Managing Addiction And Dependence
While many traders make a healthy living out of binary options trading, like anything, it comes with a certain level of risk. Many people can manage the risks and know when to stop, how much to spend and when to walk away. For some, however, it can become a problem. Knowing when it is a problem can sometimes be a tricky part.
It's easy to say that you are going to be sensible. You start with all the attractive and glamorous promises of making money out of something that you know you should be relatively good at doing. The harsh reality is that binary options trading is a risk, even with the most detailed research and tools to assist your experience.
There are important considerations to make when you start trading, especially if you feel that you may not be able to stop if you hit a losing streak. If you are committed to continuing though, you need to exercise caution, stick to a budget and know when to stop or, where to go for help and advice, if it becomes a problem.
In this guide, you will learn:
- How to stay in control and prevent problems
- The signs and issues to look out for
- Why seek help if you can't keep control
How Can I Stay in Control
When you start options trading, there are some things that you should look out for and consider, to ensure that you stay in control of your spending:
Is The Online Broker Licensed
Choosing a licensed broker means that you aren't going to lose your money as they disappear with your generous deposit. It also tells you that they have a level of responsibility to their traders to assist them and ensure that they are trading responsibly.
Set a Budget And Don't Budge
Whether its $100 or $50,000 you should never trade unless you can afford to lose it. It is critical to ensure that you never invest more than you can afford to lose and that you stick to this budget.
Know When to Walk Away
Once you pass your initial investment and carry on trading, it starts to get dangerous as you try and win back the money you have lost. Telling yourself you will stop after the next trade, or the following few trades are how problems can start. It can then be quite hard to stop. Knowing when to walk away is critical.
What Signs Should I Look For
Problem trading can sneak up on you gradually. Perhaps you win the first few trades and get excited about the money going into your account. At this stage, everything is excellent, and you're enjoying the success. The problems start when you lose a trade. One trade or the next one isn't going to do too much damage, but when you start to lose the next one and the one after, you can begin to panic.
It is the panic that can lead to a set of bad decisions that can then start to escalate. Perhaps you lost $100 on a trade, so you put $200 on to the next one to try and win back your investment. After a losing streak, perhaps you convince yourself that you will start winning again soon.
The trouble is, the options markets are not predictable, and you do not know what is going to happen. Gradually you start to lose control of your willpower and find yourself doubling up on trades and trying desperately to claw the investment back. You suddenly find that you are telling yourself "just one more trade" over again until you are in far deeper than you intended.
As well as the links above, it is essential to share your worries and fears with someone close to you. If you can't confide in a partner or loved one, then talk to a neutral source that can help you address the issues if you feel you can't do it alone.
How to Prevent Problem Trading
Educate yourself when it comes to trading. You don't want to start without any prior knowledge about your chosen markets, the different trades available or how to use the tools available to you. Stick to what you know and don't try and be smart with markets or trades that you don't understand.
Furnish yourself with as much knowledge as possible before you begin. Secondly, you need to set some limits both in terms of time and budget. Set a budget and stick to it. Don't tell yourself that you will just have one more trade. Once your agreed budget has been spent, then that is that.
You may decide to set yourself a monthly budget so that you know once you have exhausted it, you have to wait until next month to trade again. By setting time limits, you can also limit how much exposure to bad decisions you have. If you are in and out all day, the temptation to keep going back at different times is too high. Perhaps choose a specific time of day when you will trade.
Where Can I Seek Help
If you do find yourself in a predicament with trading and find yourself spending money that you don't have then it is likely that you do have a problem. For some people, the problem can escalate it can lead to a terrible debt which can spiral into issues at work, at home and with your family.
To avoid problems intensifying, it is critical to seek help and advice as soon as you recognise the problem. While some people may be able to stop and walk away from trading, writing off their bad luck as a bad experience, there are others who start to get stuck in a downward spiral that only intensifies.
If you believe that you have a problem with trading and need to seek help and advice, then there are organisations out there that can help you. Visit the following links:
Shelly is proud of her current position as Head of Brand for a well-known organisation that owns several brokerages in the trading sector. She’s consulted for us since 2015 and readers can benefit from her insider knowledge of how brokers work. Learn more.