Part of the evolution of success in getting better at binary option trading is to understand your own trader personality. Th e fact is it is impossible to separate emotions from the trade. Th is is a fact of life and the challenge is to recognize one’s own personality. Th is will help limit your risks by associating the trading strategy that calibrates to your personality. Th ere are several personality types and the fi eld of psychological fi nance is devoting a lot of work to modeling emotions and how they become translated into the traits of a trader.
In fact, an entire new fi eld called computational psychology and artifi cial chemistry is focused on mapping how emotions result in behavior. A good place to start to detect your trading personality is to consider which of the following archetypes best calibrates with you.Th e Gladiator/Samurai— Th is person loves to trade even more than winning or losing. Being in the action is the objective.
We call them the gladiator-type because gladiators had no fear of death and focused on the battle itself. A gladiator-type of binary option trader has the advantage of being committed to the trade without being frenetic about the result. Th e disadvantage of this personality is that it can lead to overtrading and unnecessary losses. Few gladiators survive for long!Th e Warrior— Th is personality type loves trading but really wants to win.
He avoids trades that are not highly probable and has no allegiance to any one market. Th is type of personality is comfortable with a mixed binary option strategy, each one being a diff erent weapon of choice.The Gunslinger/Surfer—He or she acts upon an emotional or gut feeling to enter or exit a trade. This type of personality often likes to surf and jump from one trading opportunity to another.
At-themoney,momentum-type strategies attract this personality.The Sniper—Analyzes the market and takes the trade only when the market moves on the conditions they have specified. This trading style is similar to swing trading or waiting for a key support or resistance level to be tested. Many people do not have the patience,or the wisdom, to be a sniper-trader.
This type favors breakout trades that provide out-of-the-money pricing.The Lamb—This type of trader reacts to market moves by running with the crowd. When a lot of such traders come into the market, they add energy to the momentum of the prices, creating a contagion. Deepin-the-money binary option trades are favored by this personality.The Black Sheep—The trading behavior of this personality is contrarian.
This type of trader doesn’t join the crowd and seeks an opposite opportunity. It takes courage to be a black sheep. But when theblack sheep is right, profits are very large.The Gambler—This person’s attitude toward trading is similar to that of a gambler. The motivation is not to seek a profitable return. The trader is in it as a search for excitement at the moment. He or she is not distressed by losses.The Eagle—This type of trader scans multiple markets and multiple time frames to determine best possible trading opportunity.
The Eagle trader is a predator that is in impulsive.The Donkey—The donkey trader experiences consecutive losses and doesn’t change the strategy. He or she is stubborn like a mule. Self-examination of one’s own trading personality will provide many insights that can improve your results. Very often, the critical weakness
facing the binary option trader is not a lack of technical, or fundamental analysis, but a lack of being aware of the psycho-dynamics relating to the trade.