Overcoming trading fears can be difficult for any trader, but especially for those that are trading futures, forex or commodities. Fear is normal and can stem from any of the following:
- Unknown outcomes
- Will you lose? If so, how much?
- Will you win? If so, how much?
- Will the market move?
- Will it move too fast to exit?
- Will something unexpected happen and cause the market to crash? If so, can you get out quickly?
- Lack of confidence in your understanding of the markets, platform, or indicators
- Fear of losing money
- Fear of knowing exactly when to exit the trade — too soon you give up profits, too late you give back profits. This creates an internal conversation that often leads to second guessing yourself.
Regardless of how many winning trades you have, the losing trades are the ones that stick with you the longest. Why? Since the losing trades result in feelings of danger, discomfort, and anger, the subconscious quickly stores these experiences for future reference to protect you from harm. The next trade you try to pull the trigger on a trade, the subconscious immediately sends out danger signals (based on your previous loss).
Overcoming Trading Fears Using Binary Options
Using binary options, you can actually work through these fears and create a safer environment for trading.
- Removes the Unknowns – Binary options removes the “major” unknowns like how much can you lose or how much you will profit. Every order ticket shows exactly what you can lose (red square on chart below) and the maximum you can make (green square on chart below).
- Since binary options allow you to foresee the best and worst outcomes on entry, traders can focus on their charts and indicators. Plus, with so many different option expiration’s available, you can choose the one best suited for your level of trading knowledge. Beginners may need to start with longer term binary options, ie daily or weekly, while experienced traders may opt for the shorter term binary options.
- Where to exit is easier to decide because you know the best and worst outcomes. For example, on the ticket above, the worst case scenario is a $23 loss and the best case scenario is $77. If price moves in your direction, and you achieve $50 in profit, you can decide whether to stay in for the remaining profits, $27, or simply exit. On the flip side, if price goes against you and you lose $15, you can opt to exit with a $15 loss versus the full loss of $23.
Binary trading provides the variables that help traders in overcoming trading fears. By overcoming the fears, traders can actually focus on their charts, indicators, and setups instead of trying to deal with the emotional roller coaster that futures, forex, and commodities create.