The reality of any traded market is only an elite few among many become profitable. It’s much harder for binary options on platforms like Quotex due to the lower payouts than other online trading types.
Yet, there are things traders do that lead them to disaster. In short, traders lose on Quotex for these reasons:
5 Reasons Why You Lose Money on Quotex
- Large position sizes
- Using non-disposable funds
- Lack of trading experience and strategy
- Using signals
- False expectations
1. Large Position Sizes
One golden rule of trading is to risk or allocate 1-2% of your account on every trade. This is especially crucial in standard binary options, where the potential reward is fixed and lower compared to other trading styles.
Yet, binary traders increase their chances of losing substantially by allocating more than 1-2% per position. A string of a few losses sees the trader at a massive drawdown that is often impossible to recover without depositing more funds or risking much less for subsequent trades.
For context, a 10% loss in trading capital requires an 11.1% gain for the trader to return to their previous balance. The disparity becomes exponential the higher the losses become.
Another reason traders lose on Quotex is using money management methods like Martingale and other high-risk techniques.
Ultimately, using conservative position sizes and safer money management methods reduces your chances of losing when trading binary options on Quotex.
(Risk warning: Trading involves risks)
2. Using Non-Disposable Funds
Another golden rule of trading is, “only invest money you’re willing to lose.” This means one should use disposable income or funds separate from life expenses.
While Quotex offers an affordable minimum deposit of $10, it can be a disadvantage for traders. Given our natural instant gratification, there is always a need for massive wins using a small amount.
Losing traders often use non-disposable income in this regard, which makes their trading more emotional than logical. Removing emotion once your last dime is on the line is challenging. Generally, losing traders lack emotional intelligence and will often ‘revenge-trade‘ or become greedy after a few wins.
However, much of this behaviour stems from using non-disposable money.
3. Lack of Trading Experience And Strategy
Many trading purists consider binary options gambling due to their two-fold betting-like nature. Hence, it’s much simpler to understand binary options for this reason, unlike other markets without this structure. However, this can play against one’s favour.
It’s best to enter binary options once you gain experience in traditional traded markets like forex and crypto. Because these assets are more complex, the transition to binary options becomes easier. Most importantly, regular markets instil key concepts like risk-to-reward, which are necessary for the latter.
In short, we recommend gaining experience in other non-binary trading first. However, you should also master binary options by spending as much time as possible on a demo account, such as signing up for Quotex and getting 10,000 USD to your demo account to learn how to trade, before transitioning to a live account.
This is necessary for developing a strategy which won’t be the same as what you may have used before. A lack of a proven strategy is another reason traders lose money. As already mentioned, demo accounts are designed for this purpose.
4. Using Signals
The purpose of signals is noble. After all, the aim is to leverage actionable recommendations from a superior trader or automated system. Sadly, most binary options signals are overly hyped and have no long-term consistent track record. Meanwhile, others are pure scams.
Another problem related to signals is timing. Most binary options are short-term in nature. Hence, someone receiving a signal may not react to it in time, leading to a missed opportunity or capitalizing on that opportunity when it’s too late.
Fortunately, Quotex provides integrated trading signals. Still, one shouldn’t treat this feature as a quick hack, bringing us to the final reason why traders lose money.
5. False Expectations
Most traders treat binary options as a ‘get-rich-quick scheme.’ As mentioned, this style of trading is designed for short-term gains. It’s another reason that many label binary options as gambling based purely on luck and ‘blind guessing.
While binary options have similarities to gambling, it’s more a game of skill than chance. Although the all-or-nothing structure is straightforward, being profitable is more challenging than traditional CFD trading. As already stated, one faces the inherent low payout structure.
While you can make significantly more in other types of binary options, predicting them becomes more complex.
So, it’s foolish to expect huge wins, particularly if you haven’t traded anything before. Again, it’s essential to have some trading experience before entering the world of binary options to have realistic expectations.
Does Quotex Manipulate Trades?
There is a long-held belief in the binary options community of manipulation by brokers like Quotex. Let’s first consider that binary options are decentralized, where brokers often facilitate trades internally without a publicly viewable exchange.
One big disadvantage of this model is the absence of regulation, which can often lead to trade manipulation and general unethical practices.
So, the real question is whether Quotex manipulates trades, which would certainly cause its clients to lose money. In reality, over 90% of binary options speculators lose money. A similar percentage applies to other types of trading, generally due to the reasons we’ve covered.
Using an unscrupulous broker may partially contribute to the failure rate. Yet, Quotex’s reputation has been stellar since launching in 2019. With only a scarce number of traders good enough to be profitable, manipulation doesn’t seem worthwhile from a reputation standpoint.
It’s also worth noting that standard binary options on Quotex offer a maximum payout of 95%. While there are other complex, better-paying binary options, the success rate is even lower. Thus, Quotex and other binary options always benefit one way or the other.
In addition to seeking solutions to the five reasons listed previously, we recommend avoiding OTC (over-the-counter) markets as much as possible. OTC trading is more susceptible to manipulation since it’s not based on the real prices of assets.
Finally, it’s best to use a few other charting platforms alongside your Quotex platform to note any discrepancies you can report.
Conclusion
Binary options are truly not for the faint-hearted. Despite seeming like a simple way to make money, very few traders remain in the game over the long term. The five causes discussed here are the prominent contributors to losing traders on Quotex.
All that’s left is to find the right solutions, and you stand a better chance of surviving and thriving.
FAQs – Most asked questions
Is Quotex manipulated?
No, Quotex is not manipulated and it is technically not possible to manipulate the trades of customers.
Is it necessary to have trading experience before using Quotex?
Yes, having experience in other trading markets can help you develop better strategies and improve your chances of success in binary options.
Can I get rich quickly by trading binary options on Quotex?
No, treating binary options as a get-rich-quick scheme is unrealistic. It requires skill, experience, and realistic expectations to be profitable.