Controlling Emotions in Binary Options Trading

Controlling Emotions in Binary Options Trading

I am often contacted by readers asking why they have good results in the demo accounts and lose money in the real account. Or why they make money initially but then lose everything. One of the answers is controlling emotions.

But what is Controlling Emotions?

Basically, controlling emotions is using a set of rules that enable you to know what to do at any given time. This way, you can always act logically and rationally, thus avoiding mistakes, or wrong decisions. These decisions are often made based on emotions that don’t allow you to think clearly and maintain a cool head when you trade.

Controlling Emotions – Which emotions should you control?

> Fear – When we trade in a demo account the money isn’t real. We aren’t afraid of losing because we have nothing to lose. As much as we try to simulate that the account is a real money account, we don’t feel fear, therefore it isn’t like a real money account. We may feel excitement or enthusiasm, but we have no fear. Fear is one of the most difficult emotions to manage, and when it gets out of control, it makes you lose your head and the account. It is normal to be afraid, fear is part of the trading, but it has to be controlled so that it does not overpower our ability to trade and to make good decisions.

> Euphoria – This emotion normally occurs when we win a lot, especially when we are starting out trading and win early on. Good results give us a sense of power and well-being. But sometimes, and when it is too much it is harmful, because we start to think that it’s all easy, that we are the best and we know everything. And we start to become lax and unfocused, which leads us to losing trades. We must always stay focused and avoid euphoria.

> Greed – Wanting to win more and more typically has negative effects. When we want to win more and more it can lead to riskier and riskier trades that are increasingly larger. In the end, this extra risk taking is felt in the losses, because when you lose a larger trade the final effect is the opposite. Many times when we want to win more and more, we increase the value of the trade too much. We forget that while we are increasing the earning potential, we are also increasing the potential for loss. On the other hand, risk management can be influenced by larger trades. My advice is that you maintain the orders low and trade only the advised amount of time per day; if you are earning a little every day at the end of the month you have a good profit. Greed usually spoils continuous and consistent work.

> Frustration – Frustration from a bad day, a day of losses, often puts the entire bankroll, all your money, at risk. This is because at a certain point we cease to be able to think and be rational. Therefore, it’s important to be able to stop before reaching a state of frustration where you no longer know what is right and what is wrong.

Controlling these and other emotions that I discuss in my training classes is essential to achieving consistent positive results. The way that I teach it, normally, the discipline and rules that I give are good not only to make money, but also to avoid losing money. The first concern should not be winning but not losing, or at least, never lose a lot.

Controlling Emotions – What is it for?

Our first concern as traders should be to protect our money, and emotions usually prevent us from doing this correctly.

In addition to the emotions that are covered in this article there are others that are also important and that are explained in my training classes. However, if you know how to deal with and manage these emotions you will already have a good part of your emotion related problems solved.

As I always say, the trader who makes money is not the one who has the best strategy, but the one that has the most discipline. If you know how to manage your emotions (controlling emotions), you are half way to profits and success.

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