8 Binary Options Trading Superstitions Exposed
Superstition has been around since the beginning of time when people were throwing virgins into the volcano so that the entire island can be spared from the gods’ wrath. Sailors never set foot on a boat with their left leg first, sports players have tons of superstitions, from using the same equipment to kissing the grass on the playing court. Heck, there’s a superstition in every game, every profession, so why not in trading? Sure there is. In fact, trading is a profession that’s highly affected by superstition, so let’s take a closer look at some of the most common fallacies.
1. The Gekko
Many of you have seen Oliver Stone’s 1987 movie Wall Street and if you haven’t, I strongly recommend you take the time to do so. The main character – Gordon Gekko – portrayed masterfully by Michael Douglas, is wearing most of the time a striped blue shirt, with a white collar and white cuffs. Nothing out of the ordinary, right? Yup, right, but the character became so iconic that his contrast shirts became a trading superstition and even received the name “Gekko”. It’s kind of: if you’re wearing the Gekko, you “steal” some of Gordon Gekko’s panache and trading prowess. Heading out for an important Wall Street meeting? Wear the Gekko. Trading from your couch? Put on a Gekko for good measure.
2. Never a Red Pen!
Red is the color of loss. On most platforms, wins are green and losses are red; when price is going down, it flashes red. That’s why many traders never use a red pen to write and, going a step further, they don’t even own a red pen or don’t want one to exist in their office. I’d say it’s a bit too much, but hey, to each his own. If you think that not having a red pen makes you a better trader, then by all means, don’t own one.
3. Lose a Trade to Appease the Gods
This is a superstition that comes from the stock trading world: if the trader is holding on to many losing trades and everything seems to be going down the sinkhole, one of the trades should be closed at a loss, hoping this will please the financial gods and make your other trades reverse, closing in profit. Should you follow this superstition, turning one of your trades into a sacrificial lamb? Heck no! If the market’s gonna turn, it’s gonna turn for other reasons, not because you closed one of your trades. If it were that simple, I would open one trade with 100 bucks, another for 10K and close the small one if the big one doesn’t go my way. Make millions over night, sell the secret for $99.99, make more millions and that’s it.
4. The Broker – There Can be Only One
Some superstitious traders think that once they change brokers, their luck will change. In other words, if you’ve made profits trading with one broker, once you switch to another one, you will start losing. This type of thinking is more suited to a casino because your trading shouldn’t be based on luck so – assuming that neither broker is manipulating price or doing other shady stuff – the choice of brokers shouldn’t affect your win rate. Of course, some brokers are worse than others (delayed execution, delayed closing of trades, bad pricing, etc.) but that’s another story.
5. Wear the Same Clothes
If yesterday you have had a profitable day, today you have to wear the same clothes. Well, if this superstition works, two things will happen: 1- you will become very rich, very quick because you will not have a single losing day and 2- you will start to stink from wearing the same clothes every day for a long time. Soon we will live in a world of millionaires that look like homeless people.
6. It Rains. Better Avoid Long Positions.
A long position would translate in binary options into a Call, so if it rains you shouldn’t use Calls according to this superstition. Well, what if the market is in a strong uptrend? Should I use Puts nonetheless? And what if it’s sunny outside? What if there’s a thunderstorm? What if the rain stops? Should I place a Call immediately? Ah, the wonders of ambiguous superstition…
7. Stocks and the Super Bowl
This one is actually proven to have a 81% accuracy!!! According to this superstition, if a team from the American Football Conference (AFC) wins the Super Bowl, then it will be a bear market (down) and if a team from the National Football Conference wins, then it will be a bull market (up). This concept was discovered or created or whatever you wanna call it in the ‘70s and as of January 2015, it has been right 39 out of 48 times. However, I believe this is just a coincidence and I wouldn’t put money on it, but if you want to know more, visit Wikipedia.
8. Always Keep a Fresh Currency Note in Your Wallet
Having a fresh currency note will allegedly maximize your chances of making money trading. Yea, right. When does this “new” note start getting old? And would it be better if I would frame it and put it on the wall, above my trading desk? What if I freeze it? Yea, I will have good luck forever!
Superstition – A Self Fulfilling Prophecy?
If enough people would believe in a certain superstition, I believe it could turn into a viable trading “strategy”. Take the rain superstition for example: if millions of people would start selling when it started raining, the market would definitely go down, but so far such a “Superstition To Rule Them All” doesn’t exist. There are millions of traders, maybe each with their own little superstition, whether that is a red tie, a Gekko, a lucky charm or anything else. Does it work? Today yes, tomorrow no, but what works consistently is proper training, education and a professional approach. You know where to get that, so don’t waste another second and go to our Binary Options School.