 and make $5000 per month?” is a statement you may hear from greedy investors. You start trading too early with lack of knowledge and use poor risk management. Normally, you also tend to listen to advice from account managers or harmful scam artists. In conclusion: Greed makes novice investors fall for the most ridiculous and obvious scams where they are lured in with too-good-to-be-true stories that always end up in losses.
Solution? Gaining knowledge through proper trading education can put the lid on your greed and guide you in the right direction.
Sloth – Excessive Laziness or the Failure to Act
The fourth sin is about being too lazy to try learning and taking action! The desire to be spoon-fed or achieve success without making an effort is a big part of the issue here. Most likely, lazy traders seek “easy money schemes” such as auto-traders where they will not be learning anything because they despise learning or are too unwilling to work hard for their success. They are also always looking for a “working strategy” rather than making a strategy work for them. In conclusion, the traders who commit this sin do not understand that they can’t make money without making an effort. All they want is a get rich quick scheme that really works, and they never do.
Solution? If you don’t have the time nor the desire to become a trader, it’s best you don’t bother at all, there is no easy way to riches. But you can always find good mentors and valuable tips in our CommuniTraders forum.
Wrath – Uncontrollable Anger
The fifth sin is wrath and it does not take much imagination to relate this to trading. Most inexperienced traders lose their cool after facing a few losses. Hell, I’m an experienced trader and I can lose my cool after a few losses. You tend to revenge trade and act as if the market is your personal enemy. But revenge trading in anger will most likely increase your losses and a couple of losses in a row can easily turn into ten losses in a row. Rage is your worse enemy in trading because it leads to dumb decisions, get rid of it!
Solution? Patience is virtue – You can cure wrath by taking time to cool down and understand what mistakes you made. Keep notes in a trading diary so fellow traders can help you analyze what you can do to improve your skills!
Envy – Desire to have Someone Else Experience or Results
The sixth sin is envy. Isn’t it annoying when everyone to your left and right is making money from trading on a daily basis but you lack those skills? Especially if none of them is interested in helping you? The desire to have their skills can quickly turn into envy and you don’t want to be an envious trader – it’s just not healthy and you may easily be fooled into signing up for a scam that offers you those same results that you were so envious of. Just like wrath, envy can also lead you into making bad decisions.
Solution? Luckily, we have the solution – our experienced traders are always here and helping newcomers in the CommuniTraders forum!
Pride – Excessive View of One’s Self
Finally, the seventh sin is about pride. Pride is closely related to your ego and in this case, we are talking about selfishness and understanding your own limits – the bad kind of pride. In the trading world, thinking that as a beginner with just a few weeks of demo trading you gonna be the next George Soros of trading is one example of pride gone wrong. Or how about borrowing that big pile of cash from your friend because you think you will triple it on Binary Options trading and pay him back within a week. We all know how those stories usually end – yeah, broken friendships and empty wallets. Those who commit this sin will pay dearly because the markets themselves always do a pretty decent job destroying a beginner’s ego and taking them down to humbler mindsets with one or two blown accounts.
Solution? Only take pride in deeds that also help others succeed. The feeling of pleasure should be a result of helping someone else succeed – not because you won a few trades in a row.
Seven Ways to Cure Your Sins
“Forgive me my investment portfolio for I have sinned” – well, hopefully, it will never have to come to that. But why just hope if you can simply avoid the 7 sins of trading we discussed? There is often a solution for whatever the issue it is that is holding you back. I guess, so long as you are not a sloth, you can educate yourself enough to glut your greed, show wrath towards envy and show lust for helping others so you can be a trader with self-respect who can hold their head up high!