If you have read the advantages of the binary options trading system over other investment vehicles as well as the benefits it offers, you have probably begun thinking about whether it is possible to go into trading on a full-time basis and make it a primary source of income.
Before you quit your day job and become a professional trader, there are several factors you have to carefully weigh. For one, you have to make sure that your earnings from trading will far exceed your expenses. Second, you should have a high proficiency of binary options trading and have a keen understanding of how the system and the markets work. On the other hand, if you are just starting out and you have yet to overcome the common mistakes binary options traders make, you may have to go back to the drawing board, re-think your plans, and stick with your day job. What are these mistakes?
Failure to have an objective mind set
Trading should be approached the same way a scientist would an experiment — with keen attention to facts and data. Instead, most newbies fall prey to emotions like greed and fear. And when these two cloud your judgments, you are setting yourself up for failure.
Lack of discipline and consistency
One of the pre-requisites of successful trading is finding an appropriate trading plan that fits your style as well as your goals. Now, when you find a trading plan, the next order of business is to stick to that plan even when things initially seem going against your way. Success in trading relies heavily on eliminating guesswork, and when you constantly deviate from a set plan, you are more likely to make grave errors.
What makes a suitable strategy? Ideally, it should outline trading frequency, technical indicators and signals and your calculation of the risks and rewards.
Trading without a money management plan
Related to trading using emotions, this problem can lead to potential losses which, ideally, can be minimized by putting into place a money management strategy. If you know beforehand how much money to invest and stick with that plan, you can buffer yourself against trading more money than you ought to, especially when you have suffered loss after loss.
Setting unrealistic expectations
It is perfectly normal to set high expectations and push yourself to reach those. However, these expectations should be tempered with a firm grasp of reality. If you let yourself be dictated by unrealistic expectations, it will be far easier to deviate from your set plan and commit the other errors listed here.
Not knowing when to quit
A novice trader who has suffered a series of losses thinks that one successful trade can offset these. Conversely, a trader who has won a succession of trades thinks that he can ride this wave of luck and earn more. Not only do both situations display the role of trading using emotions, but both also display poor money management skills.