8 Ways to Lose Money in Binary Options with Accurate Strategy.
Binary option traders spend most of their time in identifying highly reliable and proven trading strategies. However, in spite of coming across a successful and time tested strategy, most traders continue to lose money in binary options. The following study reveals the ways in which a binary options trader lose even with an accurate strategy in place.
Jumping into a trade.
A binary options trade should be taken only when there is a perfect trade setup, as per the strategy. However, beginners tend to get excited and show complacency when they have an accurate trading strategy. Before the formation of a perfect trade setup (as per the strategy) amateur traders tend to jump into a trade. It is a well known fact that a pull back or retracement at the last minute can turn things upside down in the financial market. In such circumstances, the trader would get caught without any respite. This is the most common cause for losing money in binary options even with a good strategy in hand.
Lack of discipline.
Deviation from the well tested trading strategy will lead to loss in binary options trading. A trade should be taken only when all the parameters corresponding to a trading strategy are satisfied. There may be situations where there will be a minute difference between the prevailing scenario and the actual trading strategy. A trader should avoid taking trades and look for better ones. Most traders, having waited for long, will try to get into a trade with imperfect setup thereby resulting in a loss. A binary options trader should show flexibility in getting out of a trade (if the circumstances demand) but not for entering a trade. Lack of discipline would make a trader lose even with a perfect trading strategy in hand.
Lack of confidence.
Having tested a strategy in a demo account for weeks, a trader should not hesitate to enter a trade when opportunity presents itself. A trader who lacks will always remain in dilemma and not be able to implement even an accurate binary options trading strategy. This will ultimately result in a loss.
Wrong choice of asset and timeframe.
If a binary options trading strategy was specifically created for a particular asset and timeframe then under no circumstances the strategy should be tried on a different asset or timeframe. Any attempt to do so will prove futile. When an immature trader tastes a series of successful trades with an accurate trading strategy, it is not uncommon to see him taking undue risk by trying the strategy in a different asset or in a different timeframe. Such a venture would lead to loss of money and also confidence in the trading strategy.
A binary options trader should remain calm after placing an order in accordance with the strategy. Not always will the price begin to move immediately as forecasted. It may remain still or move against the position to delude market participants before going forward as predicted. A binary options trader who panics in the meanwhile will lose a golden opportunity to make profit. A trader who remains calm would make money even with an average trading strategy. On the other hand, even with a high successful strategy, a trader who gives into emotions will lose.
Premature exit.
When market reacts as expected, a trader should ride the move instead of getting out of a trade . A binary options trader should not use the premature exit facility often. An early exit should option should considered only where there is a firm indication of reversal. Premature exits bring down the performance of a good trading strategy.
Discarding money and risk management.
Just because a binary options trading strategy has high level of accuracy, it does not mean that a trader can discard money and risk management. Before entering into a trade, there should be a precise plan regarding the amount to be invested and the precautions to be taken. Even a good trading strategy may result in a series of loss some times. Without a proper money and risk management in place, a trader will not have enough money to continue trading and recoup losses. Likewise, when there is a series of profits, a trader should have a precise plan for the future investments and risk capital to be set aside. If not, a single big loss will make the trader to go back to square one.
Human body certainly has limitations. A trader will not be able to have his eyes glued to a computer screen for ever. Thus, a binary options trader should have a clear time table to trade and take rest (refresh body and mind). As tiredness sets in, a trader will start losing concentration, which will ultimately lead to loss. Beginners get excited with the prospects of making tons of money in a short time span and begin to overtrade. Ultimately, even with a good strategy, the trader will suffer losses.
A good trading strategy contributes only 50% to the success of a trader. Rest is all psychological. Thus, a trader should practice a lot in demo account, gain confidence and implement the strategy without an iota of hesitation in a real account. Only such a process will ensure success in binary options trading.