Binary Options Trading Blog

The Most Expensive Mistake Binary Option Traders Make

Binary options mistakeEvery day, binary option traders are bombarded by geopolitical and economic news, such as government economic data, that typically creates a lot of volatility in the FOREX markets.

Such price volatility can be positive because it creates the necessary momentum for substantial FOREX price movements, which increases the number of live binary trade signals that Binary Signal App sends to your Android.

Also, the more price momentum in one direction, the greater the chances of your binary option contract expiring “in the money.”

But even though volatility created from news events can increase your profits from trading binary options, there is a very expensive mistake that can easily bite you when trading the momentum of market news.

I’ll get to that shortly, but first let me share a little personal experience that you may easily relate to.

When right is still wrong

When I was a new binary options trader, I used to research highly anticipated geopolitical news, predict the outcome, then enter a new FOREX trade immediately before the news was released.

The good news (at least for my ego) is that I was frequently right with my prediction of what the actual news release would be (such as government economic reports).

However, I quickly discovered that subsequent price action in the FOREX markets was rarely correlated to the actual news.

On countless occasions, I was “right” because I correctly predicted the “good” news that was released, yet prices moved lower regardless.

Conversely, what I determined to be “bad” news just as frequently led to rallies.

This means I was right at predicting the news, but wrong in predicting the actual FOREX price movement that followed.

Obviously, making money from trading binary options was more important to me than simply being right, so I knew I had to figure out what the problem was.

React to price action, don’t predict it!

Fortunately for my trading account, I eventually figured out my problem with “trading the news” was that…

FOREX prices were typically already factored into highly anticipated news events because the “smart money” was buying well before the news, not after the news like I was unsuccessfully trying to do.

There’s an old Wall Street cliche that says, “buy the rumor, sell the news.”

If you think about what this phrase really means, you will understand why trying to predict price action, rather than reacting to it, is a losing game.

Commit this to memory: the subsequent price reaction to a news event usually has no direct correlation to the actual news.

Therefore, the most expensive mistake that binary traders make is attempting to predict the price of an options contract, rather than simply reacting to the price movement.

In other words, many traders make the mistake of entering new binary option trades before an anticipated news release, simply because they have a good “feeling” about the news.

After years of experience with binary options trading, I now view this as merely gambling on the direction of the price that will occur after the news is released.

The profitable solution for your trading

The most profitable and least risky method of “trading the news” is to actually wait for the news to be released, then enter a new binary option trade only after seeing the actual price reaction to the news event.

To put the odds of a profitable trade in your favor when trading the news, simply wait for the news to be released and see the initial price reaction before placing your trade.

Don’t be a gambler by placing a trade before the news because you will inevitably be wrong more than you are right.

But even better than playing the difficult game of trying to profit from trading news events is to simply follow the binary option trade signals of a proven strategy that is purely based on reliable technical analysis patterns.

To eliminate all the guesswork and increase your binary option trading profits, just subscribe to our live 5 and 15-minute trade signals that are delivered to your Android every day.

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If you are already happy with your existing broker and just want to subscribe directly, you may sign up here for just $50 per month.

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If you enjoyed this educational trading strategy article, be sure to “Like” our Facebook page (link on the right) so that you will be instantly notified of future blog posts.

5 Comments

Dale Erickson

October 24, 2014 / Reply

Great stuff. I have a trial demo of your service on my tablet, but would like it on my phone as well. I use others signal providers, but with you, I may have found what I’ve been looking for. That is my hope.
Thx, Dale

    Matthias Erikkson

    November 7, 2014 / Reply

    Hi Dale,

    Thanks for the kind words. Enjoy our service and let us know if we can be of assistance.

Engobo Peter

November 13, 2014 / Reply

The is one of the best.. If you follow the timing instruction, you will sure smile when trading with binary option signal app.. I have almost lost all my cash in my account, but the proper follow up of the signals revive my account back to normal.. I am just a newbie in the trade.. The App is very helpful.. Thanks for your superb work.

    Matthias Erikkson

    December 1, 2014 / Reply

    Hello Engobo,

    Thanks for the kind words. We are happy you are making money with our live binary option trade signals!

Elizabeth

February 28, 2016 / Reply

Hallo Matthias

I hear from a friend your signals are excellent. I subscribed for trial but could not get signals on my ipad so I wrote an email but got no response yet. My 5days have since expired. I can’t wait to hear from you. I feel like Im missing out.

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