A binary option is actually a bet on the growth or fall of the selected asset for the user-selected period of time. For many, exchange trading seems like a kind of a casino where you just have to guess what to bet on: the red or black. This is exactly the main mistake of novice traders.
The difference between working in the financial market and playing roulette lies in the predictability of all factors affecting the price of an asset.
In contrast to the movement of the ball on the casino reel, which (unless, of course, the table is not “charged”) is not known where it will stop.
Binary options – this is the essence of the entire stock exchange process . When trading any asset, the main thing is to correctly predict the future direction of price movement. If for classic assets you also need to invest a lot in their acquisition (even traditional futures cost a lot), then while trading binary options, investments are minimal, and profit can be obtained simply by justifying the forecast.
Five common trader mistakes that are best avoided
- Lack of discipline.
Surprisingly, in such a nervous and volatile work as exchange trading, success is only achieved by those who persistently and monotonously, calmly and consistently, execute standard algorithms. A typical mistake of a trader is the message: “Non-standard situations require extraordinary solutions.” It should be assumed that all situations are standard and many a times,repeated too. It is necessary to systematically perform the tasks of finding signals confirming (or refuting) the initial forecast. Do not confuse cause and effect, do not “draw the situation by the ears (to the required answer)”, but draw logical conclusions.
- Lack of restraint and composure.
It happens that the long-term forecast is not justified in the short-term segments. The trend goes wrong period after period. A common mistake of traders is to open opposing positions, contrary to their own forecasts made earlier.
- Inconsistency.
This is a continuation of the previous paragraph. As a result, inconsistency in opening positions leads to the fact that when the price moves in the direction initially predicted, the profit is simply compensated by open opposite options that are “in the direction of travel”. This is a very common mistake of traders.
Such a strategy may save your nerves, but will not allow you to earn..
- Uncertainty.
First of all, in their forecasts. To be sure and act (in most cases) for sure, you need to acquire both theoretical knowledge and practical experience. Numerous professional literatures on stock trading can help you with the theory part, and Binomo.com demo accounts with practice part.
- Self-confidence.
This is the reverse side of the coin (relative to the previous paragraph). This is the main mistake of traders whose work experience barely exceeds six months. Young financiers, like drivers, decide that they already know enough “about life” (in our case, about working in the financial market) both in the field of theory and in practice. As a result, a large number of errors are made that could have been avoided if the initial conclusions were questioned and double-checked.
How to “get past the hatches”
It is very annoying when promising financiers lose their orientation in the “water” of exchange trading, which for them suddenly becomes “muddy.” It is about the mistakes of traders which should be avoided. If a user for a long time, demonstrates positive dynamics of profit in his trade, then he:
- propensities to extol their analytical skills;
- ignore very strong stock signals.
It is unfortunate when, due to such reasons (based on not the best human qualities – arrogance and other things), the potential profit turns into huge losses, leading to the exhaustion of the deposit.
The key to success is to constantly improve their skills and replenish knowledge. We are talking about both theory and practical training on demo accounts.
That is why Binomo.com regularly organizes tournaments with very interesting prizes!