First of all I have to introduce myself – I am one of the guys that paid the telephone bills of successful binary options traders like the The Binary Nerd. How I did that? Just by blowing my account again and again. But no worries, I will take you through my learnings and hopefully you can profit from it, as…
The world of Binary Options is like made for fantasies and mind games
May I introduce you my most favorite philosopher of our time? I am sure you know him already, it is John Lennon. There is most likely a John Lennon song for literally every situation in life, so for this as well:
Perhaps in this case LOVE might not be the answer, but it is important to be aware of the most common mind games that occur while trading binary options.
As you might know already, you are not really trading the markets, you are not actually “buying” something if your purchase a buy option – one can say you are on a binary options holodeck, as a broker is literally nothing else than someone offering a platform to execute trades that don’t influence the market in any way – it is an autark system. The prices are fed from outside by agencies like REUTERS but from the trading platform itself nothing ever goes out into the wild.
As you are trading against the broker it is a zero sum game. Imagine it like this: All the traders are forced to deposit to start trading. The whole money goes into a big pot. This pot now pays the withdrawals – and the surplus is simply the profit of the broker. If your trade is correct, you will win 70-85% in return, sounds good – but you have to put this into relation as you are loosing always the 100%. Means you must leave the field with way more winning trades than loosing ones, which is not easy. At least you won’t reach this goal just by pushing buttons or guess work. You might have had a winning streak by coincidence but the market conditions are ever changing, so don’t fall for this.
Lesson 1: YOU WON’T TRADE BINARY OPTIONS PROFITABLE WITHOUT A DEEP KNOWLEDGE OF TECHNICAL ANALYSIS OR HOW TO TRADE NEWS
Don’t know what a doji / a candlestick is? Never fired up a tool like Metatrader? Wicks, timeframes, flight path, bollinger bands – this all means nothing to you? Then stop trading your live account now as you will loose all your money and pay the brokers next Ferrari.
Furthermore you might fall for simple thoughts like when it comes to big news. You heard the results of the brexit referendum and something tells you: Man, that’s your chance – the pound must fall, I will redeposit my 250 and put them all on a put option – easy money doubling, right? Not going to happen! You will need intense knowledge in news trading to see the signs, like when the news kicks in and for how long. Don’t try – it is not as it easy as it appears. This is most likely the worst mind game binary options are playing with you:
Lesson 2: TRADING BINARY OPTIONS IS NOT EASY
Sounds easy like an easy lesson, hum? Binary Options appear easy but are not. Got it, next topic, please. No – this lesson really takes very long to kick in. You have just two buttons up and down, all processes inside your brain are going like “This is really, really easy, Man! A 50% chance!” – The system of binary options is an open invitation for your brain to switch into gambling mode and it costs tons of power to understand that conscious trading can be a tough job, that asks for much patience, and even more discipline and knowledge.
This brings us directly to the next lesson:
Lesson 3: I CAN’T TRICK THE SYSTEM
You can’t. You will loose everything. Even if you find something that works for some time, it will stop. And from my experience it will stop at that point of time you are on fire, give a flying f#ck on your money management and put an insane amount on a single option. Like in real life – tricks may work for a small timeframe but almost all the time they will fire back and hurt you badly.
Lesson 4: THE ARE NO SAFE TRADES
You will never really KNOW how a trade goes out. Sure, some options are more likely than others to end in the money – especially if you have grown patience, discipline and knowledge, but be prepared – you still can’t predict the outcome. The market follows rules, yes – but it likes to break those rules more often than you might think. The stupid thing with thinking there are safe trades, is that it will make you forget your money management and make you think you can invest a higher amount this time, as it is sooo safe, right?
Lesson 5: IN WAR WITH THE MARKET. W00T w00t – REVENGE! I WANT ALL MY LOST MONEY BACCCCKKKKK NOOOWWWWWWWW W0000000000T !!!!11111!!!!!!!!!!!
This is most likely the worst mode you can get in – the revenge mode. A true mind game as you are sitting there and loose valuable money and must just watch this or refrain from further trading for the moment. This mind game is very hard to win. Your brain does not want you to loose, and if you loose your brain wants to take chances to recover it RIGHT NOW!!!111!!!!! What happens really is, you loose the patience, you forget what you learned, you just want to get out of this loooooose situation and feel like the great and shiny winner you have been just a few minutes ago – my experience: it will not work. You will blow your account and this is 90% sure. Getting out a loss situation with this mindset is almost not possible. Remind yourself: Patience. Discipline. Knowledge – these are the main pillars of good trading and you are doing the opposite of them in revenge mode. It is like an emo cutting himself more and more.
Lesson 6: TRADING IS NOT ABOUT THE MONEY
This is another very hard mind game and directly connected to lesson 5. Of course you trade to earn money. If there was no money to earn you won’t do it, right? And this is exactly the stumbling stone you have to avoid. When trading, you have to go into trading mode, where your trades are beautifully handcrafted actions that have the power of thoughts and knowledge within. Imagine being a carpenter: If you manufacture a new bench you don’t think all the time “what will this bench earn me? How can I sell it for more, how to make the most profit of it?” A good carpenter will think something different. He will think “how can I make this bench perfect and more beautiful, more comfortable? How can I work on this piece of wood to get a desirable outcome?”. The outcome of this methapher is the winning trade – but you want a winning trade for seeing your handcraft works and produces a good result. If you win a trade like this, you know there has been good work done:
Lesson 7: DO NOT CHASE TRADES
Accepting losses is part of the game – it is hard yes, but it is part of the game. Just like the carpenter will hammer his thumb sometimes, you won’t get around it. Now imagine the following: You have patiently waited with much discipline, calculated the trade by all rules of the art, you execute it and… it looses. Can’t be! Perhaps I entered too early. I try it again with the double amount, as now I have to recover from the lost the trade as well. Looooose. DARN, all the ALGOs are blinking, the ARC values are correct and in SYNC with the STRUCTURE and the GEOMETRY and I can see a clear FLIGHT PATH. So go for a third trade! Looooooosssseeee – man this is going to be costly if loose the fourth trade again, but… I think I don’t need to explain more about this mind game – it is an ugly one. As stated above the markets not always follow their rules, and often MANIPS join the game and put some hefty chaos into the situation, making it totally unpredictable. Most professional traders don’t chase trades or martingale trades (doubling up to recover the last lost trade) – however, some professionals do a limited amount of a single martingaled trade. But that’s it. Just stop! How many accounts I chased to death by this – just don’t do it.
Lesson 8: Don’t get crazy on a winning streak!
A mind game that feels pretty good is to be on a winning streak. Man, I literally drove accounts from $100 to $2000 in one day and it felt awesome, almost god-like. Endorphins are rushing into your brain. Your ego is fluffed up to the max and you think how long you will do this before you show your blank ass to your boss, asking for a sweet kiss.
Truth is: I never got this quickly earned high amounts really transfered to my bank account. I ALWAYS lost it. I lost the feeling for the money, did not stick with the money management and wanted to perpetuate more and more, quicker and quicker – $$ signs in my eyes – GREED took over – and left blown accounts. There are winning streaks without a doubt and you can ride these waves, but set a clear limit and STOP, hell, STOP really when you see the fifth trade in a row went down the river. The reason is that the market conditions have changed what makes you win in the first place will now create a sucking black hole of losers. Enjoy while it lasts, but you need to have a really good feeling when to get out – and ALWAYS STICK TO YOUR MONEY MANAGEMENT!
I hope this post helped you to identify the most common mind games one can play with Binary Options trading. Stay safe, always leave the brain on and observe yourself what you are doing right now and if it makes sense.
Oh and turn back to the beginning: Even here Lennon was right as I can see now – LOVE is the answer, here as well! You need to have love and passion for your trades, calculate them lovingly and carefully is the right way – you can always count on John!
Did you ever find yourself playing binary options mind games? Leave a comment here and let us know!
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