It is a fact of life that when you are involved with investing money that you will have times where your investments don’t work out. At these times when you lose money it can be hard. Some traders completely crumble under this loss while others gain a greater resolve to get their trading moving in the right direction.
What it is always important to remember is that losing is all part of trading. To overcome your emotions at these times you need to focus on what it means to take a loss and how you can both cut out future losses on your account and bounce back. Here are some tips to help you when the inevitable happens on your account.
1. Know your strategy inside out.
Whatever approach you are using to make profits on your binary options account, it pays to know exactly how it is expected to perform. If you are aware of the win-to-loss ratio of the strategy (which you should be) then hitting a losing trade should not be an issue. One of the ways in which to deal with a loss is to be mentally prepared for it. If you know how your strategy is likely to perform over the longer term then you should expect losses as part of this process. It may even be that they happen back to back. As long as you accept this and known that the strategy will deliver over the longer term then you will be able to handle this.
2. Eliminate Your Emotions From The Process
This linked in with the strategy that you use. The psychology of trading binary options is one of the most difficult aspects to overcome. You need to ensure that you distance yourself from the markets as much as possible when it comes to being attached to positions. One way to help ensure this is the case is to avoid trading with too much capital as this will tie you into the fortunes of the trading result too much. You will end up sweating on the outcome, particularly if you need the money you used to pay the rent. It is much easier to trade well with money that you can afford to lose and when you are not reliant upon the outcome.
3. Don’t Chase The Markets
Don’t be too keen to build profits and put yourself at risk by constantly chasing positions. When you identify a good setup take it, but only when all the requirements that you need for success are in place. Risking your money on half chances will see any strategy come unstuck over time. You need to stick with only those opportunities that offer you the best chance of success. In this way you will de-risk your approach and give yourself the chance of making higher returns for your efforts.
4. Understand The Risk
Binary options make it easy to understand the financial risk on each contract placed. You know the amount that you will stand to win as this is agreed with your broker at the outset. Similarly you will know what you have risked on the trade. This is the investment amount that is used to purchase the contract. However it is important to also know what risks there are to your open position. This can be in the form of news that is due for release to the markets, or potential economic figures which could cause the market direction to change. Either way, if you are aware of the risk then you can adjust your trading accordingly.
5. Focus On The Markets
Just because you hit a loss you shouldn’t abandon your strategy. You may want to seek to refine it however or look for additional steps for validation to help you increase the success rate percentage of the trades that you take. Always stick with your analysis as this is the most important step to building profits on your account. Although it can be tempting to make rash decisions as the result of a loss, invariably this will simply lead to poor decisions and even greater losses on your account. So stick with your plan!
These simple tips can help you to focus on the risk that is involved with trading and help you to focus on reducing the losses that you experience on your account. It is not possible to trade without ever experience a loss so you should not expect to win with each position you take. Therefore accept this when investing with binary options and look to focus on ways in which you can further increase your strike rate.
Binary Options Diary 