4 Most Common Mistakes to Avoid When Trading Binary Options

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4 Most Common Mistakes to Avoid When Trading Binary Options

Posted on by John Thiel

Chances are if you made a decision to invest in binary options it has to do with the potentially massive profits you stand to make. Still, those earnings can seem a bit elusive at times, especially when you see all your friends cashing in on those winning trades.


Here are a few tips that will help you get started:

1. Control Your Trading Volume and Intervals
It’s logical to think that the more you trade the higher your profits can be. Still, while some traders invest a large percentage of their bankroll at once, others others choose to hedge their trades by executing more trades but with smaller amounts.

Try to factor in the bonus trading requirements as well. For example, if you need to trade 30 times the bonus in order to cash out your winnings, you will need to control your cash flow so as not to be left without a balance.  In other words, the more you risk the higher your chances are of depleting your funds without reaching the minimum trading requirements and withdrawing your money.


2. Stick to Your Trading Strategy 
Whether you are a technical trader, a scalper, swing trader, or like to trade the news, it’s easy to get emotional and lose focus when you are consistently losing trades. However, your ability to stick to the correct strategy without being lured into making excessive or high risk trades will make all the difference between your contract expiring in the money or alternatively absorbing a loss.

3. Reversal Strategies as a Risk Management Tool
Not having a reversal strategy to fall back on is one of the most dire mistakes any trader can make. Usually amateurs neglect the importance of having an alternative strategy to fall back on, and they end up paying dearly.

4. Complexity Will get You in Trouble 
It’s already a difficult and complex trading environment with many variables to keep track of simultaneously, especially if you have multiple open positions. Following the resistance line and possibly asking your broker to stop a trade (this is a possible yet costly venture) demands you being glued to multiple screens or trading windows where you can monitor your trades in real time. So keeping it simple by having pre-selected entry and exit signals is one way to manage your money and improve performance.

In essence, everything you do when trading binary options is partly connected with avoiding pit holes and careless mistakes that will get you in trouble. For example, your ability to alternate between positions, identify the correct entry signals without falling into a trap, and choosing the correct asset provided by the best broker will be a deciding factor and significantly influence your level of success as well as the amount of money you make or lose.

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