October 16, 2015 at 3:28 pm
Newbies are people that are new to the Binary Options world. They tend to believe everything they hear and see. It is easy for them to get in over their head and have high expectations that are often unrealistic. Newbies will be bombarded with all kinds of promotions for trading systems, signal services, autotraders, indicators and more. These sales pitches will further add to the misconceptions of Binary Options newbies. If you are still a novice, don’t be discouraged – we all started where you are now and had the exact same thoughts that you have. Have a look at the following list to see if any of them sounds familiar.
Most Newbies think that trading is easy because they saw some type of advertisement on the internet of some average person making x-amount of money. Most traders see a video on YouTube where the trader is just simply clicking on Call or Put and making a ton of money. While it is true that you need to choose Call or Put to make a profit, there are other factors that you also have to take into consideration before making the trade. These factors include technical analysis, economic news, and money management.
Verdict: The reality is that trading is not easy, you have to put in a lot of time and effort to be successful.
Yes, you can trade Binary Options without any prior knowledge. You might make a few bucks at first, but you would probably not last long if you don’t have the right knowledge. That being said, you don’t need a degree in economics or finance. Even if you had a degree, you would still find yourself with a lot to learn. You need to educate yourself with all the information you can surrounding trading. Luckily, the internet has made it a breeze for traders to access all the necessary info to become a successful trader.
Verdict: If you want to start trading profitably, you need to do a ton of research and testing before you can even think about depositing money into your trading account.
Yes, you can, but the chances of succeeding are highly unrealistic. You can certainly open an account with a $100 if you find a broker which allows this amount for their minimum deposit. The biggest problem when trading with a small account is your money management. A sound money management system will only let you risk 1% – 5% of your account size. When trading with a $100 deposit, a 5% risk will only be $5. Most brokers will not allow you to trade with such a small trade size. The average minimum trade size will normally be around $20 with most brokers. The other problem is that the effort you will be putting in to making such a small profit will simply not be worth it.
Verdict: You can’t expect to make a living starting with a $100 account. Traders need to begin with a decent account size. I usually recommend that most traders start with $500 to make it worth their while.
Most newbies fall for the bonus trap that brokers set for uneducated traders. Bonus money is not exactly free as it may sound. It is “free”, but with strings attached. After accepting the bonus from the broker, you need to trade 30 to 40 times the amount of the bonus before you are able to withdraw your original deposit and the bonus money. Most traders that accept a bonus will never get to withdraw the money because they would blow their account before they can.
Verdict: Bonus money is not free; it is just bait on a hook that brokers use to get you as a customer. However, there are some legit bonuses that brokers offer so make sure that you educate yourself before accepting any bonus. Stockpair is a good example of this. When they offer you a bonus, they will only release the money into your account AFTER you traded the predefined volume. You are still able to withdraw your account before the volume is met, but you will not receive the bonus money.
Newbies believe that they can just trade based on their feelings about what the market might do. You might experience a winning streak because of luck, but you will eventually end up blowing your account.
Verdict: There is no way that you can possibly make money from trading based on your instinct. You need to have a strategy in place which is based on solid testing and positive results in order to make informed trades.
Many, if not all, newbies believe that there is a Holy Grail out there which will win 100% of the time. They spend thousands of hours looking through websites and testing new systems to find this perfect system. They will come upon a system that they think is the “one”, but later realize that it’s still not the Holy Grail which they are looking for.
Verdict: The sooner you realize that there is no such thing as the Holy Grail, the better. Losing is part of trading. You have to lose in order to win. You should see your losing trades as your “rent” that you have to pay to trade.
Newbies see all these trading “gurus” on the internet making ridiculous profits through Binary Options. They are amazed by the amount of money that these guys are making so they think, well heck if these guys can do it, so can I. They will then do the math: if I start with a $100 today, it will be a $1000 in a week’s time, $10 000 in a month, $100 000 in a few months and then at the end of the year I’ll be a millionaire. Yeah right! While these exponential gains are totally possible, there are many obstacles that will hinder you from achieving this goal. Broker problems, trade size limits, psychology, and changing market conditions to name a few.
Verdict: You will not become a millionaire overnight. I’m not saying it’s impossible, what I’m saying is that it is highly unlikely. Think about it if it was really that easy – wouldn’t every trader be a millionaire?
Traders see loads of trading systems, autotraders and signal services being advertised on the internet which makes them feel that they need them in order to be successful. Why else would there be so many of them? The truth is that some of these services can be helpful, especially if you don’t have the time to trade or if you are still a beginner. However,
Verdict: If you are trading on a budget, there is no need to panic – you can trade profitably without them. However, if you do choose to sign up for these services, make sure you do your research before joining them. A good service in my opinion is Trade4me.
Traders are under the misconception that Binary Options are illegal in the US. They think this because most regulated brokers have recently decided to refuse to offer their services to US traders. They decided to do this because they are not interested in dealing with the complexities of their regulation.
Verdict: Trading Binary Options is legal in the USA. You can trade with a broker that is located within the USA or registered with the CFTC.
People who have lost money trading or saw friends and family members fail, are normally the people that will tell you that trading Binary Options is gambling and a surefire way to lose your money. These stories do point out the mistakes that other people make which you should avoid making yourself. If you investigate why these traders have failed, you will see that most of them did not use a trading system, bad money management and did no research beforehand. When people have bad experiences, they tend to walk away and tell everyone how bad it is and that they should never try it, but they never want to admit that the problem might have been with them. The biggest mistake you can make is to listen to these people and avoid trading.
Verdict: Trading Binary Options is definitely not gambling, not even the Government sees it that way. You need to do research and educate yourself before you start trading with real money.
After reading this article, you should know which misconceptions traders have surrounding Binary Options. You will be able to differentiate fact from fiction and get a realistic feel for what you can achieve through trading. At this point, you will be ready to move on to the next step.
October 28, 2015 at 9:00 am
Man these points you mention holds so much truth. Back when I first started my journey I had most of these misconceptions. The biggest one I struggled with was the Holy Grail. At the back of my mind I knew there was no such thing but I continued to search for it anyway. I thought maybe I stumbled across something that nobody else knew about – how stupid was I! I wasted a good year to search for this “perfect system” by testing all kinds of strategies. I never found what I was looking for so I finally accepted the hard truth. From there I started focusing on one single strategy and tweaking it to my liking.
Folks it’s really true, the sooner you focus on a strategy and work on it instead of looking for that perfect system, the sooner you will be one step closer to your success. You will waste your time and energy if you go in search for the Holy Grail. Rather spend that time and energy to improve on one strategy. I promise you, you’ll never look back!
November 4, 2015 at 3:05 am
The biggest misconceptions about binary options that newbies have are by far:
1.Trading binary options is easy and you don’t need any prior knowledge to trade.
2.Bonuses are free money and you can make millions from a small account
This is true because I have also been there. I think if traders know how much time and dedication it really takes to make money trading – there won’t be as much traders as there are now. None the less, the other points you mention also play a big role.
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