Why You Shouldn’t Trust Most Binary Options Signals Providers
Looking to make quick cash capitalising on someone else’s expertise? Instead of learning how to read binary options charts, you may have considered paying a binary options signals provider to send you trade signals in the hopes of achieving big returns. Before you fork over your cash though there are a few things you should know. The following warning signs indicate that maybe you shouldn’t trust this binary options signal provider, either through giving them money or putting your capital at risk utilising their signals.
If a signal provider doesn’t offer a free trial, be skeptical. You need to be able to see if this signal provider is right for you, and without a trial you can’t (unless you pay). If a signal provider is really providing great signals they should know that people will stick with them after the free trial. No free trial shows they may have something to hide and are just trading to grab as many people’s money as quickly as possible.
Bots or Robots
If there is talk of bots, robots or EAs, tread carefully. These are automated programs, and therefore lack any sort of discretion when it comes to the trades signals they provide. This can be a good thing, since it takes the emotion out of trading, but unfortunately most bots are created using back tested data and then optimised on that data. Marketed results are usually not based on a long-history of live trading. While the marketer may promise that these bots adapt to all market conditions, this is generally not the case.
There are some good bots out there. Roughly 25% of the trades done the NYSE are “program” trades. Some of the firms using these technologies reap millions. But don’t confuse these with the robots being marketed to you. The black boxes on “Wall Street” trading desks are monitored by computer programmers making millions of dollars a year who constantly monitor performance and make adjustments when needed. The robot you buy is more likely to have very little support behind it.
Lots of Signals, But No Trades
Signal providers may advertise that they send out 3, 8, 15, 30, etcetera trades a day, but not all of these will end up being tradable. Often there are conditions attached to a trade signal, and if the market doesn’t meet those conditions then there is no trade. Try to find out how many actual trade signals are generated each day, and not just how many signals are set out.
You can use statistics to make anything sound good because most people assume they know what the statistic represents. For instance: “90% winning trades!” Is that since they started the signal service? Was that today? Or was that statistic based on optimised historical data? Don’t assume you know what a statistic means until you actually see some proof. If something is ambiguous, ask for clarification. If you can’t get a straight answer, then avoid those binary options signals providers.
Lack Credibility and History
Related to the statistics point above, there are very few signal providers who have a long track record to success. Binary options have been around for several years, yet most signal providers haven’t; there have always been signal providers… just not many that are still around from several years ago. In trading a history of success is important. Several months of good results (or bad results) in trading can still be attributed to randomness and not skill (or lack of skill in the case of bad results). Therefore, look for binary options signals providers that have been around the longest and have displayed skill by beating the markets consistently over the time they have been around.
They Don’t Know How Much You Can Risk
Be wary of signal providers that tell you how much you trade. For example some may tell you to trade 1 unit or 5 units on a given trade. If you typically risk $10 per trade, that would be 1 unit, and 5 units would be $50. Since a signal provider doesn’t know how much capital you have, or what your risk tolerance is, telling you how much to risk shows they don’t know much about risk management and they likely shouldn’t be providing advice to other traders. You should control how much you risk, it is your money.
Good binary options signal providers needs to be able to get clearly communicated signals to you in a timely fashion. You must receive the signal, be able to read it and understand it, and then have enough time to place the trade. If signals don’t come through in a timely or well communicated fashion, avoid those binary options signals providers. This is why it is nice to have the free trial period to check all this out.
It Isn’t You!
Finally, you can’t trust most binary options signals providers because it isn’t you. As a trader you should treat trading like a business…your business. Many signal providers are simply making money off providing signals, and not actually trading; a string of losing trades doesn’t really anything to them (except for maybe some angry emails), but it matters a lot to you since you lose the capital….and still have to pay for signals!
Signal providers come and go. Invest in yourself and teach yourself to trade, then you won’t ever be reliant on someone else to provide you with trades.
Learning to trade for yourself is always the best option. While it takes time, over the long-run you won’t need to worry about finding another signal provider or being scammed. Approach binary options signals providers with healthy skepticism. Don’t be afraid to probe, ask questions and verify statistics. Reputable signal providers will be open, knowing they provide a good service. If your questions aren’t answered in a satisfactory fashion, move on.