10 Reasons why Binary Options Traders Fail

In the recent times, the binary options trading has become very popular amongst professional as well as naïve traders. Unlike, other trading platforms, the binary options trading platform offers ease of trading, simple rules, very high payouts, and eye candy features to attract traders from all strata of the trading fraternity. The binary options trading also has some very advanced features like automated trading through which one just has to deposit funds and set preferences, and then the software does the rest by placing orders to keeping a tab on the transactions. The brokerage firms which provides the binary options trading platform also allows traders to use signal services to help traders in their decision-making process. Even with so much on the platter, the traders fail to make big and continue to bleed on the street.

In this article, I have identified 10 reasons of failure for the binary options trader to help readers to succeed. This article will help seasoned as well as aspirants of the binary options trading, to better understand that there is more than just “options” in the binary options trading.

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10 Reasons why Binary Options Traders Fail • Avoid These Simple Mistakes and Make More Money Instantly! • Including Secret Strategies! •

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The following article provides detailed description about reasons for failure.

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1. Ignorance to “Knowledge is the King”

The easiness of the binary options trading platform and simple trading format makes traders avoid the knowledge part of the trading. It is not necessary that you should go through the formal education process for learning the binary options trading as the successful traders aren’t always with some formal educational degree. Generally, Individuals think that the trial and error is the best practice to gain experience about any trading. This is the first blunder committed by the newbie. Though, the trial and error can give you a knowledge in a bitter way of losing money and time, the learnings from various educational articles, e-books, strategies, technical chart reading, usage of technical indicators and news article regarding the binary options trading can help you gain better understanding, planning and execution of the binary options trade.

The knowledge is the supreme in each and every facet of life and the binary options trading is no different. As a binary options trader, you should always be open to learning new things, even if it reduces your trading in order to achieve the larger goal. You should also invest time in learning technical indicators, reading charts and their implication to take the sound trading call. In the case of the binary options trading, technical parameters make much sense due to its short expiry duration and hence one should be able to learn and apply the knowledge gained in taking call for each and every trade.

In today’s Glocal (Global + Local) world, the internet presents a plenty of information regarding the binary options trading and I recommend you to use the internet to search and digest as much information as possible to learn the binary options trading. Always remember that the knowledge is supreme and it never makes you poor.

2. No research to find broker

 

As it happens with all new things, the exponential rise of the binary options trading also attracts scammers to the field and hence one should do a serious research to find the legitimate broker for the binary options trading. Any aspirant traders should look for qualities like; where it is registered, what kind of regulations it follows, deposit and withdrawal policies, customer service policies, and security policy, besides payouts and other financial policies. Search for existing customer experiences with that brokers and reviews left by consumers to better understand the broker.

Some brokers offer minimum deposit amount as low as $10 while others offer varying minimum deposit amount ranging from $200 to $250. While some brokerage firms offer minimum investment as low as $1, others allow minimum investment amount ranging from $10 to $50. The payout also varies from 60 percent to 200 percent and hence one should choose broker according to his/her requirements and which fulfills all his/her needs.

A wrong selection of broker can set you up for a bigger trap to lose all your hard earned money, and hence, I urge you to devote sufficient time to find the right binary options broker.

Failures occur every once in a while
Failures occur every once in a while

3. Avoiding Demo/Free Account

All of us must have heard this phrase “Practice makes a man perfect”, and it makes a lot of sense when undertaking any kind of trading, specifically the binary options trading.  To give you the feel and hands-on experience, almost every binary options brokerage firm provide a practice account (Demo Account or Free Account), wherein you are given a virtual currency to trade in the actual trading environment. The newbies generally avoid this demo/free account and jump on to real money to try and learn through trial and error, in the process, losing a significant amount of money and desire to continue trading. The demo accounts allow you to deploy various learnings and strategies and find the outcome, which can be very useful when you trade with a real account. You can also help you assess your trading style and show you the outcome, to further improve your winnings.

Demo account helps the trader to apply the learned strategies on the real environment and allow a trader to identify which strategy work well for him and which does not work well. By practicing on a free account, the trader can optimize the workable strategies and possibility to start its real money account on a positive note.

As a thumb rule, one should at least spend 2~3 weeks on a demo account or a free account to gain confidence and improve winning percentage, before starting with the real money account.

4. Get Swayed by emotions

Normally, we consider that any financial transaction is emotionless, but a simple glance on an average trader shows otherwise behavior. As normal human beings, we are prone to get influenced by our emotions. Continuous loss-making trades makes us angry and frustrated resulting into more loss-making trades, in turn, a mounting losses. On the other side, the winning roll makes us overconfident and in turn, makes us lose our objective and ignore some basic trade influencing aspects to make a wrong future trade. So it is imperative to understand that every trade should be a well thought out decision, in whatever streak you are. Don’t get your emotions take over your trade, as it may hamper your profitable trades and may sway you to make an irrational decision which generally results into loss-making propositions.

One should be calm and composed for each and every trade, and the trade should be a well thought out decision than an emotional one.  If you are showing an irrational behavior then you should stay away from any kind of trading, as emotional decisions are always irrational and lead to considerable amount of loss to the account holder.

5. Putting everything in a one shot

The naïve traders generally put up the maximum possible amount in a single trade and loose everything in a one trade leading to frustration and giving up on trading. These further sways traders emotionally and compound losses. One must consider starting a real money account trade with minimum investment amount and build up once you gain confidence.  Though, with the smaller amount it takes longer to make considerable profits, it helps to minimize your initial losses.

The binary options are a truly retail trade industry as it allows minimum deposit as low as $10, and minimum investment amount of $1. So, my recommendation for retail the trader is to start with small investment amount and then increase the investment amount as confidence grows. This way you will not lose your hard earned money in one go and you will be able to manage your money well.

One can never avoid all failures
One can never avoid all failures

6. No planning or strategy

Though the binary options trading is a simple form of trading, it is still a form of trading. Many newbies think that to trade in a binary option, you just need to signup, deposit funds, and trade. Though they are correct, they forget that a good plan can take their trading business to flourish. Planning ensures that each and every trade undertaken is with thoughtfulness and knowledge resulting in better-winning chances. You should always make a plan before trading for how much to invest, where to invest, and when to invest. Your plan should also incorporate sound money and risk management techniques giving due consideration to the possibility of making a loss. In addition, one must be flexible enough to make required changes in the plan, in case your plan doesn’t work as intended.

Well, planned trade execution can minimize your chances of losing money, and increases the chance of winning trades. You should consider each and every trade as a business transaction and plan for each trade and never jump on to trade without planning for the trade.

7. Too much too soon

In the binary options industry, as in any other industry, there are brokers who make false claims that you can make too many profits in a shorter time period. Such claims make traders believe that the binary options trading is quick-rich-get-scheme.  Actually, the binary options trading is a profitable business only if one is organized, rational, knowledgeable, flexible and enduring.  You have to remember that nothing comes cheap in the world, and everything has a price attached to it. The binary options trading is not a quick-rich-scheme and you should never get influenced by the false claims of the broker.

The trader must control their own greed to overcome such false claim, and understand that it is also a business which can have both ups and downs.  Also, traders must realize that the binary options trading is still an another type of financial trading and where no one becomes rich overnight. Hence, one should have rational and realistic goals before entering the market.

8. Everything is constant

 

Another biggest misconception in the minds of the trader is that the market is constant and nothing changes overnight, in reality, nothing is constant except the change. Traders who do not understand that the binary options trading industry is affected by various micro and macro factors, tend to fail. So it is important as a trader to understand what affects the changes in the market and should be flexible enough to adapt to the trading environment changes. We have a natural resistant to change, but as a trader, you must overcome and treat the change as an opportunity. Skilled individuals are more consistent with their adaptation of changes and comprehend changes better.

Always remember, the only thing constant in the world is the change and no one can stop the change to happen. You should develop skills and your thought process in such a way that you are always ready for the changes, and be able to bend your plans accordingly.

9. Lack of risk management

To become a successful binary options trader one should learn strategies, but strategies only cannot make you a successful binary options trader. One must have adequate money management and risk management techniques in place to become an effective binary options trader. The zero risk management is sure to fail the trader as it won’t allow them to look at the bigger picture and manage their risk. No risk management makes trader take high-risk trades and lose big, and risk management technique can help traders to evaluate the market condition and put appropriate measures to minimize losses. One must understand that it is equally important to minimize losses and making profits in order to attain a long-term goal of becoming successful binary options trader.

By putting risk management practices in place, the binary options trader protects their money from evaporating via big losses and always have standby conservative plan to continue with trading.

10. You Think It’s Gambling, Instead of a Business

One of the biggest reason for the failure of the binary options trader is that they consider it as gambling and not as a trading business. Trader considers it as a gambling because of its structure of nothing or payout. The mistake of considering the binary options trading as gambling makes traders take undue risk and not considering as a sound business makes trader not to put sufficient efforts to learn it, resulting into higher chances of losing money.

Business owners know that short run losses and profits don’t matter in order to achieve the larger longer run gains. As a trader, you should also consider it as a business, and evaluate every profit/loss on the trade in order to perform better in the future. As a business owner, you should plan, set a rational goal, stay disciplined and organized to take your trading business on next level. The binary options trading is not a gambling but can become a potential money earning business if considered as a long term profession and not as a short-term gambling entertainer.

All traders fail sometimes, Binray option robot will reduce this to happen
All traders fail sometimes.

Conclusion

The binary options trading is a lucrative business opportunity if an individual put efforts to learn the nitty gritty of the binary options, and show disciplined approach to it. The binary options trading is very attractive due to various reasons like 24 x 7 access, high payouts, and low account requirements. It can be a rewarding if you consider following highlights:

  • Devote sufficient time to learn the theories behind the binary options trading.
  • Put efforts to research right, legitimate and suitable broker.
  • Make full utilization of demo/free account and use to at least for 2 to 3 weeks before starting real money trading.
  • Emotions act as a deterrent and should be put aside before starting a business and consider each trade with rational and sound logic.
  • Never put all your money in one go, always do staggered trading.
  • Prepare and plan well, and then stick to plan to execute your trades.
  • It’s not an overnight get rich scheme, it requires proper planning, organized and attentive behavior, sound knowledge and dedication to learning in order to become successful binary options trader.
  • The market dynamics are there to chance very often than one would like them to, and hence you should be well prepared for changes.
  • Learning strategies is not the only thing which can make you successful trader, you also need to put sound risk management and money management techniques to minimize losses.
  • Consider it as a business venture and apply organized business approach to be successful binary options trader.

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Author: Michael Allen

Michael Allen is the main author at www.binaryoptionrobotinfo.com. He holds a PhD in Economics and has worked in investment banking for 24 years.