5 Types of Fear Binary Options Traders Face
It is not a fun fact of life, but you will be regularly facing it when you trade binary options: fear. Most of us are programmed mentally to avoid situations that make us feel fear. Fear is unpleasant, and it causes an adrenaline surge which is usually pretty unpleasant as well. Nobody likes to look at an uncertain future and feel unsure of themselves, but in trading, you are always facing uncertainty. Risk is something that every person in business must learn to live with, but with trading, the risk is emphasized, because how you work around it is exactly what will determine your likely success. Fear can be broken into several different common categories for traders:
Fear of losing trades
Fear of losing something else
Fear of missing opportunities
Fear of being wrong
Fear of success
1. Fear of Losing Trades
This is probably the most common form of fear faced by traders. When you are frightened of losing trades, and eventually perhaps your entire binary options account, you can become paralyzed. You may not enter when your signals tell you to, and that may cause you to lose more trades than you should as a percentage of your account, because you start missing all the good trades. You also might begin breaking other trading rules, leading to even more problems.
Another common mistake that results from this particular type of fear is exiting too early. You might find yourself tempted to take profit or cut your losses with the “early closure” feature which many brokers provide when you should stay in your trade longer. If your wins become smaller than your losses, but you do not overwhelmingly win the vast majority of your trades, you may start seeing your account going in the red.
Also in this category is the broad fear of trading failure. Some people are not just consumed with their doubts in the moment—they may suffer from the terror that they will lose everything in a broad sense. These traders may have experienced repeated failures in other areas of life, and expect that those failures will translate to their trading. This may cause foolish trading mistakes, or may prevent them from trading at all. After all, what you never know can’t hurt you.
What is the best way to solve this kind of problem? Test, test, test. Have a trading method you know can work, because you have personally proven it to yourself on historical data, and then on current data through demo testing. Get used to facing that pressure in real time, and when you start seeing great results, start trading small amounts of money. Only after you get used to that should you fully fund your account as you intended.
2. Fear of Losing Something Else
This may sound a bit obscure, but bear with me, because at least a few of you probably will recognize what I am talking about. Why are you trading? Is it because you are confident in the revenue you have, and you want to build off of that success? Or does part of you not believe in your current living, and feel like you need trading to come along and save you from destitution, either now or in some distant, imaginary future? Are you convinced your boss is going to fire you? Or that you cannot cut it in your own line of work?
See, I am guessing that not a lot of people have thought this through, because I have never seen another article that mentions it, but I believe many traders are paralyzed by these kinds of fears that do not directly relate to their trading. I know this has to be common simply because of the way I see binary options systems, signal services, and brokers commonly advertised. So many of the videos I watch on YouTube say things like, “Quit your day job,” and “Make $100 into $10,000 in a week.” These are desperate bids made to desperate potential customers, who would do anything to turn their lives around overnight.
See what I mean?
Maybe you really are up against a wall of fear in real life, and you have good reason to be scared. Perhaps your boss is about to fire you. Maybe your business is failing. If that is the case, I strongly suggest you back away from the market altogether, unless you have a lot of funds sitting around, and you can afford time off from work while you build something else. Otherwise, find a job or create a job which is going to pay you regular, reliable revenue, and then come back to trading when you are less afraid.
Sometimes, though, it is all in your head. In the economy we’ve been living through, a lot of us have become a bit gun-shy when it comes to living in general. If you have had the rug pulled out from under you enough times, you can have a hard time ever feeling secure again. But look at what you do have and if you have no signs to believe it is failing, then do your best to be grateful, humble, and confident in what you have. You will have poor luck with trading (and possibly sabotage your current income) if you have no faith in what you are doing.
If trading makes you wrestle with these issues, my best recommendation is to make trading about something other than money. It does not mean you should not aim to make money, but make trading about something else, like developing self-discipline or confidence. Avoid thinking of it as a possible replacement for your current income until it actually is a viable replacement.
3. Fear of Missing Opportunities
Overtrading is a huge problem for some people. It is one of the most common trading mistakes out there. Some traders do it as a habit, while for others it may be a rare experience, but sometimes you may feel the urge to push the trigger when you should be sitting and waiting for good trades. What prompts this type of behavior? Usually it is the fear that you will miss an opportunity. This is connected to the fear of failure. If you miss a chance at success, you might fail. You may convince yourself you have limited opportunities to succeed, and if you let them pass you by, you will be doomed to failure for the rest of your life.
Life rarely actually works this way. Actually, it may not work that way at all, even though we may feel like it at times. Things are always changing, and there is never going to come a day when the markets devolve into complete and utter chaos. And that means there are always going to be opportunities to make money with top shelf trade setups. So yes—it is worth it to be patient.
4. Fear of Being Wrong
This may be the most lethal fear of all when you are trading—the fear that you, infallible person that you are, might possibly be caught making a mistake. But none of us are infallible; we all make mistakes. There is no shame in making an error, only in refusing to see your errors. The worst mistake any trader can ever make is ongoing dishonesty. I say ongoing because now and again, even the most honest trader is probably going to commit the sin of pride and lie to himself about trading mistakes in an effort to avoid acknowledging culpability. Admitting you lied to yourself is also an important ability to have for this reason—it is just one more way you can be wrong, and one more sin you have to be willing to come to grips with.
You are not, and never will be, smarter than the market. The market is not an opponent sitting opposite you, trying to out-think you and make you lose. The market does not care if you win or lose; it is indifferent to your success or failure. It has no pride. So when you become conceited and lose your honesty, you place yourself utterly at its mercy.
You also must be willing to admit you are wrong to people who count on you in financial matters, like family members who are dependent on you. If you lose your accountability to those people, you are not only going to mess up your trading career, but also your relationships with the people who are most important. It is okay to be wrong now and again. Only by acknowledging your wrongs can you correct them with better behavior, move forward, and get back to being profitable. These tips on how to recover may help you cope with your fear of being wrong.
5. Fear of Success
Success? Why would anyone fear success? There are a lot of reasons actually, especially if you are usually consumed by failure. Success is a major life change, and change always means facing the unknown. Even when the unknown is positive, it can be scary to some people. Self-sabotage is a fairly common psychological issue, and plenty of ordinary people face it. If you are afraid of success, it does not necessarily mean you have deep-seated issues of self-loathing; it probably just means that you are afraid of change.
Deal with this fear by understanding it, and by accepting that the unknown is not always a negative. Just because you do not know what is going to happen next does not mean that you are not going to be happy. You may be happier than you ever have been before. Move forward with faith in yourself and in your trading method, and your life may turn around for the better.