Many times after venturing into Online trading, especially Binary Options and Forex, you mostly leave empty handed and asking yourself the same question as always: why do I keep losing money despite doing my best?
Today we will look into some of the reasons why you may be losing money even though you see other people being rewarded with handsome payouts from the same broker. The problem is not always the broker, but the trader.
1. Lack of Risk management
Trading with a large amount of money is not always a good idea. It is even worse when you stake your entire capital in a single trade. Sure, the larger the amount traded, the better the profits. We’ve all tried this from time to time; sometimes good profits are yielded, sometimes we lose everything.
Sometimes it’s simply because of confidence, maybe you are on a win streak, or other times you just feel that you surely have the correct prediction because your indicators show and sometimes it’s just pure recklessness. But it is never a good idea to stake large just because you feel confident
You should always approach trading as a long term investment, thus, you shouldn’t rush to make large profits in the shortest time possible. In order for you to reduce the risk of walking empty handed from trading, make small investments of about 1/13 of your capital. Don’t be greedy with the profits.
Emotions are always your enemy whenever it comes to online trading. Whether positive or negative emotion, both do result in poor judgement. While positive may cause you to be overconfident and greedy, negative emotions result to feeling desperate, especially upon losing one or two trades. Avoiding emotions in your trade is one thing you should always keep in mind, and your trading results will surely start improving.
3. Trading with a Robot
There is nothing like a robot with 100% winning rate, there never was and there may never be. Stop buying into the promotions from people online, social media, ads or websites claiming to have a trading robot with perfect accuracy.
You should understand that there are thousands of factors that are constantly coming into play that affect the price of an asset for example political news, volume of buy and sell, and other economic factors. There just isn’t any robot that takes into consideration all of these factors.
You’d rather dedicate that time in finding a strategy that suites you than jumping from bot to bot.
4. Adding to a losing position
It is a very bad idea to do this in an attempt to try and recover or salvage something from a losing position. This is one of the things that will keep happening to you time and again if you don’t remove emotions from trading.
- You don’t take trading seriously
- You have a gambling approach to trading
- You take trading as a form of entertainment
- You don’t try to learn and fix past mistakes that lead you to losing
- Refusing to change a strategy that hasn’t been working for you.
Online trading (Binary options in particular), requires a lot of focus and strategy. It is normal to loose once in a while, but you definitely should stop trading if you find yourself loosing more than you gain. Work towards finding a strategy that works for you by experimenting on your demo account. Also, try as hard as possible to remove emotions from trading as it guarantees you loses.
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