If you are looking for a way to make huge money quickly, you must try binary options trading. That’s because this volatile market can help you win huge profitability in no time.
After getting available for public trading in 2008, this market has seen a good rise. And since trading binary options have a simple and easy-to-understand concept, multiple traders have shown their interest.
Traders enter the market with good analysis and information of the asset. Then they speculate the price movement and win a better payout. But there is a catch. As profitable as this market is, it’s equally risky. Why, you might wonder?
That’s because it’s an all-or-nothing trading market. That means if your speculations are not accurate, you might end up losing a massive amount of money. How can assumptions go wrong? Well, that can happen due to poor market analysis or when you misread the trading chart.
But at certain times, even after correctly speculating the market and understanding the charts, the trade can go wrong. Now, this happens when a person trades in unfavorable conditions.
In this post, we have discussed the unfavorable conditions when one must not trade binary options. Also, the mistakes that traders are likely to make. So, make sure you don’t make them.
When should you avoid trading Binary Options?
Avoiding trading under certain circumstances can save you from making trading blunders. While you can trade binary options 24/7, these situations can make you lose even a winning trade. So, you must avoid trading during the below-mentioned situations at any cost.
Skip the weekend
Many people think that trading during the weekend is profitable as fewer people visit the market, but that’s not true. One must avoid trading during weekends because when the market opens, the price of assets moves drastically to an end.
After the market re-opens, it sees a lot of activities. After the weekend, when everyone starts trading, volatility and uncertainty increase. This further results in a sudden change in the price.
That means the market is unstable and not fit for trading. So, it’s advised to stay away from it during the weekends.
Avoid major events and news releases
After the weekend, it’s the major events and news releases when you should stay away from the trading market. What happens is that when major news gets released, predicting the price movement of an asset gets difficult.
At this time, the market gets choppy and volatile. And neither is a good sign of making money. Volatility arises because both bulls and bears try to push the market for their profit. This thing can mess up the trading market for a while.
Also, choppy markets can result in fakeouts and whipsaws, making you lose a vast amount of money. Generally, choppy markets arise due to unstable market economies.
But if you want to trade anyway during this situation, you must choose another financial instrument that is less volatile and less likely to act unpredictably. Another way you can trade in major events and news releases are by having a solid trading strategy that is tested.
When you use a tested strategy, you know how to reap profit despite all the challenges. In a way, it’s good to trade during major news releases and events because when you stop trading altogether for a while, it jeopardizes your trading routine.
Expanding ranges is another event when a trader must avoid entering the binary options trading market. That’s because, during this time, the price keeps making high highs and then low lows. Or the price makes low lows and then high highs.
What happens in expanding range is that until a trader notices them, the volatility of the asset gets changed. If the volatility does not die, the price will start to trend. It further makes it difficult to predict the movement.
How often should you trade?
You can lose a vast amount of money by trading under unfavorable circumstances. But you can even lose money when you under trade or overtrade. That’s because then you are less likely to follow the trading strategies.
Why people overtrade
What happens is that when a person starts winning a series of trades, they get excited and end up trading more than required.
When they do this, they can’t keep track of their trading moves. Also, out of the excitement of winning the trade, they sometimes forget to follow the strategy. It makes them lose the trade.
Similarly, when a person loses a series of trades, they start overtraining to compensate for the lost amount. It’s called revenge trade, and it’s as bad as the above-mentioned trading condition.
Another reason people overtrade is that they get greedy. Now, it’s a normal human tendency to desire more. But when it comes to binary options trading, it’s advised not to get too greedy for the win because this volatile market is unpredictable.
Why people under trade
After the overtraders, comes the under traders. People are often under the impression that under-trading is better than overtrading. But it’s not true. That’s because, in either case, one might lose a considerable amount of traded money.
The main reason people under trade is because they are scared of losing. They think that under-trading will limit their loss. But in reality, under-trading takes away all the potential trading opportunities that might have resulted in a massive win.
Since there is no official rule for the number of trades one can make, people don’t realize how often they should do it. So, every trader needs to set a limit for themselves.
After setting the limit, it’s essential to follow it. Otherwise, you will jeopardize your entire trading strategy. Also, while trading binary options, it’s advised to use around 2% to 5% of the total amount that you have in your bank account. This way, you can freely trade without putting your financial security at risk.
Common Binary Options trading mistake
No matter how straightforward binary options trading might seem, it’s essential to avoid making a few mistakes. Once you stop making these mistakes, you will start earning massive profitability from binary options trading.
Lack of research
It’s a common mistake that even professional traders make. New traders make this mistake because they are not aware of the binary option’s nature. The simplicity of this trading environment lures them. But they don’t realize that without proper research, they might end up losing even a good trade.
On the other hand, professional traders think that they have understood the market thoroughly. So, there is no need to research each time they make a trade. Well, the experience of professional traders matters, but lack of research can be risky. That’s because binary options are a volatile trading market.
So, it’s essential to do quick or detailed research of the asset you want to trade. That way, you will know what you can expect from the trade.
Investing more than you can afford
If you are investing more than you can afford, you should be ready for some major consequences. That’s because not every trade can make you win a huge payout. And if you have incorrectly speculated the market, you will lose all the traded money. This thing will put your financial freedom at risk.
So, the best thing you can do is take a small percentage of the amount from your bank account and trade it. This way, you will not lose financial freedom, and you can trade freely. It’s always advised to trade the amount of money that you can afford to lose.
Chasing losses might not sound complicated, but it is risky. What happens is that when you start trading in an attempt to make up for the lost amount, you fail to understand the market nature and volatility of the asset.
This thing further results in more loss, so it’s better not to chase any loss because it will make you regret it later.
Believing in patterns
Every successful trader knows that there is nothing like patterns in binary options trading. In case there were any patterns that you have noticed, it was a sheer coincidence.
So, instead of looking for patterns, you must create a strategy and test it. When you use a tested strategy and trade an asset you are familiar with, your chances of winning increase gradually.
The volatility of the binary options trading market can make you uneasy. But it’s important to stay calm. That’s because when the brain runs to panic mode, it fails to comprehend the information.
Also, when traders panic, they make risky trades. Therefore, you should practice meditation that can help you stay calm even under the most stressful situations.
When you expect unrealistically, you start losing. Thus, instead of daydreaming about the money you can make from binary options trading, you should focus on creating winning strategies.
When you create better strategies, you correctly speculate the market. And this results in winning a better payout.
One of the biggest mistakes that beginner traders make is that they get lured by fake brokers. It often happens because fake trading platforms offer a better payout, have affordable deposit fees, and offer a wide range of features.
But when traders take the help of such platforms to enter the market, they get scammed. And the fake trading platforms take away all the money, saying that you lost everything in a series of bad trades.
Gamblimg instead of thinking like a businessman
Gambling can be fascinating, but it cannot make you win a better profit. Gambling is all about making random trades, hoping that they will make you win. But binary options trading does not work this way.
If you want to win a trade, you must do a proper market analysis. Also, it’s essential to familiarize yourself with the asset you want to trade. This way, you will think and trade like a professional, which will be helpful.
Borrowing money to invest
Borrowing money for trading is another possible mistake that you can make. In case you have won a better payout from the borrowed money, then it’s good. But considering the uncertainty of the binary options market, if you lose the trade, your financial stability will be at risk.
Trading indicators are one such thing that you cannot avoid missing. That’s because by using the correct indicator, you can enhance your chances of winning. Below are some common tools that traders use in the binary options market.
Bollinger Band is a technical indicator that one can use to determine the entry and exit points in a trade. The bands of this indicator help in understanding the overbought and oversold condition of the market.
This tool primarily focuses on the price and volatility of an asset. But it’s also important to remember that Bollinger Bands ignore every other considering besides these two. That means using only this indicator can be risky.
It’s another widely used indicator in the binary options trading market that helps understand the price change of an asset over time.
This technical analysis indicator is divided into two parts, i.e., simple moving average and exponential moving average.
The binary options trading market is a good place to win a huge payout. But if you have incorrectly predicted the price movement of an asset, then you cannot expect a better payout. In fact, in such a situation, you will end up losing all the traded amount, which can risk your trading career.
So, it’s better to avoid the events when the market is likely to get volatile. Also, you must stay away from binary options trade when the direction is not clear. That’s because in either case, you will lose.
You must also avoid making common trading mistakes. That way, you will get one step closer to becoming a professional trader. And don’t forget to use the right trading tools as they are helpful.