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13 popular mistakes of unsuccessful options traders
Nowadays, there are thousands of recommendations on the internet about how to make quick profits and become a millionaire by trading binary options. Nevertheless, there are very few topics looking into the fact that becoming a successful binary options trader is not easy. In this article today, we will tell you 13 popular mistakes of an abortive market participant, in order to help you have a deeper look into the reality of the trading game.
1. Trade All-in
According to Dr.Van Tharp, an American psychologist and also a very professional trader, risk management contributes 30% of a trader’s success, while analyzing skills only contributes 10%. If a trader risks everything he has into a trade, sooner or later he will burn up his balance. That’s betting, not trading.
2. Invest all your money in PAMM accounts
This is not really different from risking all into a trade. If you can’t analyze and trade yourself, letting professionals do it for you is good. But it doesn’t mean that you should put a 100% trust in them with everything of yours standing at risk.
3. Trade hawkishly
The denotation of this serious mistake is when a trader tries to get back his losses by multiplying the amount of a trade. Nothing can be further from the truth: the more he “bets”, the further he loses. And soon enough, his account will end up with an absolute zero.
4. Trade on the weekend
Most of the options brokers don’t allow their clients to trade on the weekend. However, some do because there are a few assets that could be traded throughout the week (crypto-assets for example).
The point is, trading all the week will make a trader tired. Trading is like a job, and traders also need resting time. Trading with exhaustion is very risky and dangerous as your trading decisions will be influenced seriously by emotions.
5. Consider trading the main income source
Let’s consider this example: a man is tired of his boring job. After reading several articles about how trading can change one’s life, he decides to quit his job immediately and goes to bank for a loan. He then invests all money into a broker with the hope that he can earn a couple of thousands per month by full-time trading. Totally wrong! Trading is a very difficult job, and mastering it takes lots of effort and time. There are very very few traders that are successful with full-time trading, and that’s why we should only consider trading a passive income source.
6. Trade with only one indicator
Well, if you are a professional price action trader, then it’s okay. However, using only one built-in indicator to trade will reduce the probability of your success. Two or more beacons are the best, but make sure they are combinative.
7. Buy a profitable strategy from a millionaire
Surely you have seen somewhere an advertisement about a Holy Grail strategy that can help you earn thousands of dollars quickly. The irony is that, if it can, then the seller should use himself instead of selling publicly for $50-100 dollars.
8. Trade without analysis
A kind of emotional trading. Listening blindly to someone or trading with sensitivity are as hazardous as trading all-in. Given that you are a professional, your sensitivity may be right. But if you aren’t, then it’s a matter.
9. Buy a course with the thought of getting rich quick
A prevalent mistake of newcomers. They buy a course and believe they can learn everything about trading at once. Wrong! Success in trading is achieved via experience, and experience is achieved via practice. The courses can just provide the basics, but if you want to go far, you need to practice yourself.
10. Invest all your money in Robots
This is not different from risking everything with a Holy Grail strategy since they don’t exist at all. Consider this paradox: if there is a highly profitable robot, then why does its developer have to sell it publicly for $50-100 dollars?
11. Trade blindly on the news
Perhaps you think you can analyze the news, and also the impact on the market. Howbeit, have you ever thought how many people before you have known a release’s result? When you open your order following the result, there are thousands of “sharks” having acted, and they are waiting to trap you for profits.
12. Trade with scam brokers
There are plenty of brokers nowadays established for scam purpose. If you can make profits but are unable to withdraw, then it’s entirely meaningless. Hence, you should only trade at reliable brokers that are regulated.
13. Trade emotionally
Totally believing in past performances, trading with fear and greed, letting ego take over... Can’t mention all in an article, but generally speaking, they affect badly your performance. The only way to overcome them is to correctly follow your trading plans and rules.