I wanted to address something I get asked probably the most often, which I can generally summarize as “How do I become good at trading in a very short period of time?”
The truth is that the very best traders (and investors) are those that have put in the most time to become successful at it. Many people have heard of the 10,000 hours “rule” – the claim that it often takes 10,000 hours to become very good at something. In actuality, it’s an arbitrarily chosen amount of time. But the basic take-home message is that it does take countless hours of study to become good at something. There is no magical formula or technical indicator that is going to give you results (outside of perhaps finding someone else who can competently invest your money for you).
And even the very best traders out there have bad days, and sometimes extremely bad days that can be psychologically harmful and take a long time to recover from. Everybody loses trades. Many of the best traders ever lost the majority of their trades (note: obviously I’m not speaking of strike-entry binary options traders). I personally have trouble staying above a 75% ITM rate on binaries over a long period of time no matter how patient I become over trying to find a very high-probability set-up. Sometimes the markets just act in a way that can’t be foreseen from my personal perspective. Of course, the markets can be predictable to a certain degree, which is why the concept of trading exists in the first place and why it’s possible to have long-term profitability as a trader.
But trading is all a matter of probabilities. For binary trading, I personally can’t predict with much confidence what the market is going to do well over 90% of the time. In other words, at any given point, the probability of entering a winning trade is just too close to 50-50, which is never profitable when payout percentages always return less than your initial investment. That’s why I simply decide not to trade the majority of the time. Even back in the early stages of my trading career when I would trade 10-20 times per day, I truly wasn’t trading as much as it seems in a relative sense. Back then, I was often trading four or more assets per day and logging up to eight hours of screen time per session. That’s 32 hours of total price data. Hence I was truly only taking one trade for every 1.5-3+ hours of price data.
Yet as boring as that may seem, looking at, studying, and familiarizing myself with all those charts helped me become the trader that I currently am today. Trading should be a boring activity. That’s not to say you shouldn’t enjoy it. It’s hard to do any activity or occupation for a long period of time if you truly don’t enjoy it. But trading isn’t something you should be doing for the adrenaline rush. You should always be detached in emotion while trading and this take a certain amount of time and overall maturity to truly master. After all, trading the markets ultimately boils down to making money so it can be difficult to not be vested in the outcome of a trade. But the trick, in my opinion, is to risk such a small amount on each trade that it almost feels like a waste of time to even take it in the first place – even if it’s the only trading opportunity you’ll have all day.
If you’re trading too frequently, then you might need to re-evaluate your trading approach. Like many, you might be trading for the thrill of being in a trade and watching the colorful bars on your chart tick up and down. That’s pure gambling. My first ever day on a live account, I went 11/16 ITM trading for about three hours. My natural reaction was to believe I was pretty good. Of course, I ended up blowing the account to shreds the next day and would continue to wipe out a couple more accounts – which in all honesty I couldn’t financially afford to do. By the time I had wiped out three trading accounts, I finally realized that I was entirely deluded about my trading competency and needed a lot more practice before proceeding on with real money in the future.
Always consider the market itself to be “right.” That is, if your latest series of trades has seen you grow your profit, don’t become overly confident and internally believe that it’s your trading skill at work that’s causing the account to grow. This is especially true if you haven’t proven to yourself that you can be profitable at trading over a series of several weeks – or preferrably months – in the past. On the flip side, when a series of trades goes against you or you’ve lost some money recently, don’t simply assume that the market is irrational or you just can’t get luck to fall on your side, and that you’ll surely resume profitable trading once the market starts being itself again.
Consider trading a marathon and not a sprint. It will generally take years, sometime even up to a decade (if at all), to become a successful trader. Expecting instant gratification in the trading/investing/financial industry is like expecting a tennis player to pick up a racket for the first time and win the U.S. Open a few months later. It simply isn’t going to happen. Trading is truly like trying to master any other skill, and I can guarantee that it will take plenty of time.