How do you feel about taking risks?
Traders often complain that brokers (market makers) put spokes in their wheels and that their options close at wrong price. Both of these statements are wrong, and if you believe in them, you give way to your emotions. To begin with, let us deal with the statement that says the market makers are to blame for the problems of retail traders. In fact, the main objective of market makers is to provide quotes and to correct imbalances using their own funds in the event when the amount of successfully purchased options exceeds the number of failed transactions.
Currently, thousands of people are trading binary options on each platform. Market makers do not even know that you exist until you want to withdraw funds.
The second myth is that options are “tampered with.” The problem is that your style of trading may be too risky. Each trader has a certain degree of risk tolerance, but many do not even know their level of risk acceptance and ignore it when opening a position.
Here is a typical scenario. A trader buys a CALL option, then the price starts to move in his disfavor, and he believes that he can reduce his risks by buying another CALL option at a lower point. In fact, it is vice versa—if the price starts to move in your disfavor, it is necessary to forget about this transaction and step over to further analysis or even to another asset. You should buy options based on support and resistance levels related to each particular asset in order to reduce your risks, and you should not buy options after the analysis is done. You may duplicate the purchased options only under very specific circumstances and solely in cases where the price moves in your favor.
You can control your emotions in the following manner. Determine your level of risk tolerance and trade only using the assets that meet this criterion. Typically, the lower your capital level is, the less risk you can take on. The level of risk acceptance must rise as the capital grows. Never trade beyond your level of risk tolerance. If so, you will be trading emotionally and your decisions will be based on greed or fear rather than on logic.
Use your financial self-esteem
Financial self-esteem is probably the least known and the most poorly understood emotional aspect of trading. Many traders do not even realize how much it affects their trade. For example, a trader suddenly makes a number of successful transactions, gets profit and is very self-satisfied, but the following transactions are devastating, upsetting and confusing. If this has happened to you more than once, the reason for such situation may be the impact of your financial self-esteem.
Your financial self-esteem is the top indicator of your persistent professional activity, your childhood experience, your general attitude to money and your education, which creates an overview of your value to society. This overview can be a serious emotional obstacle for successful binary options trading. Financial self-esteem has not emerged due to trading; it had been with you for many years long before you decided to start trading binary options. It has a greater impact on your life than you think. It can prevent you from making more money. Moreover, it can affect the profitability of your transactions. It prevents an increase in your income and interferes with your trade. It is the main reason why some traders earn well and the results of others leave much to be desired.
Fortunately, financial self-esteem can be easily identified and improved. When you realize its impact on your trade, you can control your emotions in a better way. You will be able to raise your financial self-esteem, allowing yourself to increase the profitability of transactions and to get rid of the pendulum effect when you suffer losses followed by profits. You will have tools to help you stop spoiling the results of your trade.
Do trading as you do business
If you want to make trading the main source of your income, you should classify it as any other job. Consider trading as a business rather than a hobby and your emotional attitude will change. Your workstation must be quiet and well organized; nothing should ever distract you. If your trading terminal is located in the living room, poor results are virtually inevitable. Keep records for each of your transactions. Register the results of all transactions in your trading log. All professionals keep a log to track changes in their performance over time. All professional traders should do likewise. This will allow you to easily compare today’s market behavior with the behavior in the past.
Professionals never stop learning. They know that professionalism implies constant learning and polishing skills because the world where we live is very changeful. Nothing is permanent, life changes all the time, and financial market changes along with it.
Be a true specialist. The most successful and well-paid professionals in any field have a specialization. For example, doctors with narrow specialization earn much more money than general practitioners do. Traders with specialization get much better results than those who trade formally and experiment with each new trading trick and strategy. Choose your field to trade in stocks and become one of the best in your area.Start trading now