I am going to give you some ideas in this article on how to reduce your drawdown weather or not you use your own trading or signal providers it does not matter. These guidelines will serve to help you to reduce losses and increase profits.
1) Never chase your losses “When you are not doing well most NooBs will try to fight their losses = chase them. They do this by doubling/tripling trade sizes and ultimately blowing their accounts after a bad run. This is the #1 enemy in trading and it does not matter if it is forex binary options stocks ect ect. Never chase your losses always stick to a money management plan. Learn to feel the same about a loss as you do a win and focus instead on making good trades instead of focusing on trying to win.”
2) Reduce trade sizes and number of trades “When in a rut/poor trading environment think to reduce your trade size and number of trades. Even the best traders can have bad periods for whatever reason. Why is not important and is subjective not objective. We remain objective at The Binary Nerd, because we want to focus on good trading and increasing profits/reducing losses. I cut my trade sizes down by half and even to 25% of my normal trading size when in a rut or what I think are bad trading conditions. I let the market decide this by my trading statistics and experience.”
3) Learn to feel the same about your losses as you do you wins “This is a hard one as this goes to our natural primate loss aversion psychology. Example you have a series of losing trades and your first thought and likely only though will be is how to win the money back or you lost so much you have feelings of your self worth being reduced and you then have a whole range of negative emotions associated with it. This is a dangerous spot because it will naturally cause one to become emotional and all logic goes out the window with their trading most often. Losses are a part of trading if you are doing poorly step back and get grounded. If you feel the same about your losses as you do your wins, you will lift the “EMOTIONAL CLOUD” that will likely cause you to make stupid trades or decisions that have nothing to do with trading but rather the emotions you feel because of the losses. Don’t feed your negative emotions as they will likely give you negative results.”
So repeat the 3 steps above logically and take some time to really review your own trading and see if any of the above applies to you, especially if you are new to trading binary options. We want you to minimize your losses as best possible and let you know trading is hard but rewarding if you do it correctly over time.