Handling Your Emotions During 60 Second Trades
No matter what expiry times you like to trade, you are going to encounter emotional obstacles that can make it difficult to trade profitably. Each expiry time carries its own unique set of challenges, and 60-second trades are arguably some of the toughest trades to deal with on an emotional level. The same thrill which makes them so enticing to new traders can also cause intense trepidation, leading to poor trading decisions. How do you get a handle on your emotions during that intense minute when you could win or lose it all?
There are three times you can work on getting your emotions under wraps:
- When you are getting ready to trade,
- while you are in a trade,
- and after a trade has elapsed.
Here are our suggestions for all three time periods and how you can work on improving your performance by analyzing and dealing with your emotions.
Before a trade:
When you are planning on entering a trade, you may not have much “warning,” since you are trading such short expiry periods. You see a great opportunity, and you have to act fast to make sure you get in on the action, or the opportunity will elapse before you know it. You should still make sure you have a solid basis for entering into the trade, however, especially if you are trading for profit and not just for fun. Double check your indicators or other trade rationale, and make sure that the trade makes sense. Be aware of important lines of support or resistance which could hold up the trade, and know where to exit early if you are considering early closure.
Having a trading method with some planning like this is an excellent tool for managing your emotions, since it helps take them out of the equation. Instead of obeying the whims of your emotions, your pride, fear or greed, you obey your trading method, which helps keep you honest and focused during a trade. And that starts before you even place an order. It should feasibly start even before you open a live trading account.
Learn more about trading methods here
If you are trading binary options purely for fun and not for profit, and the thrill of the trade is one of the main appeals to you, you may not want to remove your emotions from the situation, since that would obviate the fun you are supposed to be having. In that case, the best way to “manage” your emotions is to do so before you enter a trade by managing your money. Make responsible decisions about how much you will invest in advance so you will not be tempted to rollover or double up when you can’t afford it within your gambling budget. That way you will be less likely to fall into addictive trading behavior patterns.
During a trade:
Let’s say you’re actually in a 60-second trade. Maybe the trade is starting to turn against you, but your trading method says to hang in there. You get scared, and you exit the trade anyway. You do not have much time to think about the decision, so you make a snap decision, and then the trade goes on to win. You lose potential profit when you make fear-driven trading decisions.
Likewise, maybe you are in a trade and it is going favorably, so you decide to rollover even though you know that you are coming up on a line of resistance that is probably going to hold up your trade or even send price back down in the opposite direction. You get greedy, though, and you rollover anyway. Sure enough, price reverses, plunges downward before you can do anything about closing out early, and within seconds, you’ve blown the profit you just made.
How do you deal with these emotions? The key is to develop self-discipline. Self-discipline is what enables you to stick with your trading method when your emotions are conflicting with your good judgment. There really is no substitute for willpower, and it is something you have to work on developing even when you are not actively in a trade. Always remember that emotions add chaos to trading, and the more randomness you introduce, the less likely it is you will be profitable. This will help you develop your character traits
During fast binary options trades, you are far more likely to experience panic, and since you are in a rush, you may be tempted to act on that panic while you still have a chance to do so. All it will do is counteract your hard work in developing a good trading method, though, and it will probably cause you to blow your account. Read this article to learn more about properly using rollover and other features during trades.
After a trade:
You may think that after a 60-second trade is over, you no longer need to worry about your emotions, because the action is over. But it is really not. With such tiny expiry times, you will always see tons of new trades you can take. And even if you are following a trading method with specific entry criteria, there is a good chance that you will find plenty of other possible entries within the same day or even the same hour as your last successful or unsuccessful binary options trade.
Keep a trading journal that documents your emotions and how you handled them. Analyze your trades after they are complete. Did you lose money because you lost your grip on your emotions? What smarter, better decision could you have made before or during a trade which would have enabled you to succeed? This sort of self-review is essential if you want to get better at handling your emotions and profiting during the high intensity adrenaline rush which accompanies 60-second trades.
Bad Habits to Watch Out For
You may discover that you consistently make poor trading decisions while you are in a trade because you panic, believing you will lose money if you do not exit early and keep the profits you have garnered. While trading like this might seem “conservative” and therefore sound at the time, you may very well find it turns you into an unprofitable trader over the long run, since you will be eating into your win percentage—which already is lower than 100%, because of the way binary options are structured.
Or you might find that you are doing the opposite—staying in trades when you should be getting out of them, driven into overtrading by your overconfidence. “Miraculous” winning streaks always come to an end, usually sooner rather than later if you feed into the chaos of the market by making emotional trading decisions. Emotional trading can quickly transform into an addictive loop of behavior.
One of the worst emotional trading behaviors you can engage in is trying to “win it all back.” This is especially tempting when you trade 60-second options, because it can seem like making a comeback is just around the corner. You are feeling like crap now, because you have been losing money, but all it might take is a few minutes of trading to recover from your losses and start feeling better. This is an illusion, and it will always lead to greater and greater losses.
If you find yourself trading emotionally and breaking your money management rules or trading rules (either because of excessive overconfidence or desperation), it is important that you take a break from the markets. Go back to your journals and your trading methods, and figure out how you can do better. You might also take some time away from the computer to do other things, get some fresh air, and clear your head. Once you are feeling more levelheaded, you can return to trading.
- Before getting into 60 second binary options check out the pros and cons by clicking here