Mistakes New Traders Make With Binary Options
There are many mistakes that new traders make with binary options when they first begin. This article will highlight the most frequent mistakes that new traders make with binary options and how to avoid them.
By Gail Mercer
Thursday, March 30, 2017 - 00:00
Mistakes that New Traders Make With Binary Options
- They fail to remain in demo mode. Many new traders get enticed to go live before they are ready. Maybe they had a really good week or month in demo and are convinced they have it down pat so they go live and then they lose money. They get frustrated and try to make the money back only to lose more. What they often fail to realize is they needed to stay in demo mode because a week or even a month is not sufficient time to really test their trading plan (if they had one). The longer a trader stays in demo mode, the longer their trading track record is, the higher the probability of duplicating it in their live account. Why? Because it is all about probabilities. If you toss a coin, there is a 50% chance of heads or tails. Does that mean if you toss the coin ten times, five will be heads and five will be tails? No. But, if you toss a coin 100 times and graph out the results, you will discover by the 100th toss that the 50% probabilities was pretty accurate. The same applies to trading -- a trading record of 20 trades does not compare as accurately as a trading record of 500.
- Markets move at different speeds. Some days the markets are fast as lightning (high volatility), while other days are like watching paint dry on a wall (low volatility), and then there are just average days where the market moves just right, not too fast and not too slow (medium volatility). The new trader needs to be able to identify all three as the way the market is moving affects how they trade for the day. For example, on a slow day, buying time is an advantage meaning the trader chooses a daily binary versus a two-hour binary or, on a fast day, they use more Out of the Money binaries to lower their risks.
- New traders choose the wrong binary option for starters. In today's digital age, everyone is consumed with speeding through articles, videos, training sessions and, new traders, quite frequently begin on the fastest binaries, as well. And what happens? They crash and burn. The faster the binary the more experience a trader needs. If a five-minute binary seems fast-paced to you, you can also choose from weekly, daily, or 2-hour binaries, depending on your pace and preference. This provides time for the new trader to decipher what they are doing and read the clues that the chart is providing.
- New traders are not consistent in their approach. While it may take time to find something that clicks with them, quite often new traders depend solely on signals or indicators -- not understanding either. Then when they lose money, they jump to a new service. A better approach is to look at different approaches and find the one that makes sense to them and they can understand.
Mistakes that New Traders Make With Binary Options - How to Avoid
These mistakes that new traders make with binary options can be avoided by simply taking the time to develop a plan, staying in demo mode until a sufficient track record has been established, avoiding the fastest binary and choosing one that had more time, and by choosing an approach that makes sense to the new trader.
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