10 Common Binary Trading Mistakes | FinSMEs
When things are going well and you are winning a lot of trades, you may feel confident enough to let that fact sit in the back of your brain for a while. In fact, all it really takes is one bad day. If you suffer a major drawdown in your account, all of that uncertainty and doubt comes hurtling why am i losing money on binary options. You can quickly find yourself feeling very confused and frightened, if not outright lost. After all, you do not have a moment to spare, especially if you trade for a living.
Your account is what you rely on. Without it, you have nothing. This is when you need to take a deep breath and do what you can to get your head together.
In my experience, even though these situations feel turbulent and complex, there are three distinct possibilities.
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Your first task is to figure out which of these three possibilities explains your recent string of losses. From there, you can figure out a plan of action for getting back on track. Trend line point are the three possibilities for what is going on when you are losing money trading: 1.
Nothing whatsoever is really going on. You are making a mistake. The market conditions are changing. Now we can look at each of these and talk about what they mean. But what it does mean is that your panic and the significance you are attaching to the losses may very well be all just in your mind. Just because you have lost a few trades and you have some drawdown in your account does not necessarily mean that it is significant.
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How can drawdown not be significant? And most systems do not perform at remotely that level.
You will have losing days, weeks, and sometimes months or even longer. There are a lot of reasons why you might read into these events sometimes and not other times.
Maybe it is your longest losing streak to date, or perhaps you have something else on your mind that is causing you to feel anxious. When you are nervous about one thing, it is easy to overreact to another.
You may read disaster where nothing is written. The problem with reacting to each and every losing streak you have is that you will constantly be making changes to what you do. That means that you will never build expertise, confidence, and a solid record of success with any particular mode of doing things.
In fact, you may just cripple yourself as a trader now and over time. In essence, by trying to fix what is not broken, you are breaking it yourself, over and over again.
Of course, if you know there is a problem, then stop and fix it. That means that why am i losing money on binary options situation is probably the one below. There are a lot of mistakes you could be making while trading that are costing you money. Some of these include: Breaking your own system rules or money management rules. You get so used to trading your system that you become careless, thinking you are doing everything right automatically, because you have been doing it for so long.
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Look closely at your recent trades and see if you can spot a rule you have been breaking. If you do, try correcting the problem and see if results improve. Allowing distractions into your trading. Has something changed in your trading environment? Are you allowing conversations with others, noise in your surroundings, or other factors to distract you from what you are doing?
Letting your emotions get the better of you. Pinocchio options frustration can take its own toll, which can quickly turn into a self-perpetuating loop. Whether you are feeling angry, scared, overconfident, or even are allowing yourself to be distracted by something unrelated to trading, any of these can cause you to lose money.
You are skipping steps in your process. When you place a trade, even with a very simple system, there are a number of steps that you have to follow.
It is entirely possible to skip small, seemingly minor steps without intending to, and then discover that these small steps actually are quite important and have a large effect on your wins and losses.
A checklist can help prevent this. You are changing the way you use your own discretion.
If you are a discretionary trader, or even a trader with a method which is part discretionary and part mechanical, you may introduce variables unwittingly into your trading without even noticing. Even if you are following all your mechanical steps the same way you always do, you may be changing the way you apply discretion to your decisions. Because it is hard to constrain discretionary choices in a systematic way, this is an area where mistakes are common.
If you know you are doing everything right, and your drawdown is exceeding your expectations based on testing, the explanation is almost always going to be the third possibility. Market conditions are changing.
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This possibility catches a lot of traders off guard.