Spot Gambling Problem
5 Ways to Spot a Binary Options Gambling Problem
Anyone who trades binary options or is thinking about it has probably heard many times now that binary options trading is nothing more than gambling. When you search for information on binary options online, you will inevitably get back results like this one over at Forbes that may cause you to wonder if you are doing the right thing trading options. Odds are that you’ve also had friends or family members who have lost money trading online who will try and talk you out of trading, saying that it is no different from going to a casino and risking it all on roulette.
Is binary options really gambling? The answer to this question is not so black and white. It is neither a “yes” nor a “no.” It is more like a spectrum, and where you fall on that spectrum depends on your approach to trading. Some binary options traders really are gamblers, trusting entirely to luck for profit or loss. Other traders are on the opposite end of the spectrum, doing all they can to reduce their exposure to risk and profit from patterns in the markets. These traders treat binary options like a business. Many traders fall somewhere in between. Here are 5 ways to spot dangerous and addictive gambling behavior. If you find yourself doing any of these 5 things, it’s time to step back and take a break.
Trying to “win it all back.”
This is one of the most common gambling patterns you can engage in. When you lose a trade, how do you feel? Most people will experience depression, confusion, or even anger. It is common in these situations to feel a need to get revenge on the market. You may think you need to make up for the loss as quickly as possible. So you might find yourself trading outside your rules, maybe jumping into trades based on setups that do not really meet your criteria. You may invest more than you should, and when you lose another trade, you become even more determined to get revenge. You can dig yourself into a deep hole very quickly this way, and, sometimes, you can lose everything and not be able to dig your way back out.
This is a form of addictive behavior. If you feel angry or desperate, it is not the right time to be trading. Take a break, look over the trade you lost, and try to understand why you lost it. Once you know, you will not make the same mistake twice. When you are levelheaded, you are less likely to accept poor setups and lose even more money. Remember, the market is not a conscious organism. You cannot really get revenge on it, and it does not care whether you win or lose. But it is hungry for your money, along with everyone else’s. Respect the market, but try not to fear the market. A calm, collected trader will become profitable, while a desperate, angry trader will lose it all.
Pulling money away from other obligations
This is another sign that you are addicted to gambling on the binary options markets. Do you find yourself siphoning money you would spend paying bills, buying groceries, or taking care of other necessities into your binary options account? What about money you would normally set aside in a savings account for the future, money you would not touch for any reason? You have other obligations and priorities you should not violate in order to trade binary options. Your binary options account and your other accounts should be kept separate at all times. Once you start moving money into your trading account that does not belong there, you are not leading a balanced life anymore, and you are allowing your addiction to trading to harm other aspects of your life. If other people depend on you, like a spouse or children, you have an obligation to take care of those people first.
You also should not pull money from your savings account to add to your trading account to counteract trading losses. That is like treating the symptom and not the disease. Figure out why you are losing trades and make changes to the way you trade that reduce your losses. Don’t just add money to your account and pretend nothing is happening.
You can move money into your binary options account, but you need to do so in a controlled fashion. Once you have paid all your bills for the month and met your savings quota, then you can consider transferring leftover, additional money, to your trading account to finance your trading activities. If you haven’t paid your bills or met your quota, you cannot add funds to your trading account.
Wagering arbitrary amounts of money on trades.
When you see a really, really great trade, do you wager more money on it? Do you maybe risk 10% instead of 5%, even though you wager 5% on the rest of your trades? This is a form of gambling behavior which can have disastrous results. First off, you are not trading consistently. When you do not set appropriate rules for yourself, you may find yourself doing more and more random things. Next, you might trade 20%, maybe 30%. Imagine losing a third of your account on a single trade. Secondly, it implies you are taking trades you do not consider to be really, really great. You should only take the best trades, and you should always wager consistently on them.
Breaking your trading rules.
Just as you should not be breaking your money management rules, you also should take care not to violate other trading rules. Those include the rules of your trading system and other rules you set up for yourself involving scheduling and other aspects of trading. These rules keep you focused and reduce randomness. When you break them, it is like opening the door and inviting chaos inside. Chaos produces losses more often than wins. Remember, entropy is the law, and disorder causes loss. Your trading method is a little sphere of order in which to conduct your affairs. When you start putting chinks in the walls, that sphere collapses, and with it, your trading account.
Avoiding talking to family members or accountability partners about trading.
This is one of the biggest signs that you have a problem. It is wise when you are trading to make yourself accountable to someone. If others depend on you, you are always accountable to those people. It is your moral obligation to ensure you are taking care of them first. If you do not have any dependents, an accountability partner might be a mentor or a fellow trader, or just a friend who takes an active interest in your trading and wants to help you stay focused and on track.
If you are avoiding your accountability partner, or not being honest and upfront with family members about where your money is going and how you are conducting your trading affairs, you probably have a guilty conscience. You are worried about letting those people down, which means you have already let yourself down. Come clean with your accountability partners, and let them help you work through your problem and stay honest. That is what they are there for.
Note that even if you approach trading like a business, you are still engaged in a business of risk, and you still can and will lose money while trading. There is no trading method that can give you a 100% win rate. In fact, recognizing your risk can actually reduce your losses, because it gives you a realistic perspective and keeps you honest and involved in your trading. In that sense, even traders at the far, far end of the spectrum who are not engaged in dangerous gambling behavior are still, to a limited degree, gambling.
But that is the case with everything in life. Life itself is a business of risk, and you can never completely predict what is coming or understand what is happening. Any time you invest money in a new business venture, you are facing a level of unpredictability. Binary options trading does tend to tempt participants into addictive behaviors and other mistakes, but if you stay alert for changes in your own behavior, you can avoid falling into gambling traps while trading. Acknowledge your risk, but do everything in your power to reduce it, and you will be on the path that leads to success.
Ensuring you don’t have a gambling problem can be done by simply reviewing your character. Check it out