Introduction To Binary Options Signals
Traders who are aware of the risks in binary options trading will recognise how hard it is to earn consistently profitable results from trading binary options. Almost all financial products have a substantial amount of risks, and the risk increases exponentially in the case of Forex and binary options trading. Binary options are exotic products that provide an exciting and refreshing opportunity to trade the market fluctuations, but such an investment prospect also come with numerous associated risks. The fixed risk/reward concept of binary options and a fixed expiry time of a binary option contract also contribute to the complexities of the product, which are aided by numerous inconsistencies that are prevalent among binary options brokers.
Binary Options trading signals are some of the highly popular means by which traders look to increase their profit potential in binary trading. Trading signals are simple buy/sell instructions that provide expert assistance on investing in the markets according to the future course of binary options assets. These instructions, in turn, enable traders to make the right calls and improve their chances of succeeding in the markets. Signals come in different forms, but almost all signals have a basic underlying theme. Traders can use these signals to supplement their analysis of the markets and can choose to either accept or decline these signals based on their own inference. Binary options signals are not compulsory trading recommendations but serve more as guidance to traders.
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Why Is Binary Options Trading Difficult?
Although binary options trading is marketed as the most lucrative investment opportunity available in the financial markets, it has a lot of similarities to the traditional forms of investing. Binary options trading may be a simple and convenient product that only requires traders to make a ‘call’ or a ‘put’ order on an option according to the market conditions, but the actual process of trading is indeed a complex proposition. Established traders have spent countless years on learning the different aspects of the financial markets, and have had extensive experience in the different forms of investments to reach a level where they can comfortably trade the markets with attractive returns.
Novice traders, particularly those who are starting out in the industry, will find it extremely difficult to learn the dynamics of the market and to make the right calls to stay ahead of the competition. In fact, it will usually take a considerable amount of trading experience and some significant account drawdowns before they can predict the direction of the markets accurately. Technical and fundamental analysis of the markets is a key factor in understanding how markets move and how economic events or technical levels result in market changes. Psychological factors also tend to play an important role in determining the success of a trader, as emotional instability, greed, and a lack of tolerance for risk can prevent a trader from succeeding in binary options trading.
Often times, even intermediate and expert traders are known to fall into a trading rut, and may no longer be able to analyse the markets in a profitable manner. Financial markets are always evolving, and traders are required to adapt their trading strategies to suit the market variations. A trading strategy that may have worked in the past may no longer be relevant in the future, which is why it is normal for even profitable traders to face massive losing streaks. It is estimated that around 90% of traders end up losing money in the financial markets, with only a paltry 5% going on to make massive gains.
Importance Of Signals In Binary Options Trading
Binary options signals can be a great tool for traders to improve consistency in trading. Binary signals comprise of trading recommendations that are provided by signals service providers, which allow traders to open and close positions through expert trading calls. Signals in binary options markets are more or less designed to optimise the investment opportunities and to allow traders to have an expert opinion of the markets before investing. Traders can also use signals to manage their trades or to exit trades prematurely by cutting their losses and finding other better alternative entry points in the market. Signals service providers are usually comprised of expert analysts, traders, or other market participants, and either work independently or as a part of a binary options brokerage.
Binary options trading involves trading under highly stressful conditions, as trades typically have to deal with smaller expiry times than that is seen in traditional forms of investments. Unlike the conventional financial markets, binary options markets don’t provide an opportunity to manage trades, as trades once entered will have an outcome, regardless of the trader inputs. Of course, some brokers may provide flexible options to manage trades and their expiry times, especially for longer time frames, but traders are prone to incurring partial losses that can induce a substantial loss of the invested amount. Therefore, it is normal for traders to get caught up in the stresses of making all the right calls within a short span of time, which can lead to errors in judgements and wrong trade entries.
Binary options signals can remove the risks of erroneous trading decisions, and can assist traders with their trading ventures by offering timely advice on how assets respond to different market situations. With a trading signals service that has a higher profit to loss ratio and a higher probability of success, traders can increase their profits quite remarkably, and conserve their trading funds during periods of drawdowns.
Trading signals are particularly useful for beginner traders, as it can help in cutting down the learning curve quite drastically. Novice traders don’t have to worry about the severe account drawdowns that are quite usual among new binary options traders, all the while taking advantage of the signals service to get a better insight into how the markets conform to technical and fundamental analysis. Signals can help traders to understand the different aspects of trading, and prevent being overly confident owing to a lucky streak.
Trading signals can be extremely beneficial for intermediate traders, as they can transition from a break-even trader to a successful trader. Professional traders can also use binary options signals to their advantage, by using these recommendations as trade confirmations. These signals can also help traders to increase their profit potential by offering a wider horizon of trading opportunities, and by providing a better perspective of the markets.
What Are The Issues Associated With Binary Trading Signals?
Binary options trading signals can have a few drawbacks and concerns, as they are not guaranteed to make every trader profitable. In fact, trading with binary signals can do more harm than good for some traders. Let us take a look at some of the issues that may affect traders while trading binary options with trading signals:
- Inability To Learn The Markets
Total dependency on trading signals can hinder the ability of a trader to learn the proper way to trade the markets through in-depth analysis. While trading signals can prove to be an incredible advantage for most traders, traders must realise the importance of being independent in their approach to establish a lucrative binary options trading career. The problem with trading signals is that they cannot promise support for an infinite amount of time, and several reasons may contribute to the demise of a service. Therefore, dependency on binary options signals may force traders into switching between different service providers on a constant basis, in order to find a winning combination that works. Learning the core aspects of trading and being independent in their trading approach can make traders weather the storm and use trading signals to their advantage.
- Complacent Nature That Can Lead To Massive Losses
There is a high probability for trading signals to have a higher success rate during certain periods, which can lead traders to enjoy a large winning streak. These consecutive winning streaks are similar to the odds in gambling, where winning trades can outweigh losing trades by a fair margin. As a result, traders may get into a complacent mindset and may become overly confident in their trading signals and their trading abilities. Such a scenario may fail to warn a trader against an eventual losing streak, which can potentially wipe out all profits and even the account equity. Complacency is apparently one of the biggest concerns of the rising popularity of signals trading among novice traders, and traders must expect trading signals to have a negative phase. It is vital for traders to realise that binary options trading and trading signals can have their ups and downs, and success is actually determined by an investor’s ability to have a positive return through both negative and positive market conditions.
- Incorrect Trading Recommendations & Low-Quality Signals
There is nothing worse for a trader than to subscribe to a low-quality trading signal that has a poor risk/reward ratio and inconsistent trading results. Amateur traders often end up signing up for a signals service based on the promises of incredible returns and end up investing money in the markets without any safety considerations. Low-quality signals can be potentially disastrous for traders, as it can not only lead to massive losses, but such signals can also create a sense of disapproval towards binary options trading as a viable investment product.
Quality Of Paid Binary Options Signals
Binary options traders have the option of signing up for a paid binary options signal service that can offer better accountability for the signals provided by a company or a service provider. Naturally, a premium signal will have several advantages such as access to a dedicated account manager, excellent customer support, 24 hours signal service, and different mediums of delivery that are suited to a subscriber’s preferences. Premium trading signals are also usually backed by a guarantee that all signals offered through such programs are verified through trading in real accounts, which can instil a sense of trust and confidence in the trader.
In spite of all the promises provided by premium signals service providers, subscribers are required to accept a standard set of trading conditions that seek to protect signals service providers from any negative trading results or loss in money due to the use of such signals. Traders are also warned from using these recommendations on a live trading account, and most companies generally ask their subscribers these signals to be used for educational purposes on a demo account, rather than on a live trading account.
Nevertheless, there are genuine signals services that provide a credible and reliable platform for traders to take advantage of high-quality premium trading signals. Often times, binary options brokers may also provide paid signals as a part of their accounts portfolio, which should offer a better service than other independent companies.
Cost Of Premium Signals
Premium signals can be quite expensive, as some providers may charge upwards of $1000 per month for a 24X7 signals service. There are more economical signals service providers that charge a nominal fee around the region of $25 per month, but the actual cost of premium signals come in the form of trading performance. Spending $1000 per month on a paid binary options signal that is capable of generating consistently profitable returns is way better than having a lacklustre binary options trading performance through a $25 signals service. Of course, paying a higher cost for a subscription to a service is not guaranteed to generate high returns, as free signals can often get the job done than some of the more established signals packages available in the market.
Traders should also consider the losses incurred in trading to be a part of the cost of subscribing to a signals service. Therefore, it can offer a better perspective on the ROI, which is a better indicator of the performance of a trading signal, rather than counting the profits achieved through successful trades alone. It certainly isn’t a bad idea to subscribe to an expensive service, if it offers acceptable performance, but don’t mistake high costs for reliability or premium service. Some companies simply take advantage of short-term results to make big gains from unsuspecting traders.
Are Free Signals Reliable?
Free signals are usually provided by binary options brokers, and in some cases, several independent providers also provide free signals to lure traders into opening an account at an affiliate broker for affiliate commissions. In other cases, free signals may be provided to traders through numerous online resources, in order to take advantage of advertising revenue.
The overall reliability of free binary options signals may vary from service to service, and brokers tend to offer better trading signals than independent or third-party providers. However, some brokers may take undue advantage of its traders by providing malicious trading signals in the hope of earning money from their traders’ losses, in which case, external signals may be far more reliable than broker provided signals.
Free binary options signals are difficult to be held accountable for their trade recommendations, as the sources of these signals don’t have any responsibility to the end user. In certain cases, free binary options have far exceeded the performance expectations when compared to premium paid signals. Therefore, traders should carefully consider all the different features of a trading signal and test them to perfection, before putting them to work on a real binary options trading account.
Tips To Find The Best Binary Options Trading Signals
Top quality binary options signals with the highest success rate are hard to come by, as there are tons of scam signals that are only aimed at making a quick profit from unsuspecting traders. Sometimes, even brokers resort to providing fraudulent trading signals to force their traders into losing money. Here are some important considerations that you should adopt for choosing the best binary signals:
- Cost Consideration: The choice between a paid and a free signal service is dependent on a trader’s operating capital. A trader that seeks to invest in binary options trading with a small $100 account may not be able to spend $1000 on signal subscriptions costs alone. On the contrary, opting for a free signals package for a $100,000 account is too risky, as free signals may not be able to provide a verified or reliable service. Therefore, the cost of trading is an important factor while choosing a signals package.
- Trading Performance: Do not focus on a service provider that claims to have the highest payouts or the one that claims the highest ROI. You should concentrate on the win-rate, the losing streaks, the winning streaks, and the percentage of in-the-money (ITM) trades when compared to the out-of-the-money (OTM) trades over a longer duration. Signals can often have extended positive and negative streaks, but money management plays a pivotal role in weathering out the increased drawdowns.
- Demo Trading: Verify the performance of a signals package by using it extensively on a demo trading account. If you are satisfied with the performance, move into a real account with a smaller trading capital and try to replicate the trading performance under live market conditions. You should only increase your investments after thoroughly evaluating all the pros and cons of the signals service.
Should You Use Binary Options Signals For Your Account – A Conclusion
Using a binary options signals service is dependent on a trader’s requirements. Novice traders stand to benefit the most from these trading signals, as they provide an opportunity for traders to make positive gains without losing their entire investments through an inexperienced approach. Even professional traders can improve their trading results and their account’s ROI bottom line by making use of a trading signal service. However, traders may be apprehensive about the long-term implications of a signals package, and the actual performance with respect to the investment amount. Binary options traders who are serious about their investment should certainly consider the option of signing up for a binary options signals package, although they shouldn’t consider signals to be the ultimate ways to achieving maximum gains. Trading signals do have their own disadvantages, and a trader can only find success in binary options trading by using a combination of all the tools available at his/her disposal.