How To Get Your Head Into The Binary Options Trading Game
We talk a lot about binary options trading strategy on this site. You need to have a successful trading plan in place if you hope to make a consistent profit. The alternative is to pick trades at random. That’s like throwing darts at a board.
Having said that, there’s one aspect of trading that is just as important as having a clear plan of action. It’s having the right mindset. Even a flawless trading strategy won’t help you if your head isn’t in the game.
Today, I’m going to show you how to develop the right mindset to trade binary options. We’ll talk about fear, discipline, and having the courage to try new things when the old tactics stop working. As we’ve said in the past, you’re going to experience occasional losses. The key is having the mental (and intestinal) fortitude to roll with the punches and get back into the game.
Developing The Right Mindset To Trade Binary Options
Your behaviors reflect your mindset. How you act reveals how vested you are in a particular outcome and your willingness to do what it takes to achieve it.
For example, let’s say you want to lose 30 lbs. the old-fashioned way. In other words, no surgery. You either have to change your diet, get more exercise, or do both. If you’re determined to drop the weight, nothing will stop you. Not the rain outside and not the box of Oreos sitting in your kitchen cupboard.
You have a strong mindset. You’re unwilling to compromise.
You need to have that same unshakable resolve when trading binary options. There are going to be times when nothing seems to go your way. You’ll wonder why you’re even bothering to trade when all of your trades seem to expire out of the money.
Here’s where your mental game is critical. If your trading strategy is sound, things will turn around. You’ll win more than you lose over the long run. The key is to be tenacious. You need to have the discipline to accept the losses as the price for long-term profits.
It’s not easy. But it is necessary.
Binary Options And The Mental Game: The Key Is Discipline
Let’s talk briefly about staying disciplined.One of the biggest hurdles you’ll confront while trading binary options is the lure of promising tactics. For example, you’ll run across a trading technique that is trumpeted as a guaranteed moneymaker. It’s almost irresistible, even if you need to pay the owner to acquire it.
Here’s why this is dangerous. First, it distracts you from executing your own plan. Second, it leads to frustration and confusion when the “guaranteed moneymaker” turns out to be a loser. The loss sets the stage for fear and desperation, both of which can completely derail your trading strategy.
If you’re disciplined, you won’t be susceptible to distractions. You’ll remain steadfast in putting your own plan in action.
Why You Need To Establish Trading Goals
Having goals is critical. You need to have something to shoot for. Your binary options trading goals keep you grounded and make it easier to focus your trading activity.
Figure out what you want to achieve through your trades. The first thing that comes to mind is probably profits. You obviously want to make money trading binary options. But your goals should be specific and address more than just material gains.
For example, rather than aiming to simply “make money,” aim to “make $50 net profit” each trading day. Or aim to buy a new car or pay off your mortgage solely from your trading profits. Again, be specific.
You might also want to establish goals for personal growth. For example, if you’re having trouble conquering your fear of trading, you might plan to execute 3 trades each day in an asset class you’re unfamiliar with. On the other hand, if you’re spending every waking hour trading, you might have a goal to turn off your computer at 3:30 p.m. each day.
Your goals drive your actions, which in turn reflect your mindset and resolve. See how everything is connected?
Come Up With Your Own Binary Options Trading Strategy
I’ve mentioned that you need to have a trading strategy in place, and you need to stick to it in order to avoid distractions. Your strategy should address 3 main areas: when to place a trade, when to close a position, and how to manage your bankroll.
The first item involves knowing when to bet on an asset’s price moving up or down. You’ll need to use technical analysis tools, such as candlestick charts,to make reasonably accurate forecasts.
The second item – when to close a position – refers to getting out of a trade early and cutting your losses. A lot of reputable binary options brokers offer an early closure feature. It can be very handy when a trade moves against you.
The third item is about making sure you don’t hemorrhage cash. One of the most common mistakes new traders make is to put too much of their money at risk at one time. That’s bad money management, and it’s a surefire way to lose your shirt trading binary options.
With your trading strategy in place, you don’t have to guess. You don’t have to worry about the uncertainty that comes with each trade. Instead, just execute trades, close out positions, and manage your money according to your defined plan.
Just to clarify, you’ll definitely confront uncertainty and fear when you place trades. Even veteran traders aren’t immune. There will be times when every fiber of your being screams out to deviate from your strategy. Don’t do it. That’s fear talking. The trick is to ignore the fear and be persistent. A trade might end badly. The important thing is that you don’t let your emotions dictate your trading activity. You can always review your strategy later and make changes.
In fact, you should take a critical look at it on a regular basis…
Pro Tip: No Trading Strategy Is Perfect!
Here’s a truism to trading binary options: there is no such thing as a perfect trading strategy. Every plan is flawed. The key is to find the problems in your plan and correct them.
It’s not easy, especially when every trade you place turns a profit. When you’re on a hot streak, it can feel as if you’re the king of the world. But it’s a delusion. It lulls you into a false sense of security, which can make you less vigilant.
If you’re disciplined, you’ll set aside time every month to review your trades and look for holes in your trading strategy. That’s also a great time to test new trading signals to increase your ROI.
Recognize The Factors You Control While Trading Binary Options
You’ve probably noticed that the mental game of trading binary options is largely based on discerning between the things you can and can’t control. For example…
– you CAN control whether you stick to your trading strategy.
– you CAN control how effective your strategy is.
– you CAN control whether you analyze and make changes when there are obvious problems.
– you CAN control your fears.
– you CAN’T control asset prices.
– you CAN’T control whether trades expire in or out of the money.
In the above context, trading binary options is pretty simple. It just takes having the right mindset. The good news is that it has nothing to do with talent. Mental fortitude comes with practice. No one is born with it. That means that regardless of where you’re starting from, you can acquire the discipline to trade with confidence that you’ll make money over the long run.