No one can deny the stress investors face while executing long-term/intraday trades. There are many factors that attribute to this behavior — from personal to professional — but they cannot be held as an excuse when a large amount of money is at stake. Trading errors are pretty easy to commit when your mind is playing tricks with your decisions — and many novice and professional traders fall prey to such jumbled actions.
Renowned and reputed binary options platform Titan Trade recognizes stress issues that leads traders to the point of executing emotional trades. The firm goes beyond the contrary beliefs that blame one’s lack of analysis or strategy when a wrong trade is placed; instead, it understands how traders could face the deficiencies in emotional control, which turn out to be the main causes of dark trades.
Titan Trade believes revenge trading to be one of the most common traits found in traders. In it, a trader tries to cover up his previous losses by placing larger trades with maximized risks. It is similar to a gambler who loses one hand after another on a poker table, and buys-in more chips while expecting a major hand to recover all that was lost before.
It is the novice traders who usually fall victim to revenge trading. Their initial loss generates frustration — a certain temper towards the market — and they start feeling that the market has taken something that belonged to them. In their determination to recover the money, they place a position that could be three-four times larger than their usual trades. Such actions ultimately upset the overall trading strategy, which leads traders to further huge losses.
In case traders experience a couple of successful trades in line, they tend to believe that it’s their lucky day. It appears as if everything is going according to their plans, as they get a right size of returns from their early positions. But instead of saving this profit and betting only on original principal, traders get greedy and try to all-in. They sometime double the size of their position, while being convinces that they have a pretty shot. But usually, such decisions backfire and leave them empty handed. This phenomenon is called Greedy Trading.
Titan Trade recommends its clients to always stick to their original trading plan — all the profits must be saved time-to-time.
Over Trading refers to a circumstance where traders open positions excessively. They usually turn blind to differentiate between good positions and bad positions, and deliberately place trades for each input signal. These positions initiate many transactions, among which most turn out to be bad transactions. It is therefore recommended to stick to the original trading plan, select positions wisely and place amounts you can afford. Learn to wait patiently for a good setting that matches your entry criteria is a key element for future success in trading, says Titan Trade.
You had three consecutive losing trades (your stop losses were triggered), your confidence in yourself has been somewhat affected due to these losses and so you decide to wait patiently for the next positive signal to continue your trading plan. The market finally rewards your patience and you spot a good input signal. You benefit from opening a position.
Despite the fact that the signal meets the requirements of your entry criteria on the market, the transaction does not take long to hint a loss. You fear another significant loss, so you decide to save this small loss and close the position. Shortly after closing the position, you find that the currency pair moves in the direction you anticipated. You observe the evolution from “the sidelines” and your frustration increases as your confidence hand in the opposite direction.
When an opportunity is lost, traders are prone to face the frustration of losing out and make more bad decisions. But always remember to stick to your original strategy, no matter what happens. In the end, binary option trading is all about staying consistent than lucky.
Learn to Lose
To learn how to win, one must learn how to lose. The saying is true for all aspects of life, including binary options trading. A trader must be prepared to face losses when he starts online trading. But the best he can do for himself is playing by his own rules to minimize these losses, whenever they occur. They have to take a certain pledge — a holy vow — before stepping into trading business. It goes like this:
We know we will face losses, so we must take every precaution to minimize their impact on our capital. We must focus on cutting our losses before they become too monstrous to deal with. We must excuse ourselves from betting in highly volatile and risky markets or trends. We must never rush into trades, and should stay calm to fare better in the binary options market. And we should simply avoid trading when faced with major emotional and financial troubles — that’s how we emerge as winners — big or small.
Always remember to keep a positive attitude; never eat more than you can chew; try to be less impulsive when dealing with losses; and overall, get used to controlling both optimism and pessimism.