How to Control Fear of Trading Binary Options

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This Article Will Teach Hou How To Control Your Fear of Trading Binary Options. Read How to Overcome Your Fear and Get Better Results.

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Was it not Franklin D. Roosevelt who said the only thing to fear is fear itself? The same is the case with binary options trading. There are plenty of traders who do just fine with the demo accounts that trading platforms provide but get the jitters when they get to the real money business. This fear can range to some nervousness to extreme fear that becomes a problem to the trader. When it becomes a problem, the trader cannot trade well and may get into a losing streak for lack of focus, or he may abandon binary options altogether which is of course a tragedy as he will be losing out on a good thing.

To trade profitably with the binary options, one thing you should always have with you is caution. Caution will prevent you from making rash decisions. This should never be confused with fear. Fear will interfere with your thinking process and mess up everything. It is therefore important to learn how to confront the fear and keep it away from you when you are making your binary options trades. Here are some practical ideas to help you control it.

Have complete confidence in your trading system

If you lack a considerable degree of confidence in your trading system, you will have some fear at the back of your mind or a lot of fear. This will negatively affect your trading decisions especially where you try to second guess the provided signals. You will want to believe that you can do better and then proceed to make changes to that effect. The important thing is do not trade with a platform that you cannot have complete confidence in. When the urge to second guess the signals comes, it is prudent to remember that the same system has provided signals that made you profits from winning trades. The system has probably not changed a bit and you could be back to winning ways in no time. Most times, the signals are good and your second guessing is just that; a guess… and that is the last thing you want to be doing when trading with binary options. This is because a lot of though and resources have been set up behind the scenes to generate that signal that probably seems irrational to you. Collate some historical data on your trading system and if it is making you some money, probably not as much as you would like, give it about two months before you dismiss it completely. You never know what you could be losing out on.

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Fear/Greed

Rein in your emotions

Somebody said that if you want to confront the fear of trading binary options, you should always trade with the head and not the heart. Do not trade if you cannot honestly control your emotions. You need to be truly stable emotionally for you to trade as you are meant to. What you need to know at all times is that your state of emotion will directly affect your decision making, your strategy and your focus. Should you feel that your emotions are not stable, you had better put off trading until they are. The binary options will be right there when you are in a proper state to trade. Some of these emotions that could destabilize you into a state of fear could be rooted in depression or fatigue in which case you should be away taking a rest to let your system get back to normal. Having too high hopes and too much passion could also lead to an emotional overload and you don’t want that when you are trading.

Maintain a transaction log: From the first day you open a real money account, find a way to keep a record of all your transactions. This may seem like a daunting and monotonous task but it is worth all the effort. This is because you can sit back and relax and later, give a good look at your transactions and compare them with the kind of emotions you were having at the time of trading. A good session of giving your actions a revision may help you cope with fear when you realize that you were not doing too badly anyway.

Use automated systems

Sometimes, your fears could be borne of mistrust of your decision making. You feel that your decision making is not enough to give you good pointers on how you should trade. If this is the nature of your fears, you should seriously consider using an automated system. This type, also referred to as binary robots, generates the signals and makes your trades for you without you having to make decisions that you are not very sure of. This kind of system will give you a good degree of peace of mind. You will have to select a proper system that has a good track record of making winning trades that are within your success rate.

Schedule a strategy review

Review of your trading strategy are a good thing but only if they are spaced out correctly. This means that you cannot have an effective daily review. If you try this, you will find out that you will be making too many changes without putting the requisite thought into them. What you need to do is schedule a time frame within which you can make a detailed review of your strategy. It is only by giving the current strategy some time to succeed or fail that you can truly decide whether it needs a complete review of just some small tweaks here and there.

Be patient

As earlier noted, binary options trades need your brain more than your emotion. There should be no rush into signing up with a trading platform. You need to make a detailed study of such a system before making any moves. Your fear may be based on the fact that traders before you have lost their investments to shady systems that were developed just to make money from gullible traders. To counter this fear, take your time to study a platform thoroughly so that you know exactly what you will be going into before you do. Similarly, do not rush into making trades or setting yourself unachievable targets in your quest to maximize your profits. Take time and understand the operations of the system while you are also assessing your risk level. This is best done with the demo account over a considerable period. A good trading experience for a day or two with a demo account is hardly the right preparation for making real trades with real money. Another problem comes when you are not patient enough to wait for the expiry of the trade period and you keep your eye on the timer at all times. This induces panic and a fear that you could lose. This is not healthy. Work on building your emotional defenses against such fears if you want to trade profitably in binary options.

fear of trading
Fear can limit your potential

Take a break from time to time

Taking a rest from binary trading is not a waste of time; it is repair time. However profitable your streak was, take time to reflect and recharge your batteries. This will help you keep your eyes on the ball and to make sure that other aspects of your life are given the attention they deserve. This break will also allow you to refocus on your trading sessions. Always keep in mind that a fatigued mind does not make rational decisions. Take that break; you need it.

Avoid the fear of missing out

Your friend, with whom you use the same trading system, calls you to let you know what a fantastic winning streak he is having. The trouble is that you are out of town and you will not access the system for the next two or three hours. If you are the type who has this fear of missing out, you will start panicking and counting your losses the fact that you have not even traded notwithstanding. Every dog has his day and yours will come, just not today.

Information

Information is power. This should never be underestimated. Keep yourself updated with all the happenings in the global financial markets, track the indices and prices of commodities, and keep tabs on the economic policies of leading countries in the economic sense. With this information, you get to know what goes on in the markets and in the financial world in general. While you may not apply this knowledge directly in your trades if you are not a professional in this field, it will help you know that there is much going on and there are people with bigger headaches than you when it comes to making decisions with financial implications.

Binary options are very profitable trades if you approach them with the correct mindset and patience. Fear is a great deterrent to successful trading and should be dealt with comprehensively before you indulge into the trades.

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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.