Since binary options entered the scene of online trading it has become the number one choice amongst private traders around the world, and these days you see ads everywhere about this new form of trading that has revolutionized the whole game of trading. This has of course led to a large stream of complete beginners entering the scene, with no previous experience in trading. I therefore wanted to make a list of the most common mistakes that newbies make when they start trading, so that if you are a beginner reading this, you will then know what to avoid when you throw yourself head first on to the trading scene.
Not managing risk properly
You cannot expect to start trading and become a millionaire within a couple months, if you are starting out trading with the capital of someone who works a regular job. Way too many new traders hear about this and they immediately think that they are going to become the most successful traders ever, and that it will just happen by itself. Therefore, they put their savings into a trading account and they then start trading for massive amounts on trades that they believe are “dead sure”. The thing they forget is that we can never be fully definite about the outcome of any future event, so there’s always a chance that our trades will go down the drain if we’re unlucky. Therefore we must manage that risk by not putting to much money in relation to our total capital into a single trade. Instead you want to spread the risk by making several smaller investments so that you account for the risk that is involved in every single trade. You can read more about risk management here!
Expecting immediate success
A lot of new traders become disappointed when they don’t start making money straight away, and most of us drop out after a couple of months when we can’t see any results. The thing you need to realize, however, is that just like with everything else, practice makes perfect. Do you think Michael Jordan just picked up a ball one day and started shooting hoops and dunking? Absolutely not! He was even kicked out of the school team for being so bad, but he stuck at it and kept practicing and look where it took him!
Trading more than you read
In binary trading, knowledge is everything! Therefore, it’s important that you don’t start trading straight away after you find out about it. The first thing you should do is to spend a couple of days reading guides on the subject in order to build a bit of a foundation to stand on. I mean, if you go into a trading website and start trading without knowing how it works, binary options trading is pretty much just like betting on black or red on the roulette wheel!
