Any trader that enters the online retail binary options world does so in the sincere hope of success that will bring in profits from the good trades he/she will manage to implement. Anyone arguing that this is a simple and linear process that merely implies implementing a series of steps that methodically lead to trading profits is much mistaken, because such a “magic formula” for success does not exist.
In fact the reality of the trading process is more complicated and several factors come into play which determine one’s success or failure as a binary options trader. Therefore, instead of trying to figure out and implement a roadmap to success, it is perhaps more useful to identify the various factors that often lead to trading failure and keep them in mind in order to avoid them or mitigate their negative impact. The list is by no means exhaustive, but some typical obstacles to success and reasons for trading failure are as follows:
A trader not doing his/her homework correctly and properly is often the number one reason for failure when trading binary options. Although much simpler than let’s say forex, trading binary options also requires that the traders have a pretty good understanding of at least the basic principles and mastering the necessary trading skills in order to succeed. It is naïve to believe that a trader can reach prosperity and wealth solely based on the guidance and advice of others, for example their broker or account manager. Success will not come to you in this way, not is it enough to be able to read a couple of charts.
Therefore, if you aim to be a successful binary options trader, then you shouldn’t be lazy and you need to be prepared to invest not only your money but also the time and effort required to learn how to trade effectively and efficiently. If you don’t want to do that, then it is perhaps better to stay away from binary options trading.
Markets rarely remain static and binary options trading is done in an environment that is largely volatile. The good side of this fact is that it often creates lucrative money making opportunities if a trader has adequately fast reflexes to react in time. This highlights the importance of keeping a flexible approach to your trading strategies.
The downside however is that traders might panic in the process of handling the changing markets and keep jumping and switching from strategy to strategy, trying in vain to re-invent the wheel, which is an unlikely method to reach profits and success.
Usually the top traders are those who are able to show patience and stick with their strategies, instead of panicking and constantly changing them. Sticking with your strategy is important, especially if it is a tried and tested method that has delivered good results in the past. And remember that if the market conditions are extremely unfavorable you can always choose to sit it out for a while.
Fancy charts and advanced indicators as well as complex strategies might look impressive at first sight but more often than not they only take up much of your time without having an equally significant impact on improving your profit. If fact, the actual trading of binary options is a fairly straight forward process and most of the binary options strategies are also simple to implement. Keeping it simple is then a wise move to make, since it has been proven over time that a simple approach tends to pay dividends no matter what form of financial trading you undertake. So, it is good to remember that simple binary options strategies win out every time.
Being able to identify a good trading opportunity when trading binary options is not enough, since the actual profit making will entirely depend on whether you manage to enter and exit a specific trade at the right time. This is point that many traders overlook or fail to realize its significance and therefore end up losing money without knowing why.
It is therefore important to comprehend that when picking your entry into the market, timing can be the difference between a profit and a loss. Entering too early or hesitating for too long to exit might mean a sure path to failure, so improving the timing of your entry and exit points is key to potential success.
At some point in the trading experience it is natural for a trader to hot a string of loses. How one reacts to this however is crucial. The worst thing to do is panic and lose your nerve. Being overcome by negative emotions, despairing and succumbing to fear could be catastrophic. In fact, if you are afraid that you will incur further loses, then this will lead to mistakes and poor decision making. In a nutshell, to avoid failure you need to not allow emotions to cloud your good judgment. And of course, you need to have researched and tested your strategies well so that you will have the necessary confidence and conviction to stick with them even when faced with a string of losses. Make sure you trade within your risk profile and you manage your funds efficiently, and do so in a manner that is consistent and calm. Then you can be sure that success will be much more likely than failure when trading binary options.
George Milios is the founder of onlineforextrading.net, the binary options and forex news portal which is dedicated to providing you with all the information you need to successfully trade.