What Type Of Trader Are You?
Why do you trade binary options? Is your ultimate goal to win money, or is there something else motivating you to play? If you are new to binary options, you may believe that all binary options traders are super serious investors, or you may have the opposite perception. You may believe that all binary options traders are gamblers. Even among gamblers, though, there are many different motivations. Binary options trading is very much like poker in the sense that you are participating in a game that requires luck and skill. There are many reasons people flock to the poker tables. In fact, the reasons that traders invest are often quite similar.
Let’s talk about some of the different types of binary options traders there are based on level of seriousness and goals. This is a great first step in analyzing yourself as a beginning trader. When you understand what motivates you, you can make the most of it!
1. The Casual Trader: “I’m here to have a good time.”
There are a lot of binary options traders who play the markets for one and only one reason: to have a great time, and maybe make a little money along the way—or not. These traders are the least serious of all binary options traders. They are not here to make a profit, and ultimately it is not important to them whether they win or lose, as long as they have a good time.
Casual traders who invest for fun may have large or small accounts, depending on their personal finances. But many of them will start trading with the minimum bankroll, because, again, their goal is not to make a living trading. Many casual investors also love to head to their local casino to play poker and other fun games.
If you are a casual fun-only trader, you do not need to worry about strategies unless that adds to the enjoyment. You still will want to take some time to educate yourself on money management, though. You probably take care to manage your bankroll at the casino so you can have plenty of fun before you run out of funds. Managing your bankroll while you are trading binary options online allows you to get the most out of your money before you run out. It also ups your odds of actually winning. And while winning may not be your main motivation, it sure is better than losing!
2. The Ego-Driven Trader: “I’m trading to feel smart and accomplished.”
Ego-driven traders invest in binary options primarily because they enjoy the image of being an accomplished investor. Ego-driven traders have more of an incentive to win than those who are simply in it for fun, but may still enjoy investing even if they lose. Some ego-driven traders are very serious, but others are not much more serious about investing than those who are in it for fun only.
Being an ego-driven trader can cause problems for an investor who lacks self-awareness. If you are investing because you want to feel smart, but you are not thinking carefully about your trading decisions, you may begin trading out of conceit. You might for example believe in your own mental projection of yourself as a top trader long before you become one. You may find yourself trading on instinct, believing that is enough, and may end up losing a lot of money because of it.
On the other hand, being an ego-driven trader can actually pan out very well if you have self-awareness. How so? It all depends on what you actually take pride in. If you take pride in really becoming a top trader, that can give you the motivation to do the hard work to get there. You may find that the desire to better yourself is just as effective in helping you win as a desire for money. You do not have to win all the time to take pride in yourself either. You can take pride in all the improvements you make and the steps you take toward someday becoming more successful financially.
Whether you are investing seriously or not, if you can identify yourself as an ego-driven trader, you can take steps to keep your ego in line. There’s nothing wrong with taking pride in your accomplishments. In fact, doing so is a sign of mental health. Just make sure your pride doesn’t turn into conceit.
3. The “Beer Money” Trader: “I invest for a little extra cash.”
Traders in this category want to actually win their binary options trades, and may put more work into doing so than those who are trading exclusively for fun. This category may overlap with the category above. These traders are not aiming to become professionals and have no desire to quit their day jobs, or at least no expectation of it becoming a reality. Making money trading appeals to them, but the winnings are non-essential. In other words, they will not be used to pay the rent or bills. Any money made trading will be used for more trading, put into savings, or used to finance personal luxuries.
While there is no way to know for sure, it is quite likely that around 60% to 70% of binary options traders fall into this category or the two above. That percentage may be even larger. Most binary options traders are fairly casual, and there really is a huge crossover between binary options investors and gamblers. If you are trading for fun but hope to make a little extra money on the side, it can really pay off to read some articles, watch some tutorials, and try to come up with a good trading method. While it isn’t essential, it may help you to find the edge you are looking for.
Never mistake yourself for being more serious than you actually are. Being a serious investor isn’t just about wanting more. It is ultimately about doing more. If you are trading for a little extra and one day find yourself wanting more, you will need to take steps to become a serious investor. That means focusing even harder on your trading method and taking your wins and losses much more seriously.
4. The Semi-Professional Trader: “I have a day job, but I really want to make money trading.”
Almost the entire remaining population of traders that does not fit into one of the three categories above fits somewhere in this pile. The semi-professional trader is not trading for fun. He or she may enjoy trading, but the primary motivation is financial. Ego-driven traders are often semi-professionals. They want to see themselves as successful traders.
People in this category are still making their primary income through some other means. They may be unemployed (trading while unemployed is very unwise, but it is not uncommon). They may also be sitting on a residual income or a large pile of savings. Regardless, they do not make 100% of their income from trading binary options—yet. They may be aiming for it, though, and may hope to eventually become successful professional traders, either part-time or full-time.
What keeps a trader in the “semi-professional” pool and prevents him or her from becoming a real pro? It is not a question of income percentages. If you make 50% of your money from a day job and 50% from trading, you are still a professional trader. It comes down to approach, consistency, and whether or not you are making enough money trading to actually support yourself in full or in part.
If you are still trading with an inconsistent approach, even if you want to be a professional, you are not a professional. The desire and the drive might be there, but until you start leveraging them fully and trading consistently, you will remain a semi-professional trader at best. If you are trading with a consistent method but still not achieving reliable results, you are also still a semi-professional, but you at least have a professional attitude, and you are probably on your way to becoming a pro. If you are trading effectively, but your bankroll is still too small to support you, you may have a long journey ahead, but you have a very good shot of going pro.
Among semi-professional traders, there really is a whole range from somewhat serious to very serious. It comes down to what is preventing you from moving forward. If it is your own lack of commitment, or your decision not to trade using a consistent and proven method, you are not very serious about your professional dreams. If however you are doing everything you can to succeed and you simply are not there yet, you are very serious about trading. Success may only be a matter of time and determination from that point on.
5. The professional trader: “I trade for a living.”
This is as serious as it gets. If you are a professional trader, you are trading parttime or fulltime, but you are doing it for significant and substantial income. You make that income on a reliable basis. You might use it to pay your bills, or you might put it into savings or keep it in your account to grow your bankroll. Either way, winning trades is absolutely vital for you. You are not just investing to entertain yourself. The growth of your account is a central concern of your life.
Traders in this category are definitely motivated by money, and may also be ego-driven. If you are in this category, you probably have very clearly defined goals. You have those goals in your mind every day when you sit down to trade, and you are constantly working on honing your strengths and improving your trading techniques.
Binary options traders take many different forms, and span a whole spectrum in terms of their motivations and dedication. There is no one type of trader that is superior to another. The superior trader is the one who trades with self-awareness and responsibility, and understands the motives governing his or her choices. That trader has the chance to make the most of binary options trading, and maximize fun, pride, and profit.