Avoiding Beginners Mistakes
Even though binary options trading is popular and plenty of people around the world as well as in South Africa are interested in this online trading opportunity, not all of those who try their hand in it will be successful for the simple fact that they often make beginners mistakes.
This is precisely the main topic of this article, or to be more precise, avoiding beginners mistakes.
In order to help all aspiring South African traders on their binary options trading journey, we shall try to point out those beginners mistakes which are most frequent and which traders keep repeating, even when they do have some experience.
The traders who take part in binary options trading have, as a rule, a desire to be successful and make their investment profitable. In order to secure that, there are certain mistakes which should be avoided and which, with a little bit of practice, can be easily revoked.
Absence of Money Management Plan
Lack of sound money management is one of the primary beginners mistakes. While investing time to study underlying assets, trends on the market, trading options and looking into strategies is an absolute must, disregarding the money management plan is not likely to lead to a successful trading experience in binary options.
South African traders looking to trade binary options should set their budget intended for the trades then continue to make an outline of how much they wish to invest in a particular trade. Experts suggest that it would be best to invest between 2- 5%. In adopting this approach, traders are also minimising the risk as it is hard to lose all your funds with this balanced and organised approach.
It is also important to stick with the money management plan as that will provide traders with a clear overview of their trading activities.
Irrational Trading Expectations
Yet another common pitfall which is also placed in the avoiding beginners mistakes list is the fact that many traders who enter binary options trading do so with unrealistic expectations. Yes, it is possible to make a great profit with binary trading as the returns may range from 65-85%, but traders have to work toward that goal.
To expect amazing results from the offset, especially if no preparation or education has been done can only be a huge disadvantage for novice South African traders. It will also lead to disappointment and that is never a good combination to reach goals.
Therefore, traders are advised to set realistic goals, put together a sound plan and slowly but persistently progress toward it. Losses will happen, as they always do, even to the professional traders who have an abundance of experience. But, if traders learn from their mistakes and improve their skill, then they are one step closer to their profitable trading expectations.
Operating with a Minimal Investment
While the fact that potential South African traders needn’t have millions on their bank account in order to invest into binary options trading is a huge advantage and one of the most appealing aspects of binary options it can also be a problem too.
It is always advisable to be rational with investment and the amount of money traders deposit on their account, but sometimes a more can mean precisely that – more. If traders constantly only the minimum amount necessary, it may limit their profit-making opportunities.
And while it is great that binary brokers do impose the minimum amount that should be deposited and with some brokers like IQ Option that amount is only $10 which truly makes it accessible to traders from all walks of life, investing a bit more also has its advantages.
It is easy to understand that beginners feel reluctant to invest too much, however, after some initial period and a bit more experience and knowledge, investing higher amounts might mean the difference in achieving the goal and constantly being on the verge of achieving it but never actually getting there.
Carrying out Too Many Trades
Avoiding beginners mistakes also means not slipping into the habit of careening out too many trades. It’s easy to see why inexperienced traders might come to the conclusion that placing numerous trades just might be a secure path to monetary success but that is more tricky than it seems.
Actually, in stretching yourself thin and placing too many trades in a short time span might lead to failure. It is easy to get carried away, especially if traders are experiencing loads of success and profiting, but curbing that enthusiasm a bit and carrying out the trades according to the plan can be a better approach in the long run.
Another reason why so many newbie traders both in South Africa and around the world start over-trading is when the opposite happens and their investments are not being successful. In wanting to reverse the loss, traders place too many trades which, mostly, just lead to more losses.
Binary options trading is a blend of discipline, balanced approach, learning and keeping a watchful eye on the market, not about rushing in and hoping all will simply fall into place and the end result will be a fat bank account.
Gambling Approach Instead of Trading
One of the misconceptions about trading binary options is the one where traders see it as gambling. While it is possible to argue that any sort of business dealing has an element of gambling present, there is more to binary options than simply relying on luck.
Luck, or the lack of it, is a province of gambling.
In order to have a profitable binary options experience all interested South African traders will have to invest time into studying available educational materials, monitoring the events taking place on the market, understanding the underlying assets and trading options. Also, it is of essential importance to select a binary options broker which will satisfy traders’ needs and expectations.
In short, binary options trading is a business venture and should be treated as such in order to obtain satisfactory results which, in this case, means healthy profits.