Do I Need Signals for Trading Binary Options? To make that answer as short as possible: yes, you do. Everyone who’s ever traded a single binary option, has done so based on a trading signal of whatever type. The trading signal is essentially the factor that prompts the trader to commit and actually open the position. It can be anything really: a wild, gut feeling-based emotional trigger, or an informed and educated one.
What is the definition of a trading signal in the context of binary options?
Successful binary option traders all use some sort of strategy when determining how much to invest, and which side of a trade to target. Proper binary option strategy consists of a combination of technical and fundamental analysis elements, to which a healthy dose of capital management should also be added. While capital management is a way to deal with the aftermath of the trades, technical and fundamental analysis are all about trading signals. Technical analysis is the mathematical side of the coin: it uses charts, chart- and candlestick patterns as well as various mathematical artifices, to generate actual trading signals from the above. Fundamental analysis is the science of analyzing and predicting the impacts of various real-life events on the markets.
How do you get your signals for trading binary options?
As said above, to stand a chance to be profitable, a trader needs proper signals to act upon. The most straightforward way to generate trading signals is to just do all the technical and fundamental analysis on your own. While this is indeed the best way to understand how trading works and what makes the whole thing profitable, it’s by far the least convenient approach. In order to master both facets of analysis, a trader has to invest quite a bit of time and possibly even money. Most amateurs out there – drawn in by the promise of quick and easy profits – simply don’t have the means or the will to go through with it. That explains why there are so few truly profitable experts roaming around.
The best way for rank-and-file traders to obtain some decent trading signals is through a signal service.
Trading signal sources
In theory, a third party signal service is one that delivers profitable trading signals to customers, thereby doing all the “dirty work”. Trading signals represent a sort of half-finished product in and of themselves. They may be valuable as they are, but traders need to apply them properly in order to really allow them work their magic. There are dedicated signal-services out there, which require a subscription fee, or come as a part of a wider package-deal. Some of these signal services only use technical indicators to generate trading signals. The way this usually works is they have four or five such indicators working to confirm and re-confirm the resulting signals. All that considered though, these signals are still not accurate enough. The best sort of trading signals are those delivered by expert traders who do their own technical analysis and add their fundamentals-expertise to it on the top. Such signals are often known as “expert trade alerts”.
As said above, even with the best trading signals, the trader retains a massive amount of control. It depends solely on the trader how these signals are actually applied, and that has an instrumental impact on the eventual results. As said above, most traders simply cannot afford to pour the needed resources into their own signal-generation. Some however, can’t even be bothered to actually apply signals resulting from elsewhere. This is where auto traders come into the picture. These programs generate their own signals and they apply them too, essentially doing their own trading, based on parameters set by the user. The user can usually fine-tune money-management, but he/she cannot modify the algorithms on which the software operates.
The problem with auto traders is that they’re mostly based on the easily automated technical analysis elements detailed above. As such, they usually don’t work very well in the long-run.
The Auto trader does have its place in the binary options landscape though. There are brokers out there who now offer entire platforms aimed at the creation of such robot traders. One such broker is IQoption, whose Robots platform has earned quite a bit of acclaim among those who understand how all this is supposed to work.
On this platform, traders can use a variety of tools to create their own auto traders. These traders are then shared with the community, so everyone can just pick up the most successful ones for free. While the platform features a wizard (which uses some ready-made modules) as well as a constructor (for those looking to build their robot from scratch), everything is still based solely on technical indicators.
Trading signals are as essential for successful binary option trading as is air for breathing. Because of this importance, one’s success hinges entirely on the quality of the trading signals he/she uses.