Trading binaries can be a challenge, even when you understand how much potential they represent. One reason people often struggle with these trades is because of how many binary options myths are out there. Here’s a look at four of the most common ones you’ll want to be aware of.
Bonuses Go Hand-in-Hand with Trading
Just about every broker out there offers some type of bonus for signing up with them. To some degree, this is to be expected. It’s a cutthroat market at the moment, so every broker out there is doing their best to outsell their competitors. Maybe someday this will slow down a bit, but it’s not going to be any time soon.
Accepting a bonus isn’t a big deal, but it cannot be allowed to cloud your vision. Never pick a broker solely because of the bonuses they offer. In fact, you should ignore the bonuses altogether. Look for brokers with experience, solid reputations, good software and who are the right fit for where you are right now in your binary options trading journey.
Above all, never keep your money tied up with a broker because they’re giving you bonuses to do so. There is a long list of traders who have lost their shirts because they didn’t withdraw any money—to ensure they received attractive bonuses—and eventually it was too late.
Experience in the Stock Market Carries Over
Of all the binary options myths, this one may be one of the hardest for people to accept. Being a successful trader on the stock market can definitely help you succeed when you try your hand at binaries.
That being said, it’s no guarantee. A lot of traders would probably be better off truly trying to start from square one, even if they have years of experience behind them.
Trading binaries is just a completely different animal. Now the game is more about predicting when your investment will pay off—not simply whether or not it will. While some of your knowledge about a given market will come in handy, you can’t expect that it will be enough all on its own.
You Need at least a Few Thousand Dollars to Start
This is another of the binary options myths that many brokers like to spread. It makes sense, of course. They have an active interest in having you put as much money into play as possible.
The truth is that many successful traders began with just a few thousand dollars. It takes a lot more patience, though, because your returns are going to be so much smaller, but it’s totally possible.
Also, if you ever have a broker try to convince you that your initial deposit is too small (they’ll use bonuses to try to get you to increase it), you should probably look elsewhere.
You Need to Make Big Trades
Again, brokers are probably behind this one. While nothing will get your adrenaline running like putting 20% of your account behind a single contract, this is a great way to lose all your money in record time. Stick to 2% to 3% of your account at most. Ideally, you should be trading less than that.
You simply can’t predict every single factor when it comes to binaries, so there’s never going to be a good time to invest huge percentages of your account. Losing streaks will happen and they will sometimes be completely beyond your control. By keeping each trade small, though, you can easily weather this storm.
Don’t let these binary options myths reduce your chances of success. They may be widespread, but that doesn’t make them true.
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