Binary Options For Beginners Mistakes To Avoid

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Binary Options For Beginners: Mistakes To Avoid

You already know you can make money on binary options. You even know the best strategies to do so.

But what about the pitfalls? As a beginner, what do you need to know?

To answer that, we’ve come up with a list of common mistakes to avoid when it comes to binary options for beginners.

Trading without a purpose

You wouldn’t aimlessly walk into traffic on a busy highway. Likewise, you shouldn’t blindly step into the fast-paced world of binary options without a plan.

Consider this. Relying on intuition, you would have to correctly guess at least six out of every ten trades in order to be successful. Can you consistently predict 10 coin flips with better than 60% accuracy?

No. Because that level of success is simply not sustainable based on guesswork alone. If you base all your investments on gut feelings, you will lose in the long run.

By contrast, a solid plan helps you find patterns in the chaos so you’re ready to strike when conditions are prime. Similarly, you won’t be shaken by the market’s ups and downs, or make impulsive moves that will cost you money.

While we’re on the subject of impulsive moves, another big mistake is…

Trading emotionally

Humans are naturally emotional creatures. But there’s no room for emotion when it comes to binary options. And recognizing the difference between a logical and emotional response can mean the difference between making and losing money.

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A common emotional behavior for beginners is to chase your losses. Like a gambler who only goes deeper into the hole trying to get their money back, you’ll only throw more money away if you overreact to a volatile market.

It goes both ways, too. As a newb, it’s easy to fall into the trap of feeling like you can’t lose after a series of successful trades. This overconfidence can cause you to go outside of your investment plan and make questionable choices you would normally avoid.

Of course, there’s definitely an intuitive element to trading. But those gut decisions are only effective when safely applied within an existing framework. They need to be guided by structure.

But even if you make the mistake of an emotional trade, the bigger issue is…

Not learning from every trade you make

The truth is, not every trade is going to be a winner. You’re bound to make some mistakes as you learn what to look for in binary options.

However, it’s important to analyze your history and learn from it. If you don’t, you’ll only find yourself repeating the same mistakes over and over again. (And losing your money–over and over again).

That applies to your successes too, though. When you look back on your trade history, it’s important to see exactly where you went right and what market conditions prompted you to succeed.

As a result, you can improve your trading skills and make better decisions going forward, while also avoiding the pitfalls that took you down in the past.

But before you put any real money on the line, it’d be a major mistake to start…

Trading without testing

Many beginners jump right into trading without any prior experience.

While that might work for some, new traders are prone to panic and poor decisions. Because they’re not comfortable with the process yet, and quite honestly, they don’t know what they’re doing.

That’s why it’s not enough to just randomly pick an approach to binary options off the internet and hope it works for you. No matter how many people might sing its praises online, there’s no one right method to trading for everyone.

That’s why demo testing is vital for beginners.

You can use virtual money on a free account to get comfortable with the trading process. Then, you get to see how your system will perform in a variety of market contexts and learn to recognize the signs for good trade setups.

All without any money on the line.

Smart binary options for beginners

Now that you’re up to speed on some common beginner mistakes, make sure your plan doesn’t fall for any of these binary strategy myths. Or head over to Binary Options 101 to learn more about making less risky trades.

We understand binary options can seem pretty complicated at first, so please don’t hesitate to contact us with any questions.

Mistakes to Avoid as Binary Options Trader

Are you interested in investing in binary options?

If your answer is yes, then you are on the right place to gather valuable information about to become a successful trader.

This guide is intended for all South African traders who want to learn all tips and tricks of profitable binary trading and of course, discover mistakes to avoid as binary options trader.

As you might already know, binary options industry began in 2008 on global market, and very quickly became searched online investment type in South Africa.

In a short time, binary trading on South Africa became field of interest to many ordinary people in South Africa, who wanted to participate on financial market and earn money.

So why is trading binary options popular?

Possibility to invest in different assets as beginner trader and maximize profit is something that is appealing to most people, which is understandable. It is everybody’s wish to have successful trades, especially when there are plenty of traders who have continuously positive trading results.

There are different ways on how to become pro trader and what does it take to avoid scam in binary options. Therefore, we believe how our guide on mistakes to avoid as binary options trader will be of help to interested South Africans.

The initial and most important step of successful binary trading journey is to find a reliable binary broker who offers secure trading platform. Once traders succeed in that, the biggest issue is solved.

Below we will provide you with relevant information about possible mistakes to avoid as binary options trader. This is very important for traders to reduce risk and have profitable trades only.

Having Unrealistic Trading Expectations

This might seem as a little thing, however it definitely isn’t, especially for new and inexperienced traders.

So why is that? This is a big mistake, done by many new South African traders. Since there is no previous financial knowledge, traders right away think how they will earn high profits without any strategy and in their first trade.

Having high expectations is good, but unrealistic ones are those to avoid. Although many brokers, including reliable ones, offer high return on investment, is doesn’t mean that traders shouldn’t have a strategy by which they would place trades.

Unclear Terms & Conditions

This also comes as one of the mistakes to avoid as binary options trader.

Unclear terms and conditions are closely related to scam brokers who don’t provide significant information to their traders, such as this one.

If South African traders are planning to invest in binary options, it is highly recommended to check broker reviews and get detailed information if a broker is safe enough to trade with and earn money.

With most scam brokers, T & C will be either unclear or even missing.

This is something that traders should keep in mind before they deposit. Professionals know these things but new traders still don’t have sufficient knowledge and that is why they should be cautious.

Brokers listed on our website are reviewed and offer secure and protected platform for traders in South Africa.

Regardless of platform type and available features, platform should be easy to use in order for traders to navigate over it without any difficulties.

Poor Money Management Plan

Non-existing money management plan is definitely considered as one of the mistakes to avoid as binary options trader.

This is probably one of the main reasons why some traders fail in binary options trading. Successful traders spent a certain amount of time analyzing market situation and different trading assets to be able to accurately predict price movement.

For those traders who don’t want to invest time in the trading process, can choose auto trading option. Trading with free automated software is simple and yet profitable, therefore traders can check our Binary Options Robot review to know more.

So to have a good money management plan, traders should make a logical plan combining strategies and market news which reduces risk level. Having a bad strategy which traders don’t understand is mostly likely to be leading to failure and that is something South African traders want to avoid.

Choosing to Gamble Instead of Trading

Binary options traders should have in mind how trading isn’t the same as gambling and there are more than one difference which support this fact. Gambling relies completely on luck, however if traders do the same thing for binary options trading they will experience losses.

Binary options trading requires more serious and business approach. It means how traders should try out different strategies to see which will work the best for them and lead them to money gain.

Having a good strategy plan, discipline and clear head are great characteristics to start binary trading journey and succeed in it.

Get the Most from Education Guide Materials

One of the reasons why binary trading is widespread among traders in South Africa is because they made online trading more accessible to ordinary people, and not just professional traders with years of experience.

South African traders are able to trade with many trustworthy brokers who operate on South African market. They all differ by certain characteristics and available features, but also enable traders Education Area.

Why are education materials relevant? Depending on a broker, traders can choose among many useful education materials which can be out of great help and assist traders to become more experienced. Brokers, such as 24option, IQ Option etc are considered as leading binary options brokers.

On their platforms, they offer a wide selection of guide articles and tutorials which should be sufficient for both inexperienced traders and pro traders. Also, FAQs, webinars, glossary and different guides are on traders’ disposal. Thanks to its advantages, there is a big chance for new traders to avoid beginners mistakes when trading binary options.

How to Avoid Making Rookie Mistakes in Binary Options Trading?

Binary options trading caused major changes in financial markets ever since it appeared in 2008.

It draw the attention of people all around the world who suddenly had a way to freely participate in trading which had been, up until then, more reserved for financial experts rather than ordinary folk.

And, when first starting out in any sort of business venture it is good to know about common mistakes usually made by beginners.

In this case, knowing how to avoid making rookie mistakes in binary options trading can only lead to more profitable trades, which is the ultimate goal.

Bearing that in mind, this article is intended for all those South African traders which are at the start of their binary options trading journey but who have the foresight when it comes to preparing themselves properly.

Learning how to avoid making rookie mistakes is one of crucial steps.

Going in binary options trading blindly and hoping for the best will not accomplish much, therefore developing a strategy is a necessity which will help in selecting the right expiration dates which will be used in binary options trading later on.

Lack of focus is a common rookie mistake, which sees traders studying 4-hour charts and then going off and trading in expiration dates which are short, or trading in longer expiration dates while consulting a 1-minute chart.

Hence, the first thing to do is to line up the time period used for market analysis along with the expiration date.

By analogy, if South African traders are looking to trade on 4-hour charts then longer expiration dates are needed, e.g. End of Week or End of Month.

Trading patterns are another focal point interested South African traders need to take into account as those can be quite useful. Flat trading pattern or a zigzag one can be a great source of valuable information to traders when they are choosing an expiration date.

Choosing the Right Expiration Date

At the beginning, trading binary options might seem like a tricky business as South African traders will face having to select expiration dates on their own.

Naturally, there are times when traders feel angry or unhappy with the choices they have made.

E.g. the price was “in the money” basically during the whole time in the trading process only to change direction unexpectedly which ends in lost profits.

Fact of the matter is – the expiration date wasn’t chosen properly, a common enough rookie mistake and it’s one which may not be completely avoidable in binary options trading, especially when the market had been steadily moving in the predicted direction only to change at the very end.

Rookie Money Management Tips

However, there is a remedy which South African binary traders can use – money management techniques. Those include coming up with a trading plan which will hold.

Traders might opt to section investment funds they plan to use into several identical parts and then, further divide it into even smaller amounts.

Great thing about binary options trading is that traders can prevent a complete loss of funds since a percentage is offered.

Additionally, switching regularly from shorter to longer expiration dates allows them to place trades hourly but also use much longer expiry dates such as End of Day or longer, depending on the broker they selected for trading.

Using Timeframe to Choose Expiry Time for an Option

Another fairly usual rookie mistake many binary options traders make is to deviate from the plan without a solid reason. If a plan has been formed and traders invested their time into forming it then not following through makes little sense.

Changing expiration dates which traders already decided upon should only happen if a decision is being made on the latest analysis of time frames.

Let us imagine this situation:

Trading technique used by a trader is founded on RSI (Relative Strength Index) of overselling or overbuying levels which are joined with price deviation.

If traders are using this setup on the 1-hour chart frame then trading expiration date which are shorter than End of Day makes little sense.

Also, just because a trader has selected End of Day expiration date does not mean he/she has to wait the entire day in order for their option to close “in the money”.

Especially, if the option was taken in the second part of the day which means the expiration date will only take several hours. The same principle can be used for options which are being traded in second part of the month or second part of the week.

Devising and then following money management and technical analysis can be a great way to avoid another one of rookie mistakes – over-trading and trading short term expiry dates since those appear as a shortcut toward the desired goal.

Short-term Expiry Rates – Yes or No?

Change in the market direction happens and that is the undeniable reality of any financial trading business, regardless of the expiry times used.

However, there are those traders no like neither short nor long expiry times but to find just the right middle ground South Africans interested in binary options trading will need knowledge of market analysis and self-discipline.

Besides, avoiding rookie mistakes in binary options also includes using fundamental analysis too, not just the technical one.

Regardless, the best way to continue is to develop a careful approach and try to have a full overview since both long-term and medium expiration dates are standard.

Best Binary Options Brokers 2020:
  • Binarium
    Binarium

    Best Binary Options Broker 2020!
    Free Trading Education!
    Free Demo Account!
    Perfect for Beginners!

  • Binomo
    Binomo

    2 place in the ranking!

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