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When To Abandon A Binary Options Trading Strategy

When using binary options trading strategies there could come a time when important decisions need to be made. The decision to abandon a strategy entirely should not be made without proper analysis of how effective or ineffective it has been. Popular strategies are popular for a reason. These tend to be effective more times than not. But what about personal strategies? These can be profitable, average, or cause losses.

Tracking is the key to knowing how effective a binary options strategy really is. It matters little how tracking is done, be it a spreadsheet, word file, or even with a pen and paper. Without tracking, the trader may have only a vague idea about how well the strategy is working. Many novice traders make the mistake of not tracking results. Tracking should be made a habit right away.

The decision to abandon a binary options trading strategy should not be made without the strategy being used in many trades. The exact same trade type will need to be used to ensure that the tracked outcomes are accurate. Expert traders advise using the strategy a hundred or more times before performing evaluation and deciding the fate of the strategy. In most cases, this evaluation and review will make the decision an easy one to make.

Should the number of binary options trades that ended out of the money exceed 50%, the strategy should be abandoned. It could also be altered in an attempt to make it more profitable. Any strategy that is performing at less than 50%, it is costing the trader money. Should the percentage amount be extremely low, total abandonment is likely the best idea. With so many possibilities to consider, there is no reason to feel locked into one binary options strategy.

Some questions could arise if the percentages of in the money and out of the money outcomes are very similar. This would be a good time for the binary options trader to take a good look at the strategy to see if it can be improved upon. A mediocre strategy could be transformed into a powerful one with just a bit of tweaking. The good news with a strategy that has only been average is that there is still hope of salvaging the time and effort that went into development.

It is not wise for new binary options traders to assume that any investment need to be made when testing strategies. This can be done using only fictional trades and tracking. Those who prefer to test strategies with actual money can do so, of course. However, experts advise that only small investments be made until the binary options strategy is fully tested.

Few wish to abandon a binary options strategy after investing time and money. It is important for the trader to known when to cut his or her losses and move on. Trading is a learning experience and thus requires the binary options trader to continue to develop skills over time. The ability to develop effective strategies is one that will benefit the trader P/L.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.