At What Point Do You Quit Binary Options Trading?
I ran across a thread with a similar title to this on a Forex forum, and I thought it was a good topic to discuss. When you are first embarking on your binary options adventure, the last thing you probably want to think about is quitting, but it is important to set some kind of guidelines for quitting, because in many ways, your treatment of this topic determines what you are in the market for. It is a good way to analyze your motivations for trading and your end goals.
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There are a number of reasons that people eventually quit trading binary options. Here are a few of the most common ones:
Losing X amount of money. There is a certain point at which many people feel they have lost too much money to continue. The amount is often arbitrary. It is the psychological breaking point, and may differ a great deal from one person to another. It could be an actual dollar amount of a percentage of your overall funds.
Blowing X number of accounts. Optimally, your first trading account will be your only trading account, and you will never blow through the entire thing. You’ll just build and build and let it grow indefinitely. The reality however is a bit harsher than that. Most traders will blow one or more accounts completely before they become profitable. No, it does not have to go that way, but it happens. How many are you willing to lose before you throw in the towel?
Going through X number of systems. How many trading systems are you prepared to try on trading before you give up? Five? Ten? Twenty? Fifty? A hundred? At one point will you become overwhelmed by failure and give up?
After putting in X number of hours. An author named Malcolm Gladwell published a book called Outliers in 2008. One of his claims was that it takes around 10,000 hours of hard work for most people to become experts at most things. While Gladwell was probably onto something (hard work and dedication and time do generally result well), it is an oversimplification to believe you will really succeed at anything in 10,000 hours. How many hours are you willing to invest of your life in binary options before you give up? Would you keep going after 10,000 if you were not yet an expert?
After deciding you just don’t like it. You might quit binary options for the simple reason that you do not enjoy it and think there is a more rewarding way for you to achieve success financially and in other ways.
These reasons for quitting were pulled together from the Forex thread that I was reading, and they apply equally well to binary options trading. They are two closely related activities which utilize very similar skill sets and processes. Another interesting option on the poll that was tied to the thread was this: “I quit after trying everything possible.” 38% of the respondents voted for this option.
This is a very interesting assertion—that you could possibly actually have tried everything to win at binary options. It is difficult to justify actually believing that when there are other people who really do make a living successfully at trading. Clearly, it is possible. If you are not succeeding, there must be another reason—not simply that it is impossible for you in particular. I would thus sum up that particular rationale for quitting quite different. Instead of saying, “I quit after trying everything possible,” I would say, “I quit because I hit the wall of despair and no longer believed in myself.”
According to the poll and discounting respondents who said “other,” that was the number 1 most common reason for quitting trading. And that goes to show you that the most challenging part of trading actually is the sheer psychological difficulty of not giving up on yourself. Learn about character traits that help keep you from giving up on yourself.
Do Not Forget About Demo
One thing you can do to try and prevent some of these issues that can cause you to want to quit is simply to avoid losing money in the first place. While it is again quite possible you will blow your first trading account, it is far from inevitable. Moreover, while you will lose trades (and money), you do not have to lose a lot of either if you demo test. Instead of worrying about losing all your capital, why not put more focus on when you start risking your capital?
Binary options brokers like MarketsWorld allow you to trade with virtual funds on their unlimited demo account. You can trade as long as you want, as often as you want, without any risk, and not spend one dime learning how to trade. It is a wonderful feature, and most traders will not take advantage of it. You should not start risking your real capital until you are not restarting your demo account repeatedly because you keep blowing it. On top of that, your demo account should be profiting consistently for several months at least before you risk real capital.
This will prevent you from blowing your real money and your real accounts. At that point, you do not have to worry about quitting because you are blowing accounts and losing money—which eliminates two factors that cause traders to quit. Admittedly, this does not take care of the other issues, though it does make them less problematic. You will waste fewer hours failing when you do it through demo than if you do it with real money. You will also be dealing with less pressure and frustration, which makes it less likely you will run up against the wall of despair and hit your emotional limit.
Focus Your Efforts
As far as deciding you do or do not like trading binary options, that is a completely subjective matter. You should never confuse liking something with finding it easy, though. You may find binary options challenging and frustrating and still like it and appreciate what trading can give you. It also may take you more than 10,000 hours to achieve greatness. And you may go through numerous systems—and you also may spend a great deal of time revising the same one over and over and over. That is another thing to consider. The more you jump around, the longer it takes you to spend 10,000 hours on one method and become an expert. Trading is a broad discipline, and the more you scatter yourself and the less you focus, the more time you will waste without progressing.
So buckle down, focus on a trading method you like, and learn to trade it like a pro. Conduct your experiments on demo, and don’t go live until you are really ready to profit, and be ready for the obstacles you can’t avoid. Trade smart, though, and you will be able to steer clear of many other pitfalls.