The psychology of traders on the binary options
Human beings are all social creatures driven by emotions. Everything that we do is in some ways as a result of our emotions or lack of emotions. Having said that, no two individuals have the same psychological makeup.
Trading psychology and money management
Some people control their emotions better while others tend to be led by their emotions. This is one of the main reasons why we see some binary traders tend to be very successful while others struggle to breakeven with their trades. In other words, for a trader to be successful, they must be able to master their psychology in binary option trading. There are three 3 main emotions that a trader must overcome in order for him to be able to trade effectively. Fear is a natural innate survival instinct.
When threatened, fear takes control over our mind in order leading to us confronting the danger or fleeing from it. In financial trading, this fear is triggered by the fear of losses. We may feel threatened when confronted with losses due to the market forces or due to wrongful determination of how an asset price will move.
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Unfortunately for the majority of traders, when confronted with losses, their primary instinct will be to hang on to their investment in anticipation of the market turning around.
Some will even invest more in the hope that they can cover their losses when the market turns around. In short, we cloud our judgement as to when we should cut our losses and get out of the market. Unfortunately, that happens only in the movies. In real life, when it comes to trading in a fast paced market where the timeframe runs in minutes, greed can be a destructive emotion. Because of greed, a winning position can easily turn into a losing one when we fail to liquate our position before the market falls.
The insatiable appetite to want more profits can easily blind us as to the opportune moment to exit the market. Actually, human beings possess this psychological phenomenon as well. We can easily see the result of this behaviour at work in the dot com bubble bust and more recently in the crash of the real estate market in the U. Overcoming our emotions in respect of fear and greed is never an easy task. In addition, there is no hard and fast rule that we can actually follow because we are all different people.
What works well for one person might not work at all for another. The best advice for mitigating the effects of these two emotions is perhaps, being aware of them during the heat of trading and then walking away from the trading.
Only if we feel for certain that it is a wise move then we invest our money into the options. BinaryOptionStrategy does not accept any liability for loss or damage as a result of reliance on the information contained within this website; this includes educational material, price quotes, signals data, trade ideas, and analysis.
Please be aware of the risks associated with trading the financial markets; never invest more money than you can risk losing. The risks involved in trading binary options are high and may not be suitable for all investors Binary Option Strategy doesn't retain responsibility for any trading losses you might face as a result of using the data hosted on this site. The data and quotes contained in this website are not provided by exchanges but rather by market makers.
So prices may be different from exchange prices and may not be accurate to real time trading prices. They are supplied as a guide to trading rather than for trading purposes. Broker Center Demo Accounts FAQ Promotions Regulation Bitcoin Brokers Trading Strategies Strategy Videos Education And Courses Trading Guide Education Articles Market Forces Glossary News About Contact. Investors can lose all their capital Review Visit.