Free Money? No Thanks!

  There’s a famous experiment, that has been repeated many times in slightly differing formats, that involves someone trying to give free money to random strangers. Sometimes they offer them the notes and try to convince them that there is no catch. Sometimes they just leave the money in clear view with a sign saying it is free. The outcomes of these experiments are always the same. The vast majority of people do not take the money. Usually they try to ignore whoever is conducting the experiment – as you might expect if someone was asking them for money. If … Continue reading

Death by Piranha Bites

Death by Piranha Bites

  OK, so, the headline is a bit dramatic. But I’m not the first person to do that and, as you will see below, there is a relevant point behind it. There are two ways to blow up your account. You can lose a large portion through placing too much risk on each trade. Even if you have a trading plan with, let’s say, a 75% success rate – highly unlikely – it is still statistically likely that you will encounter times when you lose 5 trades in a row. If you put 10% of your fund at risk per … Continue reading

How to Lose with a Winning Trading System

Does this sound at all familiar? There once was a trader, with a small amount of trading experience, who was doing very nicely indeed. So good, in fact, that his account was up almost 200% for the year. The world looked good. He had cracked this trading game. And perhaps all the promises the broker’s site had made when he opened the account were being fulfilled. Of course it was not the broker or anyone else that was to be credited for the success of his trading but his skill and ability to recognise an opportunity, take appropriate action and … Continue reading

Can You Learn to Love Your Losses?

Stanley Kubrick’s movie comedy Dr. Strangelove or: How I Learned to Stop Worrying and Love the Bomb was released in 1964 at a time when nuclear war was a real possibility and reason for worry. In the movie a nuclear war ultimately could not be avoided.  Fortunately, in reality, such a catastrophe has been avoided. We won’t go into the movie’s plot as it has far too many twists and turns but it contained a few strong messages. The most obvious was that people in authority, although powerful, are still human and are therefore fallible and subject to irrational behaviour. … Continue reading

Thinking of Using a Martingale Strategy?

In a previous post I wrote about a so-called trading strategy that is presented to traders in Binary Options as a virtually sure way to win. Click here to view that post. In fact, as we showed, it was nothing of the sort and actually amounted to a virtually sure way to lose your whole fund. What’s wrong with using Martingale? The main problems were that there was no actual market analysis included and it was really just a Martingale betting strategy dressed up a bit. According to Wikipedia, because it is very easy to learn and the maths appear … Continue reading

When is a Strategy not a Trading Strategy?

Probably the greatest benefit of Binary Options for a new trader is that they are just so easy to understand. There’s no need to set targets or stop losses, no need to calculate risk to reward ratios. You either win or you lose and you know your risk in advance. It’s easy to open an account with a small fund, it’s even easier to open a trade and there’s virtually no need to manage the trade once it’s opened. And therein lies one of the greatest problems. It’s so easy to trade that it can appear as though the main … Continue reading