The concept of binary option signals is easy to understand. Binary Options signals are a way to profit from experts’ recommendations. Actually binary options signals are a form of professional recommendations for traders who may not have the necessary skills to conduct the analysis of financial assets themselves. They are generate in the form of a simple rule that trader can simply implement into the trading interface.
There are numerous influence that should always be considered while trading. Predicting the future is not easy. While binary options made it easy to trade this from the technical side – only by loading up your browser and selecting asset and direction – the subject of financial analysis which should precede the trade execution is something not everyone understands.
Market Brings Risks for Traders
Financial markets can be very volatile and unpredictable. This is expected and the reason why many industry people and scientists speculate how these prices relate to fundamentals, how are they formed, what do various graph patterns mean and is they a way to predict prices in the future based on some factors one can observe. Obviously, no one has the complete answer. Markets would not exist since there would be no arbitrage opportunities – opportunities to make profit.
So, for ordinary investor, in binary options or some other financial product, the question remains – how can we detect these arbitrage opportunities and make money. Two basic tools are the fundamental and technical analysis. Fundamental analysis is a look at long term determinants of growth, such as price-earnings ratio, liquidity analysis etc… Technical analysis rests on the idea that various patterns that can be discovered in graphs tell us something about future moves of the price.
In order to understand and implement these two types of analysis, many years of experience are needed. Obviously, ordinary traders do not always have time for this. This is where binary options signals come in. The idea is to outsource trading expertise to other traders – experts and professionals with a huge experience. They create possible scenarios and form recommendations. These recommendations can be later formed in many ways – like a simple textual explanation, like a computer instruction that trader can execute or a form where the signal is fed directly into the trading system.
How are Signals Delivered?
If it is a textual signal, all trader needs is to copy the data into the trading system and place a trade based on the signal. If it is a computer instruction that many providers of binary options signals use, all that is needed is to click the button and the system will place the trade instantly. If the binary signal is fed directly to the trading system, then we call that service “auto trading”.
In a nutshell binary options signals & binary auto trading platforms are following professional traders every movement. Either it is free or you pay for a service to get profitable trading signals. Instead of doing research themselves, traders can pay $100-$5000 and be able to trade like the pros by leveraging the power of binary options signals. As the binary options industry progresses we are seeing more and more of these services become free. Sometimes it means traders get less, because it costs less, but in some cases these signal providers have huge trading volume so they can significantly reduce costs and offer binary signals for free.
Binary options signals are a great way of earning more, but delivery is crucial. Notice you don’t have to do the trades yourself if you select a binary auto trading software. Everything is handled automatically by the software. This is new not only in binary but generally in finance industry and finance as science. New methods for auto trading are constantly developed and in some cases there are ideas to use neural networks (see picture right for visualization) to progress in this area.
With auto trading, binary options signals are automatically fed in the trading interface. So its a one time effort after that you just have to wait for the winning trades. We are not affiliated with the companies below and can’t guarantee that you will profit from the signals and robots. Most services are free if you do not profit so you don’t pay for the months where you don’t earn money.
Binary options signals are mostly created by analysts who have profound levels of experience in the field and an in depth knowledge about the market. But not to forget that binary options signals do expire after a certain time for which you need to be prepared in advance. Surely, high payouts can be regarded as highly probable in the business due to which more and more people are thinking about making use of these systems.
How do Binary Signals Get Formed?
There is no end to the merits and advantages that can be utilized by making use of binary options signals. It is best to channelize the signals at the night time so that the traders might come to have a sufficient time in terms of taking their decision. Nevertheless, it is a fact that binary options signals do appear to be technical in the start, but as time passes by, they can bring a change in your trading success and the underlying dynamics.
Example of RSI, source StockCharts.com
Signals can be created on basis of both – technical and fundamental analysis. While algo trading usually uses some sort of indicators and various trend line strategies since these are the easiest rules for the computer to understand. There are many financial indicators that are used by both traders and algorithmic trading.
There are many others used to make tule of thumb decisions, however, using a combination is a better idea. However in that situation experience will be crucial in case indicators are conflicting.
Binary Signal Types
Binary options signals providers are vigilant in terms of providing a number of different types of these signals. But before all this, it is best that you have some knowledge about the functioning of these systems and their variants. They can be based on almost all of the types of the underlying assets which are widely available for carrying out the binary trade including forex, indices and a number of commodities.
It is imperative that binary options signals and options should be categorized or classified in lines to the varying types of assets specified above. For your convenience, it is recommended that binary options signals should be brought to use or utilized in accordance with the type of asset you are interested in. For example, if a trader has opted for the stocks, then using Apple, Microsoft, Pepsi and many more can be termed to be the most appropriate and applicable choices for the trader.
There are push signals and act signals. With push signals traders get a notification – these are usually signals that need to be acted upon in that exact moment. With other binary options signal types, such as the free signals that Fair Binary Options offer, traders need to wait for the price to reach the level that was indicated and then act upon the instructions. Naturally, both of these have pros and cons. Push signals have problem that one must see it in order to capitalize on it immediately. However, they can be more reliable. The second type is better exactly because traders can miss it at first as long as they do not miss the level. However since they have to wait for the level, it is natural that the waiting may be a problem and many variables may change before the level of price needed to trade is reached.
In traditional finance, signals are not used as much as in forex and binary options – at least at the consumer level. Basically the ways many traders operate is to form recommendations, but since these are more trading than investing based, in-house traders of big financial firms – such as Goldman Sachs or JPMorgan – do not send signals to clients but simply manage their portfolio from the trading desk. However, with binary options, trader is in the centre. Fees are low and the full retail experience is provided, however, as noticed, many traders are not specialists. In this case binary signals come in handy. Binary options signals can be created in several ways – trough professionals or algorithmic trading by computers. This depends also on the binary signal provider you choose.
One of the most important facet in the binary trading world is to select the most experienced and professional binary options signals service provider in the industry. No doubt, there are more than just a few signals providers all over the world, but not all of them can be relied or trusted for superior services. In order to ensure that secure trading would be carried out, they records must be public and data of the specific service provider should be analyzed in lines to the present market trends.
According to the most recent statistics, signal services mostly manage to reach win rates of over 65%. But remember that most of the service providers use professional traders to generate signals. While algorithmic trading is getting a boost these last few years, especially with the rise of high-frequency trading and advanced networking infrastructure, binary options are customer oriented meaning that there is no incentive to take advantage of these minuscule market moves since the financial leverage is usually smaller than with institutional and other funds.
High frequency trading problematics have been recently part of a debate, especially as Michael Lewis new book – “The Flash Boys” presented the case for market manipulation by these super fast systems. However, binary options is and over-the-counter market with no specific infrastructure that would enable such manipulation as with centralized exchanges. Since there are always two parties involved, arbitrage is expected to be fully covered. Some binary options auto trading software solutions are trying to implement algorithmic trading but experts that are coming from financial institutions are still proving to be a better choice in binary options.
Binary Option Robot
Also, always look if there is a list of binary options signals previously generated by the service to have the opportunity to asses the quality of the provider. At the moment, the best signal service, which is actually also a trading bot is the Binary Option Robot. While we understand that they are not a strict signal provider, but understanding that the cost is zero, and that manual trading is also possible with some added portfolio features, it was expected to consider it a signal provider.
To learn more about options trading signals, we recommend references below.
- David Aronson (2011): Evidence-based technical analysis: applying the scientific method and statistical inference to trading signals
- K. Lam, K.C. Lam (2000): Forecasting for the generation of trading signals in financial markets, Journal of Forecasting, Number 19, Pages 39-52
- L. Hamm, B. Wade Brorsen (2000): Trading futures markets based on signals from a neural network, Applied Economic Letters
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- F. Allen, , R. Karjalainenb (1999): Using genetic algorithms to find technical trading rules, Journal of Financial Economics, February 1999, Pages 245–271
- S. Mabua, K. Hirasawab, M. Obayashia, T. Kuremoto (2013): Enhanced decision making mechanism of rule-based genetic network programming for creating stock trading signals, Expert Systems with Applications, November 2013, Pages 6311–6320
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- C. D. Tilakaratne, M. A. Mammadov, S. A. Morris (2008): Predicting Trading Signals of Stock Market Indices Using Neural Networks, Volume 5360 of the series Lecture Notes in Computer Science, Pages 522-531
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- C. Lento, N.Gradojevic (2007): The Profitability Of Technical Trading Rules: A Combined Signal Approach, Journal of Applied Business Research Volume 23, 2007
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