Tick trading newbie mistakes to avoid
Tick trading is so simple and intuitive that I don’t blame you if you jumped in with both feet right off the bat. It’s all very well to play around to get a feel for the BonusTrade app and for tick trading binary options, however, you do want to watch out for those newbie pitfalls that could set you back in your trading.
If you are new to tick trading, here are 5 common tick trading newbie mistakes you should look out for if you want to up your win rate.
1. Trading “blindly” without zooming out or using indicators
If you have no idea where prices have been, whether it has been trending up, down, consolidating, ranging, erratic, you’d be unwittingly cheating yourself out of easy wins.
It is not enough to just watch the last few ticks move before getting into a trade. It only takes a fraction of a second to zoom out a little to give yourself a better perspective as to how prices are likely to move.
You would also be trading “blindly” if you don’t have at least one of the technical indicators on the chart.
Technical indicators can give you a very good indication of whether prices are ranging or trending and the precise spot to get into a trade. And the BonusTrade app comes with 4 of the most popular technical indicators.
2. Trading trend reversals
It’s all too tempting to think that prices have been going up 4 or 5 ticks in a row, it’s bound to come back down, or vice versa. And so you bet against the trend.
You would luck out if the market is “ranging”, moving within a narrow price range, but not if the market is “trending”.
As a general rule, don’t trade against the trend, not even for tick trading. It is called a “trend” for a reason. I must have said it in every blog article, and I will say it again,
“The trend is your friend.”
3. Treating trading like a video game or a casino
The BonusTrade tick trading app does bear some resemblance to a game I have to admit. And there is indeed a “ trading simulator “ version available in the Google Play store.
If you are serious about trading to make money, you have to take trading seriously and not treat it like a casino game. As you know, for casino games, the House always wins.
For tick trading binary options, you are making predictions, albeit very short term, on prices of publicly traded assets for the most part. People have studied and traded market movements for decades and there are certain popular strategies to predict market price behavior. It pays for you to have some idea of what those are. We will be discussing simple but effective tick trading strategies in this blog. Stay tuned.
4. Trading regardless of trends and patterns
It is a well acknowledged fact that stock, commodities and forex currencies prices all move in certain fairly predictable patterns by and large. Have you heard about “head and shoulders”, “Support” and “Resistance”, and “Elliott Wave” for example?
There are also trending patterns, consolidation patterns and ranging patterns to name a few. These patterns are discernible not only at the macro level of larger time frames (5 minutes, 1 hour, 4 hours, Day, Week, Month), they also work at the micro level of ticks!
If you are able to recognize these patterns, it will give you more “ammo” to make better predictions of price movements at the tick level.
5. Trading in slow markets
If you are trading certain forex currency pairs in the afterhours when the market is very quiet, you might be thinking that it is easier to predict price movements when the prices don’t move much. And you would be right. You generally don’t see much movement in prices in the afterhours. But that does not necessarily make your tick trading prediction any easier.
You have to remember that besides Up or Down, it is also possible for the exit spot price to be the same as the entry spot price. In which case, you still lose and the House wins. In fact, this is the main drawback of trading slow and quiet markets — there is a good chance that the exit price ends up the same, which weighs against the odds of your predicted direction of trade being right.
There you have it, 5 of the most common newbie trading mistakes in tick trading. I hesitated to include “Trading without a plan” because it is a pretty big topic in its own right that deserves a separate article altogether.
Are there other common newbie trading mistakes that I should have included? Please leave a comment below.
Originally published at https://www.bonustrade.app on February 15, 2020.
