Show Me Options > The Power of Trading Psychology
The Power of Trading Psychology
There are many distinct emotions which traders may feel while trading binary options. Trade psychology is something which has drawn the attention of many recently, as investment experts are starting to connect the dots and link human emotion directly to investment decisions. Although this is not exclusive to the digital options marketplace, it is something which traders will want to be aware of. Why? Because in most cases, strong emotions lead to losses.
New traders often start out feeling optimistic and filled with excitement. There absolutely is a thrill which most get out of trading, particularly binary options trading at Anyoption since all trades are time-bound and many end quickly. The first few in the money finishes are likely to leave traders feeling on top of the world, maybe even invincible. While there is no harm in being happy about earning money, too much elation can lead to bad decisions.
A feeling of over-confidence could cause you to commit larger investment amounts, increase your trade volume, or even invest all of your funds on a single binary options trade. What comes after this? If you’re lucky enough to still have money in your account, then the next set of feelings are likely to be negative ones. You could feel desperate or panicked. Depression could set in, causing you to be fearful of your next trade.
Panic can cause all types of different decisions. Some traders may start firing off trades in an effort to recover from losses. Others may stop trading altogether. No doubt, panic is a horrible feeling that could cause all types of reactions. Be sure to take a step back, take a deep breath, and calm down before resuming your binary options investment activity.
Fear can lead to holding back and holding back isn’t going to allow you to earn much, if any money. In many ways, fear can be just as damaging as over-confidence. Of course, there are emotions which are between these two. There is actually an entire range of emotions which can be felt when money is on the line. Binary options trading does come with risk, but in many ways, risk can be controlled through analysis and wise decision making.
So, with all this in mind, what is the trader to do? Since it is not possible to eliminate emotion from the equation, you’re left with only being able to recognize it and then try to control it. This is a task which may not be easy during the initial days of trading, but should quickly become easier to do over time. Many traders simply vow to themselves to walk away from trading whenever they feel that their emotions are out of control. This is actually an excellent idea, but it does require self-control.
The key is being able to recognize the times in which emotion may impact your investment decisions. When you are able to do this, you’ll develop a lot of control and won’t have to worry about making emotion-based mistakes. Trade psychology is still being studied, but we know enough now to know that emotions can wreak havoc on binary options trading. Keep this in mind as you go about your trading day.