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Thread: Psychological edge in trading binary options

  1. #1
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    Psychological edge in trading binary options

    Traders often come to binary options due to the following reason: they are confused about uncertainty that comes with traditional trading. Where to place your stop, should we move our stop-loss, should we “let profit run” or “take what the market gives” to us?

    There are no certain answers to these questions as we are operating in the environment with high level of uncertainty, ambiguity and conflicting information. It will be right for one type of market conditions to hold position whereas it would be wiser to take profit in the other one. Traders with experience of active trading over 1 year will be agree that there's no certain answers on such questions. All we are able to do is to build hypothesis and stick to it, or to change it due to changing market conditions.
    It's hard sometimes to make reasonable decisions when you have a position. That's why traders often recall worst case scenarios or have extremely optimistic view. They have two outcomes in their minds – “yes” or “no”, but market is often much more complex.

    According to my trading experience, everything of described above happens, when traders fail to distinguish between “analytical mind” and “trading mind”. “analytical mind” is a point of view where we are objective, we see the big picture as well as numerous nuances, we are flexible and can make reasonable conclusion about the market “here and now”. “Trading mind” is something associated with logics of your account, not the market. We tend to stick our attention to something that threats our position or gives a hope for quick profits. “Trading mind” switches on when we are in position. That's why most analytics in hedge funds or other serious institutions are not permitted to trade – they have to be neutral.

    So, you might see that traders face a very difficult task – they have to judges and players at the same time. Imagine that judge in the soccer game was permitted to make bets on outcome of the game. How do you think – would they be good judges in this situation? For most people, be an observer and a participant at the same is a very tough task, when they try to get inside of mind of their competitors, all they have is stress and emotional discomfort. Now you understand why many traders fail after they transition from demo to real money account.

    Trading options is a way to distinguish two positions of perception (“analytical” and “trading” mind). Thus, we can analyze one market (chart of the currency pair) and trade on the other. When our attention is not absorbed by getting stopped out of your position, you can pay 100% of your attention to process of trade selection. Of course, in this case you will more than likely spot a good opportunity, repeating this positive cycle in the long run.

    That's why, if you feel that you experience difficulties in making good analysis when having paper profit or loss, try trading your strategy with binary options and see what happens.

    P.S. Of course, if you are trading big trends, it can not be replicated in trading with binary options (they have limited upside for profit).

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    Last edited by Value trader; 01-15-2015 at 09:48 AM.

  2. #21
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    It really is regarding place or even phone, however it is actually a lot more than which. The option from the investor is actually suffering from numerous elements which are difficult. However, once the investor possess a great buying and selling program that's period confirmed, this may be the idea associated with assist for that investor constantly within the buying and selling associated with binary choice, this isn't a problem for those who have a person described buying and selling technique.

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  3. #22
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    The psychological state of a trader is considered both in the Forex or binary options have a very important factor in influencing the decisions of rolling, which reflect the impact directly on the results of the transactions carried out by the so A must for any trader in the field of forex or binary options to show restraint and to avoid any influences psychological in order to ensure the achievement of successful trading

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  4. #23
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    There are so many things that you have to know when trading in options an of other things that you have look for is the confirm confident that a trade has to have before they can invest and you have to know that trading will take a lot of gats

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  5. #24
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    in robo option the balance is limit to just 1500USD per call or put transaction. It means the change to get profit is about 75%-85%. And the chance to get loss is about the 100%. I think this is the weakness of demo option so far. We can not put or call order untill unlimited. Am I right? CMIIW ( Correct Me If I am Wrong)

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    Registered user ara's Avatar
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    Personally I think that the binary option concept can reduce the effects of psychological in trade. Because here we only focus on the analysis of the market and positioning. I very much agree with all that you say, especially about the analogy of a football referee. Binary options can reduce complexity in traditional forex trading. But it doesnt mean that binary option is easy. I think binary option is more difficult than traditional forex trading. Its just my point of view.

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    Lightbulb Check emotion is key to success in binary trading

    Basically
    In Binary Trading...... i think control emotion is the best key to success. because if you trading with stress or emotionally then you will miss tha right entry

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    Quote Originally Posted by mehwishraheel View Post
    Really, this is true that people need ease with less risk, they know that forex market is a high risk market, but they don't see this, they just see the high returns in this business, that's why they seek some expert advisers, some scripts, someone to copy or someone with PAMM account to invest and earn money with less efforts, now they can do that with the help of binary options, so they get attracted with this option. They need less risk, and this is available in binary option, but main thing that is needed in this business is called analysis, and that is too much difficult. :)
    Yeah....... really u well said..in binary trading analysis is most important.. and its a very difficult work. and you need keep patience to better analysis.

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    Quote Originally Posted by aris90 View Post
    in robo option the balance is limit to just 1500USD per call or put transaction. It means the change to get profit is about 75%-85%. And the chance to get loss is about the 100%. I think this is the weakness of demo option so far. We can not put or call order untill unlimited. Am I right? CMIIW ( Correct Me If I am Wrong)
    Actually its a not false about Binary Trading. but I hope in future will unlimited for all call or put. thanks

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  8. #27
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    Binary options trading is one thing that is very different from other kind of trading because this is one thing that is time bound and when the time passed the wrong kind of trading directed to the other side even in the smallest Fraction that meant that you loss the money that you have made as state

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  9. #28
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    I always loved binary option trading ever since I come to know about it. It is because of all the things you(Value trader) mentioned here. As I am a scalper so short term trading is very common to me. I close my trades many times under 10/15 seconds with profit in a volatile market with 3/5 pips. Now when I saw I need less money to trade in binary option with the possibility of making more then I am after it.

    Example: Suppose I have 10$. I want to trade normally. Taking 1:100 leverage I can open of 0.1 lot of AUDUSD or USDJPY pair. And I like to risk my 10% at a time. So when you open a trade you have 7 pips away from hitting your SL and 11 pips away from making 8% profit. Now if you open a binary option of 1$ for say 15 minutes you just need 0.1 pip to go your way. You can get return of your money if it is a tie. You will lose it only when price gone against you no matter it is 0.1 pip or 100 pips.

    There is no certainly that you will win. But surely you have good possibility of winning.

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  10. #29
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    You possibly can make funds using foreign exchange investment methods, although it is not an right away method. Creating the amount of money will take time period as well as endurance. There isn't a easy method all-around of which concept. A lot of the software program you will find on the web will probably fall short an individual and a lot of indication products and services help make the funds off their buyers rather than dealing foreign exchange. For the reason that you will find not any easy solutions. If there was clearly there will be far more effective foreign exchange traders available, although there are certainly not, since it is not something you can begin as well as immediately acheived success with. A fairly easy currency trading method should be to purchase small, market substantial, shield oneself with a realistic quit and be individual.

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  11. #30
    Registered user lawners1791's Avatar
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    working on haunting of the longer trends as persevering manage on returning good results as completing target with the decision on calling by the terms of the TF.
    that those to gives of the better chance comparing with ones to run by the less /short tf of the choice.

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