Controlling Your Fear of Binary Options Trading
The majority of new traders who want to trade with binary options who used demo account and switched to real account with the binary options broker that they have selected are facing certain problem while they were trading with a demo account. That problem is actually the fear that appears when traders actually start to trade with real funds. Over time, that fear grows stronger and stronger and that can potentially get out of control if it is not treated. In the situation where fear controls the trader’s actions, there is no chance for traders to earn money in the binary options trading market and they would end up only losing their money.
Everybody understands that fear is really big and important factor in everything that we do and trading binary options is no different. However, the question remains how to reduce the effects and the fear itself. For many traders, traditional advice that includes recommendations like ”stay calm”, ”follow your trading plan” are all very good pieces of advice. However, the biggest problem occurs when it is time to implement those pieces of advice. However, in order for these pieces of advice to actually work, only saying them is not enough. What the trader in that situation actually needs are the specific instructions on how to achieve that.
Be in Control of Your Emotions
Controlling your emotions is recommended in almost all lines of business and trading binary options is not exception as well. When it comes to the binary options trading, what a trader might do before he or she starts to trade is to write down on a piece of paper a word or two about their emotional state in that moment. Let’s take, for example, that you are tired and that you feel sleepy. In that emotional state, the type of binary option trade will not be the same as the binary option trade when a trader is feeling relaxed and excited.
Once you put those emotions on paper you will be able to realize that emotions actually play very important role in how successful your trading will be. For some other group of traders, irritation, anger and other negative emotions can also have bad effects on the rate of success of your binary options trading. As we all know, in that states, it gets really hard to control ourselves and our actions and because of that trading under those emotions is not recommended.
However, some emotions that are considered positive in general, may also have negative effects on binary options trading. Emotions like passion, hope and similar emotions can negatively influence the results of the binary options trading. Even though these emotions are positive too much of those emotions can be devastating for a trader. In our opinion, the best way that a trader can use the trading platforms is to use them only for a small period of time and then take a break. If you go blind into trading, you will soon think that you have the skills of predicting the outcome but in fact you will be far from that and in that way, you will lose your money.
Be Responsible and Keep a Record of All Transactions that You Done
Even though many of traders do not recognize the importance of this issue, it is still very important to have the records of all the transactions that you have done. In that way, you will be able to prove yourself that you are responsible. Besides that, you will also be able to see how successful you were in different emotional stages which will enable you to realize what emotions work the best for you. With as many details as possible, you will have the insight in your traders and what and how to make them more successful.
Believe in Your Trading System
Not believing in the trading system that you have been using causes fear to appear and as we have already mentioned, fear is one of the biggest factors when it comes to the rate of successful trades. This will also make you switch strategies which are never a good thing for successful trading. All of this comes from the fact that many binary options traders are actually trading manual which enables them to switch strategies. However, the question is how a trader can resist trading manually.
Well, for start it is important for traders to realize that trading with the system actually brings profit and that even if it currently is not making a profit it will eventually. If you think that you can do better, that is, that you can make more profit than the system you are misguided. The system considers facts and important information while you on your own take into account dreams, wishes, assumptions and other things. Besides that, you should also test your system for 2 to 3 months and to see whether or not it will be effective in binary options trading. If it is not successful it will be a sign that you need to change the system.
Automatic Trading is Helpful
Automatic trading is nothing to be feared of. Automatic trading enables you to easily make a profit by not spending as much time on your computer or your mobile device. However, you should not fully switch to automatic trading as soon as possible. It is better to make some aspects automatic while keeping some other aspects manually controlled.
Have you tried automated trading yet?
Evaluate Your Strategies From Time to Time
Once again, even in this process, you should be able to exclude your emotions. Once you have realized that you can improve your trading strategy write the ideas on paper and let some time go by. In that way, you will be able to analyze whether your improvement will actually improve your strategy or not. Otherwise, those improvements will have the opposite effect on your trading and your earnings.
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References and Further Reading:
- Insider Trading, Secret Agents, Evidentiary Privileges, and the Production of Information (Frank H. Easterbrook)
- The World Trading System (Jagdish Bhagwati)
- Predatory Trading (MARKUS K. BRUNNERMEIER, LASSE HEJE PEDERSEN)
- The Regulation of Insider Trading (Dennis W. Carlton and Daniel R. Fischel)
- Should We Fear Derivatives? (Stulz, René M.)