shutterstock_70220881When you find yourself in the middle of a binary options losing streak, the emotions that inevitably accompany those losses can be devastating to your confidence. You might feel anxiety, panic, anger, or confusion. In almost all cases, a feeling that you are spinning out of control and are helpless to do anything about it is going to be a major component of the psychological challenges you are facing. This is a dangerous place to reach, because it can easily turn into depression—where you have ingrained that sense of helplessness and no longer believe you can succeed.

Step away and try some demo trading for a bit.

How do you extricate yourself from a situation where you feel helpless? Here are five steps you can take which may help you to regain your sense of control and start turning your losses back into wins.

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1. Take a break from trading live

The last thing you should be doing when you are mired in fear and doubt is try to make trades, especially if you feel tempted to “win it all back.” This usually leads to bad trading decisions which result in huge losses. It’s a good idea to back away from your trading for a bit instead. Taking a break won’t solve your problem by itself, but you’ll stop contributing to it for the time being, and that’s a good thing. Oftentimes the closer we are to something, the harder it is to see the big picture. You need to let your brain rest and then tackle the problem when you are fresh and are not so caught up in all the negativity. And meanwhile, you will stop bleeding money.

2. Take some time off

Taking a break from trading live isn’t the same thing as taking a full-on break from trading. I feel it is important to state this separately because so many of you will feel tempted to stop trading live and then focus and focus and focus on your mistakes. There is a time to focus on your mistakes and try to fix your problem, but it should not take up all your time. You actually will do your brain a favor if you go and do some activities completely and utterly unrelated to your trading, and try to stop thinking about it for a while. Perspective comes from things outside of the problem. By taking time to spend with friends and loved ones, maybe going out and taking a drive in nature, playing a sport, making a craft, or spending a day on the town, you might actually come back with the perspective you need to see things differently.

3. Look for patterns in your failures

When you come back to focusing on your trading, you are going to have to identify what is going wrong before you go back to trading live. Try to separate yourself from the situation to the best of your ability. I recently read an article on trading where someone stated that learning how to become an observer is important, because it removes you from the pattern of failure. Inside the pattern of failure, you feel helpless, because you are immersed in it. Outside the pattern, you have more control, and you can have a better frame of mind.

There are numerous different aspects of your trading you can examine in search of an answer. Maybe you have been breaking with your money management rules or your trade rules—but maybe not. Perhaps you just have not been applying them well, because you have been ignoring context, overtrading, undertrading, or doing something else that is not exactly a violation of your system, but just an example of bad implementation.

http://www.binarytrading.org/how-much-binary-trading-is-too-much/ find out how much overtrading could hurt your success.

Or perhaps the market conditions have changed, requiring you also make a change. Perhaps the pattern has nothing to do with your system. Maybe you just trade when you are feeling emotional, resulting in poor decisions. Or possibly (rare in most markets, but probably more common in binary options) it is your broker that is the problem. Here are tips on finding a good broker.

4. Do not search for a holy grail

At times like this, it can be tempting to throw away all your hard work to date and go back to the drawing board in search of a better system, or a system that will never fail. You absolutely must talk yourself out of this, especially if you have a good system to begin with, and especially if other people are using the same system profitably right now. Many good trading methods work for decades with reasonable adjustments. There is no such thing as an unbreakable system, but just because a system stops working, that does not mean it is worthless. You will probably spare yourself a lot of trouble if you work on repairing your existing system than going on a quest for perfection which does not exist.

5. Reach out to the community

Isolating yourself as a trader is never a good move, especially when there are so many other traders out there who are willing to lend a hand for no price at all. Traders are a pretty generous lot on the whole, and there are a lot of folks out there who will happily take a look at your charts, listen to your story, and help lend some of that outside perspective that you are in need of. These people can help you see things differently and restore some of that confidence and control which you have lost. Being part of a community empowers you as a trader, so get on trading forums and participate. Read more on joining a community here.

Losing confidence as a binary options trader can be a tough situation to face, but it is a guarantee that sooner or later, you will find yourself up against that particular challenge. It may stall you for days, weeks, months, or even years. But you can get back on your feet, and following the suggestions above can get you back to your trading with greater skill and confidence.

What Constitutes a Losing Streak?

In binary options trading, it’s a guarantee you’ll lose trades, even if you are trading with a method. If you aren’t, you will probably lose most of them. Even with a method, though, losing streaks are inevitable over time. But what exactly constitutes a losing streak? For a lot of traders, it seems to be “three losses in a row.” One loss is obviously not a streak. Two losses in a row is “a couple of losses.” But three? Psychologically that’s a pretty tough thing to deal with. And more … well, your account may not be able to handle any more than you can.

Some traders may be tempted to consider three losses in a row “not that bad.” They may define a losing streak as starting at four, five, six or more trades in a row. Regardless, you do not need to rely on a subjective definition. You can come up with an objective definition of a losing streak and understand what is “normal” and what is not by testing your trades.

Testing your trades allows you to accumulate statistical information on your trading method and performance. One of the statistics you can look for is “worst losing streak.” Over a relatively long testing period, how many trades in a row did you lose at a maximum? Then you can see how often that kind of streak occurred, as well as how often smaller losing streaks happened.

This tells you exactly what you can expect as part of “normal” trading business when you are trading live. While testing and while live you should of course try to avoid ever losing a trade, but that does not mean you will avoid losing all trades. That would be impossible. It may save you from panicking though if you find yourself with three or more losses in a row at some point. You might look at your statistics and realize, “This is likely to happen once or twice this year.”

What should you do at that point? First, look at the trades you have been losing and try to figure out why they failed. Did you break your trading rules when you placed them? Were they placed in a bad trading context? Were they against the larger market trend? Were they allowable setups, but just not the best? If you can explain the failures, you can avoid repetitions in the future.

Sometimes you will find out that the trades were perfectly legitimate and failed anyway. In that situation, the best thing to do is probably just to keep on trading and try not to worry about it. If you followed your system and they happened in accordance with your reasonable expectations, things should normalize as you continue to follow your rules.

If you find that you are still losing trades even after making these adjustments, then it may be time to take a break from trading and figure out what pattern is causing your repeated failures. If your system is no longer performing according to your testing results, then that is an indication that something has changed. Trading methods regularly need little tweaks in order to function properly in changing market conditions. Sometimes if you wait, the market conditions will adjust instead, and then you can resume trading as usual. Either way, it does not mean you need to start all over with your trading.