The Dangers of 30 Second Binary Options

The Dangers of 30 Second Binary Options

You will find out that 30-second trades offer a unique set of challenges, which can be dangerous if you do not regard them with the respect they deserve. For that reason, most traders will do better if they start out with longer term trades which last a few hours or days, and then work their way up to fast binary options.

Here are some of the unique challenges which are imposed by 30-second binary options. These challenges apply equally well to 60-second options and other fast options which last just a couple of minutes.

1. Volatile markets and unreliable data

No matter how fast a thinker you are, and no matter how quickly you can place a trade, there are some factors which are out of your control, and which can impact your trading adversely. Some traders avoid fast options outright for just this reason. The data you base these trades off of is generally less reliable. Why? When you look at a trading chart with candles which each represent an hour, there is an hour’s worth of data in each candle. But if you are basing trades off of the one minute charts, each candle is only a minute’s worth of data. Not only that, but there is a lot more choppiness on these lower levels, and that means more fakeouts. Can you steer around these obstacles for success? It can be done, and some traders are great at it. It is important not to go into 30-second trading blindly though; know the terrain and you will have a much better chance at navigating it safely, even if that takes some extra preparation work. Is it a fake-out or break out?

2. Lots of pressure

Fast trades and slow trades each pose different psychological difficulties for traders as well. You may or may not find yourself suited to trading 30-second options. For many, they simply are too fast. If you fret when you have to make fast decisions, you may not make smart decisions. You could compromise your own judgment with panic. Frantic to avoid missing a trade, you might start taking trades which are not “A setups,” but instead are “B” or “C” setups. Not everyone can confidently make a correct judgment about a trade that fast. Another possibility is that you will skip trades because of a lapse in confidence that you actually should be taking.

That same pressure can certainly come into play even when you are doing slower trades. For some traders that may be even worse. They may end up second guessing themselves precisely because they have so much time on their hands. It might seem like too much time. Those traders may actually do better trading faster options, because they may find that the faster trades fit their psychology better. The bottom line here is to figure out what kind of trader you are, and trade accordingly. 30-second options may be too fast for you, or they may be ideal for you.

3. Less time to correct your mistakes

Probably the biggest danger of trading 30-second options and other fast options is that they blaze by so quickly you may not realize that there is something wrong until it is too late. Picture this example:

Cathy is trading 30-second binary options. Her first few trades go well, but her next trade is a loss. Eager to “get back at the market,” and sure that this loss was a fluke, she places a second trade, and loses again. Surprised, but still sure that this is part of a normal losing streak, she makes another trade a few minutes later, only to lose this one. On each of her trades, she was investing 5%, so she has had a 15% drawdown of her account within just several minutes.

Nonetheless, there were times that she lost this many trades while testing, so she assumes the losing streak will now end. Her next trade is another loss, so now her drawdown is 20%, and only about fifteen minutes have gone by since the entire mess started. Can you picture losing a fifth of your account in just fifteen minutes?

If Cathy continues to blow through her account at this rate, she could lose the entire thing in less than two hours. If she had been taking slower trades, she might have had more time to think about what was going wrong before she lost this many trades. She might have picked up on mistakes that she was making. Perhaps Cathy has been taking setups in the wrong market context, or she has been misinterpreting the signals her system has been sending her. Either way, she can pull out of the market and go back to demo testing to try and figure it out, but you can see how fast trades predispose traders into losing more money than they need to in order to identify a problem. Trading fast is addicting, and it is easy to lose control and succumb to the emotions of the moment.

In Cathy’s case, the emotions included fear and anger. You cannot really get revenge on the market, but the thought that you could “get it all back” in just a couple of minutes can be almost irresistible. When you think that way though, you make it far more likely you will lose everything you have just as quickly.

One Response to “The Dangers of 30 Second Binary Options”

  1. if you want to make many many trades every day you must use 30 seconds option

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