How people lose money in binary options

Posted By Christopher Jackson on Sep 15, 2016 |


The lack of knowledge and general inexperience are the primary reasons for significant losses in this market. It isn’t as simple as this, but it comes down to that. Many underlying reasons exist, but they come from one of those two faults. A trader can lose money, but they can also find some easy ways to avoid some of these failures.

Primary factors that cause binary losses

Random trading is an issue that brings doom to many beginners. Whenever a newbie sees a favorable trade, they automatically invest their money in it. No research or data collection is there to support their decision. The trader may win a trade or two, but this kind of trading never ends well.

Every asset has its volatility, and that determines the movement of the price. Different events and factors influence different assets, and a trader should be aware of those things. New traders fail to recognize assets that are suitable for trading and they end up with trades that involve securities that aren’t favorable.

trading-losses-jamdesign-300x211The one-minute trades attract every new trader. The idea that they can earn money in under a minute is enchanting, and they invest their capital in them. That is a grave mistake. Those short trades are highly unpredictable, and no sane trader utilizes sixty—second expiry dates.

The binary options market is full of shady brokers. New players are unaware of this fact. They invest their money through those brokers, and that means the loss of their investment. Failure to recognize a shady dealer from a legal one is due to lack of research and hasty decisions.

Investing money into signal software that turns out to be a scam is another way in which the new traders lose money. Only a few signal providers have the legitimate software. New players should do extensive research before they invest in the signal software.

How to avoid initial binary losses

A newbie can do a lot of things to avoid losses that usually happen at the beginning of the trading career. Finding a system or a strategy that will ensure possible minimal losses is a good way to start. This might reduce the amount of profit, but it will also minimize the risk of larger losses.

risk1Limiting trades to one-day expiry trades is a good way to avoid those short-term deals that usually result in a loss. Using even longer expiry dates is also an option that can increase the chance of earning money. Limiting the investments on active securities is also a way to reduce the possibility of unnecessary losses.

Bad brokers advertise wrong signal providers. That is the general rule, and it is correct in the majority of the situations. New players should invest their money in 24Option because it is a respectable broker. They exist for a long time and thousands of traders use their platform.  They might not have huge bonuses, but the size of the gift isn’t something a new player should worry about. The most important thing is that they are the fair broker that doesn’t try to scam its traders.