Don’t be overconfident
Trading in Binary Options is fun and exciting, but ultimately it has to be worth it financially. It is all too easy to start overestimating your personal knowledge and talent after a couple of lucky hits and to all of a sudden start trading in amounts that are far too large. Please just take positions for modest amounts. With 365Trading you can start with as little as € 5.
Do not continue buying in a losing position
This is one of the biggest pitfalls in trading in Binary Options. You have taken a position, entirely in accordance with your personal strategy, and subsequently the market does not go in your favour. You want to win back that money, so you buy more—this time for a better price—because the price has gone down against your expectations, and therefore you can now buy at an even lower price.
Then the price continues to move in a direction which is disadvantageous to you. Don’t do it. Just accept the loss, stop for a while and analyse why it did not go as you had expected. Remember that not a single trader is able to place only winning orders. Everyone suffers losses; what counts is that you are left with more winning orders and fewer losing orders at the end of the day. Taking a new position at a lower exchange rate may be worth your while. But you should see it as an independent decision, and one that isn’t meant to make up for your earlier losses.
Don’t create false expectations
It does not matter if you lose € 100 once because you did something stupid; just as if you become enthusiastic because you may have earned € 1000 at some point. Take your time to become better at it and keep on looking realistically at your claims, without becoming obsessed by how much you exactly earned in the last week.
It may well be that, in time, you will earn more through trading in Binary Options than through your day job. Then again, it may not happen because you do not have the time, the interest or the discipline. It is best just to look and see how far you can get, gradually get better at it and book more profit, than to apply specific financial objectives and try to trade towards these. After all, you can’t always know what the future holds.
Only trade with money you can afford to lose
The best part about trading in Binary Options is that it is the least risky. You can never lose more than the capital that you deposited. It is therefore never necessary to risk money you can’t afford to lose. Just reserve an amount for your trade account and accept that you could, in principle, lose this amount. This is especially sensible when you’re still learning. If there is one thing that is not necessary when trading in Binary Options, it’s sleepless nights. So don’t put yourself in that position.
Never start trading without a plan
Alwaysthink carefully before opening a position. Do not take a position because you have some vague suspicion, or because an acquaintance let it slip at a party that the Dollar is really about to collapse. Instead, base your orders on well-thought-out Fundamental and Technical analysis. Try to determine an entrance and departure point as effectively as you can before you open a position.
At first you may notice that your plan does not always work and that the market sometimes moves unexpectedly. But this will only allow you to develop a better feel for trading and you will continue to get better at it.
Don’t open a position when in doubt
The Americans have a good expression for this: “When in doubt, stay out.” Of course, you also should not be a scaredy-cat, but if you have done an analysis and you are still in serious doubt about what the price will do, look for another stock exchange to place an order in, or go and do something else for a while. You take a position for a specific reason and if you cannot really convince yourself of the merits of this reasoning, then it is probably not a very good reason in the first place.
Concentrate when trading
This is something that every trader in Binary Options has done wrong at some point: button here, button there, busy with other things, and then all of a sudden…Pushed the wrong button. Bought instead of sold by accident. Or mistakenly deposited € 500 instead of € 50.
This can of course be easily avoided, provided you stay focused. Concentrate when you actually take a position. Make sure you have set all fields correctly before clicking on ‘Place Order’.