One of the most unbelievable things I can think of when it comes to trading binary options is that some people (actually a lot of people) don’t think their trades through. Of course I understand that when dealing with a limited time frame – for example when the possible ‘trade of a lifetime’ has to be set within the minute – you have to think fast. But sometimes it’s better to slow down and really get to the bottom of the ‘why’ we discussed earlier this week. That’s why I always ask myself these 5 questions.

1. What do the renowned news sources say about this underlying asset?

I know news isn’t everything, but it’s still an important source. The news can give you an indication of things to come. It can also give you an indication that an opportunity has passed. Usually when something is in the news everywhere, the hype is over.

2. Are there any signals that support my trade?

If you use a signals service, try to find signals on the underlying asset you’re about to trade. Even if you disagree with the signals, there’s still no problem, just as long as you can support your view.

3. Does this trade fit my strategy?

Before you trade binary options, you have formed a strategy. In this binary options strategy you have identified your goals and how you want to reach them. For example, if creating profit through long term, low risk investments is your goal, you should stay away from 60 seconds binary options.

4. How much shall I invest?

The amount you invest per trade is something you can identify in your strategy. If you haven’t done this, it’s good to think about the investment you put into each trade. Make sure the amount isn’t too high for you to lose more than you can handle, but also not too low to leave you with little to no profit.

5. What does the outcome of this trade mean?

Before you close the deal and activate your trade, think about this question. What does it mean when you lose? Will you overcome this loss? If not, don’t place the trade (unless it’s a sure shot). And what will happen if you win? Does this mean you have reached your goal? Think about the pros and cons of the possible outcomes.