The Psychology Of Trading


Having gone through the basics of what Binary Options are and the differences between technical & fundamental analysis, it is important that we now take a look at the mind-set required to trade Binary Options.

For make no mistake, when undertaking any form of financial trading (especially Binary Options) if you are not in the right frame of mind, the chances are you will end up losing money.

Though this ‘trading mind-set’ may come more naturally to some than it does to others, trust me when I say that with a bit of discipline, any wannabe trader can develop this mentality when trading.

So if you are about to place your first Binary Option trade online, than STOP and take the time to read the rest of this article as it may well save you from losing a lot of money at the start of your time trading Binary Options!


Come across any Binary Options trader who is generally making a profit trading these options in the long run and one thing which stands them out from all other such traders is that the successful ones don’t trade with $ signs in their eyes!

For when you start trading Binary Options, it soon become obvious the amount of money which you can make (in theory) and the speed in which you can make this money.

Yet what the successful Binary Options traders are all too well aware is the insidious nature of greed and how quickly it can come enter and dominate one’s mind if one isn’t aware that it is happening.

Such traders don’t fear the emotion of greed out of some moral principle but rather they know that greed (like all emotions) if unchecked can distort ones thinking and lead one to make foolish decisions.

And when trading, such foolish decisions can be costly!

To give you an example, there have been times in the past when I have been trading Binary Options and being on a winning streak (a number of trades have all ended with I in profit) the temptation to quickly put on bigger and quicker trades can be almost irresistible.

Worse still when I have succumbed to such temptation, I will usually lose because I didn’t really put the Binary Option on with full, detached knowledge of the market.

Further still that one big loss doesn’t end my trading session there.

For there is often the urge to quickly try and undo that mistake by quickly putting on an even bigger trade in the hope that you can quickly win back all the money you lost.

And so the cycle continues!

Unfortunately this pattern of greed happens all too well with many Binary Options traders throughout the globe.

So how do the successful traders get around their greed?

Whilst every person is individual and will therefore have their own little rituals, etc. to help keep their mentality in check, one commonality which stands all these traders apart is that they all have a trading plan.

By a trading plan, I am referring to a set plan which they will stick to and not allow their emotions to deviate themselves away from.

And such a trading plan could be something as simple as to only place 2-3 trades per day and having done that number of trades, they will than cease trading; whether their trades all end in or out of the money!

Or their plan may require that they will only do one trade an hour and once the trade is done, will not go back to undertake any more trading until the hour is up.

Though it can be hard to stick to such a plan, our emotions (in particular fear and greed) can be very persuasive, every successful trader knows that if they don’t than their trading careers will quickly be over.

Even through every successful Binary Options trader’s plan will be independent to the individual, one thing they all have in common is they stop the trader from overtrading.

We humans by nature are emotional creatures and as trading can be very addictive (especially when you are getting a series of wins) trading too much can quickly cause us to be governed by our emotions and as such, lose the calm focus needed for trading!

As well as having a trading plan, one thing which successful Binary Options traders will never do is trade when they are physically tired, hungry, etc.

For they are well aware that such physical sensations (just like ones emotions) can also be a distraction from the calm focus and diligence needed when trading.

To give you an example, before trading it is wise to spend your time looking at the previous price movements of whatever asset you wish to trade and build up a hypothesis of which direction the price of the asset is going to move in.

Yet if you are half asleep or have the hunger pangs then your full concentration is not going to be on your research and as such, there is a pretty good chance that you may come up with the wrong hypothesis which can negatively affect your trade!


Within this post we have delved into the mentality of a successful Binary Options trader; how they tend to think and behave differently from the vast majority of Binary Option traders who tend to lose money in the long term.

So what separates a successful trader from the rest?  Well to summarize, such traders tend to;

HAVE (AND STICK TO) A TRADING PLAN – Successful Binary Options traders always stick to some type of trading plan as so to stop themselves over-trading.

CAUTIOUS AWARENESS – Successful Binary Options traders will always maintain a cautious awareness to with regards to their emotions – make sure it doesn’t focus their trading.

CALM FOCUS – Successful Binary Options traders always approach trading with a calm focus, making sure they do their thorough research before starting a Binary Options trade.


By having such a mind-set when trading, the chances are that your trading will be far more successful compared to if you were trading whilst filled with emotion and going on impulse.

Fortunately there are several Binary Options Brokers platforms which can help you when starting trading such as Finpari.

To find out which platforms I use, feel free to read The Binary Options Brokers I Use.


Otherwise, it is now time that we go on to learn about how to form a trading hypothesis at Technical Trading.