How do binary signals work?

how do binary signals workBinary signals can be your autopilot to trading success. Still, many traders wonder how a system works that can make you rich with minimal effort of your own. In this beginners guide How do binary signals work?, we explain this mystery. In detail, we will answer these questions:

  • How do binary signals work?
  • How do I setup a binary options signal account?
  • What is the proper strategy when using signals?

With the answers to these questions, you will immediately understand how binary signals work, and you will be able to start using binary signals to make money yourself.

How do binary signals work?

Binary signals are based on a simple premise: finding profitable trading opportunities is difficult. Especially newcomers would have to invest years and suffer through many lost trades and rookie mistakes before they would be able to analyze the market well enough to turn a profit. Consequently, they and really all traders would profit from a service that helps them find profitable trading opportunities.

Binary signals are this service. Providers of binary signals analyze the market for you, and when they find a great trading opportunity, they alert you to it. All you have to do is follow their instructions, and you can invest based on professional market analysis, even if you know nothing about the market.

This is the basic system of all signal providers, but there are three different ways in which signal providers go about this system. Each way has its own strengths and weaknesses, and each way is perfect for a certain type of trader. Let’s take a look at each type of signal provider individually and identify the traders that should use this type of service.

Binary signals type 1: signals via email and text message

Signals via email and text message are by far the most common type of binary signals. The biggest advantages of this system are its simplicity and mobility. You simply enter your email and/or your phone number with your signal provider, and they will send you their signals directly to your phone and/or email account. You can also specify in which way you would prefer to receive your signals – you can select text message, email, or both.

With this system, you can get your signals wherever you are. Whether you are at work or out in the wild, as long as you can access your email account or have your phone with you, you can trade from wherever you are.

Combine this system with a broker that offers a trading app for your mobile device, and you can seamlessly integrate your trading into your daily routine. Whenever your signal provider sends you a signal, simply take out your phone, open your trading app, and execute it. The entire process takes less than a minute; it is as easy as possible, and you can do it whether you are at work, at dinner, or anywhere else.

There are two types of email and text-message signals: simple signals and complex signals.

  • Simple signals tell you what to invest in. A simple signal could look something like this: S&P 500, HIGH, 1 HOUR. With this signal, your provider tells you to invest in a high option for the S&P 500 with an expiry of one hour.
  • Complex signals tell you where an asset will trade at a specific time. A complex signal could look something like this: S&P 500, 2,250, 5 PM GMT. With this signal, your provider predicts that the S&P 500 will trade at 2,250 points at 5 PM GMT today.

Both types of signals look similar but are actually very different.

  • Simple signals tell you exactly what to do. This is easy, and even complete newcomers can trade this signals. On the downside, simple signals force you to trade their predictions with high/low options, which might be too much of a limitation for experienced traders who want to use advanced binary options types to increase their profits.
  • Complex signals allow you to choose how you want to trade them. You can decide for yourself whether you want to invest in their predictions with high/low options or a more complex binary options type. This way of trading can increase your profits but also requires you to perform at least some technical analysis, which is more time consuming and means that you need to learn the necessary skills first.

Because of these differences, simple signals are ideal for newcomers and traders who want to keep their trading as simple as possible. Complex signals are ideal for traders who are willing to invest more time and who know enough about technical analysis to pick the right binary options type for the signal.

At least 90 percent of all signal providers offer signals via SMS and email, and most of them use simple signals. You can get simple signals for a price from $97 to $99. Complex signals are sometimes a little more expensive, which is fine because they allow you to use more profitable binary options types that can make up for the added costs.

To find the best providers of signals via email and text message, take a look at our top list. We have tested all relevant services and listed the best of them in one convenient place, making it easy for you to find a great signal provider at a glance.

Signals type 2: Video signals

Video signals follow a fundamentally different approach as signals via email and text message. With video signals, your provider offers a video stream with which you can watch professional traders analyze the market for you and come up with profitable trading signals.

This system requires you to invest a lot more time than simple signals. Most providers of video signals stream their sessions for two hours on every weekday, which requires a 10-hour investment every week – considerably more than signals via email and text message, which you can trade for almost no time investment.

On the other hand, video signals are so much more than just signals. While watching professional traders analyze the market, you can learn new tricks and strategies, and you can become a successful trader yourself. You get one of the best lessons possible in addition to your signals, and since you can also trade your signals, you learn and make money – a great combination.

Because of this unique characteristic, video signals are ideal for traders who want to master technical analysis quickly and under professional guidance, but also want to make some money while they learn. For newcomers, there is no other way of learning to trade without making losses.

In this sense, video signals are a niche product, but a very important one. Most traders just want to make some money or reduce their time investment. These traders will be perfectly fine with signals via email and text message. Those traders who want to become great for themselves, could not get a better start than with video signals. When you learn technical analysis on your own, you will make a lot of rookie mistakes and lose at least some money. With video signals, you can avoid most negative aspects of this process.

Video signals are more expensive than signals that you get via email or text message. Since video signals require much more equipment for recording and streaming the videos, this makes only sense. Price usually start at around $200 a month but can easily reach $500 or $600. If you use video signals as a way to learn trading while avoiding initial losses, this money probably is a smart investment since it means that you can earn money from the start.

In conclusion, video signals are for beginners who want to get serious. For them, the added cost of video signals is easily worth it since it saves them from losing significantly more money on rookie mistakes.

How do I setup a binary options signal account?

Setting up a binary options signal account is easy if you know what you have to do. Simply follow these three steps, and you will be fine:

  1. Find the right signal provider. The first step to setting up your binary options signal account is finding the right signal provider. In our top list, we have listed the best signal provider in the market. Check our top list, and pick the provider that you like best.
  2. Register an account with the provider of your choice. Once you have found the right signal provider, follow our link to their sign up form. Fill out the form, click send, and you have an account.
  3. Specify how you want to receive your signals. If you choose signals via email and text message (odds are you did), specify in which way you want to receive your signals and which email address and/or phone number your provider should send its signals to. If you choose a provider that uses video signals, note the times when they stream their sessions.

That’s it. With this simple three-step process, you can setup your signal account. Once you have completed this process, you will receive signals as email and/or text message, or you will be able to access your provider’s video stream.

What is the proper strategy when using signals?

Once you have setup your account, you can start trading. At this point, it is important for you to understand that signals are only one part of your trading strategy, and without the second part, they are useless.

A proper strategy for signals also includes a money management strategy. With this strategy, you define how much money you invest in a single trade. There are three things you have to avoid with your money management strategies:

  1. Investing random amounts based on your whims. With this strategy, you will sooner or later invest too much money in losing trades, digging yourself a whole it will be impossible to climb out of.
  2. Investing always the same amount. With this strategy, you will never become rich. As your account balance grows, you will still make the same profit as in the beginning. Sooner or later, you will realize the problem and try to counter it by increasing your investment based on how you feel, leading to the type of investing of which we warned you in point one.
  3. Increasing your investment after a losing trade. Some strategies recommend that you should double your investment after you lose a trade to gain back the money you lost. Sooner or later, you will so many trades in a row that this strategy will ruin you.

The ideal money management strategy to avoid all three of these mistakes is a strategy that invests a fixed percentage of your overall account balance in every trade, ideally somewhere between 2 and 5 percent.

With this type of strategy, you increase your investment when things are going right for you and you decrease your investment during a losing streak, saving you from bankruptcy.

Conclusion

Binary signals are a great way for traders to outsource their technical analysis. This way, even complete newcomers can make money, and even traders with very limited time can fit their trading into their schedule.

Signals via email and text message are simple and consume little time; video signals are a great way for newcomers to learn technical analysis without losing money by making rookie mistakes.

To make signals work for you, you need a good signal provider and a good money management. You can find the best signal providers in our top list, and you can manage your money well by always investing a fixed small percentage of your overall account balance, ideally somewhere between 2 and 5 percent.

Follow these simple tips, and you will get a successful start to your binary options trading career with signals.

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