Most traders want to be great. Most traders also have no idea what it takes to be great. Here is what you need to know to become the world’s best binary options trader.
What it takes to become a great trader
When starting out with binary options, every new trader wonders what it will take him to be successful. He looks at the examples of world-famous traders and wants to know what he should do to become like them.
Most traders therefore start trying to read everything they can about technical analysis. So far, so good. You should try to get a glimpse of all the different techniques and ideas out there, so you can choose which one suits you best. Understanding different trading styles will also help you make sense of market movements later in your trading career.
Where most new traders go wrong, however, is that they are trying to perfect all these different ideas, market theories, and trading styles. The truth is: You should have a basic knowledge of different trading styles, but that is it. You should only perfect the one trading style you are using.
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Becoming the world’s best binary options trader does not mean to know everything about every market theory ever conceived, it means generating the best rules using one of them. Just like the most respected experts know very much about very little, to become a good trader, you should therefore try to become very good at a very narrow field.
The reason most binary options traders ignore this fact is fear. They fear that they do not know enough to decide which field they want to perfect, and they fear that they could go into the wrong field and waste a lot of time and money. This fear stops them from becoming great and keeps them forever dabbling at a low level.
Unfortunately, the system does not even matter. Every system – trend-followers, swing traders, intuitive traders, mechanical system, signal providers, and so on – has created numerous successful traders. At the same time, however, even more traders failed with exactly the same system.
Therefore, the difference between systems, market theories, and trading strategies does not lie within them; it lies in how well they fit your personality. When choosing how to approach the market, you should therefore not try to find the best system; you should try to find the best fitting system for your personality.
How to find a system that suits your personality
To find a system that suits your personality, ask yourself these questions:
1) Which returns do you expect?
Depending on how many signals a strategy creates, your potential returns vary greatly. You want to double your money within six months, but your strategy only generates one signal per day? You should choose a strategy that creates more signals or adapt your strategy properly. You are only trading as a hobby but your strategy keeps bombarding you with signals? Maybe a quieter strategy would be better fit for you.
2) How much time do you want to invest?
Some strategies generate more signals than others. A swing trader, for example, will generate far more signals when trading the same time frame than a trend-follower. Therefore, if you are not willing to invest multiple hours each day, but only want to invest 15 minutes, swing trading is not a good fit for you. You should become a trend-follower. Find the main trend, invest in a binary options with a long expiration time, and you are done for the day.
3) Do you have the patience do let long trades unfold or do you want to make many decisions?
As a trend-follower, you will have many situations in which the market will go through a correction and will threaten to turn against you. Can you bare these situations or will they cause you to start investing in the opposite direction? If you lack the patience to watch long trades unfold, maybe you should become a swing trader.
As a swing trader you can make more decisions and the market will run against you significantly less. Swing trading comes, however, with significantly more stress. Trend-followers can simply turn their price chart off once they invested. Swing trades constantly have to follow the market and try to find weakening movements.