Binary signals are the cornerstones that all binary robots depend on. They are quite simply indications that point in the direction of a successful trade.
Binary signals are generated by extremely sophisticated software that analyses market movements. When the software indicates that a good trading opportunity is available, a binary signal is created.
A binary robot will respond automatically to such a signal, and complete the indicated trade on behalf of the client. However, some companies, called binary signal providers, will send signals via email or SMS to subscribers. The subscriber will then have to log into his or her brokerage account to complete the recommended trade manually.
What are binary signals?
A binary signal is a recommended trade. It has been identified by software that analyses the markets specifically on the lookout for binary trading opportunities. A signal contains all the information required to take advantage of the opportunity. It is basically an expert piece of advice. The best professional traders in the business use this sort of software to help guide their decision-making.
Binary traders who are not yet at a professional, expert level can also take advantage of signals. There are two ways of doing this.
- Use a binary robot. A binary robot will execute a trade automatically, on your behalf, when a signal appears.
- Subscribe to a signal provider. A signal provider will send you a signal via email and SMS when it appears. This gives you the chance to act on the signal if you like.
Binary signals will in most cases have an accuracy of around 70 %, or more (up to 91 %!). However, you should be aware that not all signal providers (or binary robots) deliver all that they promise.
There is a fierce competition in this market sector, and some companies have been known to promise a little bit more than they can deliver in their marketing. If you see a provider or a robot that guarantees you a winning frequency of much more than 80 %, or promises you to make millions quickly, you should be skeptical.
Binary signals v. Binary robots
Obviously, using a binary robot offers a number of important benefits compared to subscribing to a signal provider. Some of the most important include:
- Timing – in any type of trading timing is very important. This is also very true for binary trading. By using a robot your trade will be completed immediately with no delay. The same is not true for a signal that is generated, then sent to you so you can log into your broker to complete the recommended trade after reading the email or SMS that contained the signal.
- Effort – the robot takes all the hard work out of trading. No need to log into your account to manually to trades anymore.
- Consistency – no company can claim a success rate of more than about 80 % for their signals. This means that in order to gain maximum benefit, you need to trade on all signals. If you only trade on a few, you might end up with the 20 % of losing trades, without getting the 80 % of winning trades. Using a robot negates this issue – it will trade with perfect consistency.
- Number of trades – your signal provider will send you a signal when the software indicates that a good trading opportunity is imminent. This can happen when you’re in a meeting, at the gym, shopping, asleep and so on and so on. You will not be able to always act on signals. Obviously, a robot will be.
Having said that, there are also some benefits to using a signal provider instead of a robot. They include:
- Calling the shots – some traders might feel uncomfortable about leaving all the decision-making to an automated system. Will the robot operate with too great risk? Will it take chances you wouldn’t have? Not being in control can unnerve some traders.
- Cost – unsurprisingly, robots are generally considerably more expensive than signal providers. This should come as no surprise, seeing as they offer a far more complete service. The cost of binary robots can be prohibitive – especially for newer traders.
Fortunately, there is one robot that solves both these issues and renders them irrelevant. That is BinaryOptionRobot. BinaryOptionRobot offers special features that allow you to control what level of risk you would like the robot to trade with on your behalf. And it does not charge its users anything at all. Instead, your broker will cover the cost of this robot. It really offers the best of both worlds.