The binary options market is one of the simplest money markets. You have only two choices: yes or no. That sounds simple enough, but most binary options traders are unsuccessful. This is because they allow themselves to make seemingly simple yet costly mistakes. Many don’t even realize it when making these mistakes.
You should tread carefully when trading binary options. There are some mistakes that you cannot afford to make.
- Convincing Yourself it is Simple
There are numerous ads that present the binary options market as lucrative and simple. They are misleading.
Binary options trading may seem simple, but it takes a keen mind to make money. The markets are volatile, and prices can change directions and momentum in seconds. As such, it takes an enlightened trader to predict correctly whether or not a given trade will be successful.
It’s easy to get started and most amateur traders are attracted by the promise of lucrative returns. They don’t do the due diligence to learn and practice, and this costs them dearly. Binary options trading is simple only when you know what you are doing, so get a mentor to train you and do lots of practice using demo accounts.
- Being Lax with Your Choice of a Broker
A simple search for a binary options broker on Google will bring up millions of leads. Unfortunately, most of these links lead to dead ends. Very few brokers are competent and legitimate. Most don’t play by the rules or uphold their clients’ rights. You can also learn about more mistakes to avoid from finsmes.com.
It is easy to get enticed by a rogue broker. They promise huge bonuses to start you off and unrealistic trading policies. They then lock your funds up and cite guidelines in their fine-print agreement forms when you demand your money back. They should not be trusted.
If you are shopping for a broker, it is advisable to settle for the major ones. Ask around binary options online forums and go over each broker to know what you will be getting yourself into.
- Trading Without a Strategy
Even the smartest and most experienced traders need a strategy to guide them. Unfortunately, most new traders feel confident enough to trade without a strategy. They trade on impulse and end up losing. They then try to make up for their losses by trading some more but end up losing even more.
Numerous automated trading strategies can help you get started. Alternatively, you can come up with your very own personalized strategy. Ensure that you stick to the guidelines of your strategy to avoid making bad trades.
- Going All In
Returns for binary options are fixed and often range between 70% and 90%. Most traders figure that they will make more if they place large orders. This is a long shot that often ends badly.
The binary markets are not a get-rich-quick scheme. It takes a lot of time and dedication to growing one’s investment. The volatility of the markets, coupled with the bleak success rate, should be acknowledged by treading slowly. Every trade you place should never surpass 10% of your capital.
Even the smallest mistakes can cost you when it comes to binary options trading. These four mistakes, however, will surely cripple your account. As such, keep your eyes open and your mind keen to avoid making these mistakes and others.
Image Credits: M. B. M.