Automated Binary Option Trading – The Rise of the Trading Robots

automated binary option tradingAutomated binary option trading is an extremely attractive proposition. Think about it: you sign up to a site, you download and install a software, you make a small (usually $250) deposit, and you flick a switch.

The auto trader gets going and it churns out unlimited profits for you day after day. If you are a reasonably intelligent adult though, you know that’s not how the world works. This is exactly the sort of pipe-dream that auto trading scammers are trying to sell you, and it’s obviously just that: a scam.

They need your $250 deposit, so they get a commission from the broker with which they work. The broker – who is usually also a crooked operator in such cases – is OK with the deal too: after all, he’ll get to gobble up your $250.

This sort of setup cannot work for a number of reasons. First of all, the technology to make something like that happen simply does not exist, and if it did exist, it would have to be destroyed or locked away forever as it would accomplish nothing less than to bring down the current world financial order. Think about it: if trading worked like that, no one would ever work. Everyone would just run free trading software on their laptops, in an “Idiocracy“-like dystopia, at least until the internet and the laptops themselves broke down, without maintenance and technology-replacement.

How does automated binary option trading work?

With the above in mind, it’s clear that 90% of the advertised auto-trading software solutions out there are scams. Fortunately, such scams are relatively easy to spot, especially if one has a decent head on his/her shoulders and a bit of experience in binary options. Scam auto-traders are only made available in limited numbers, to a chosen few, right? Wrong. All comers get scammed until someone takes action and reports these sites to the appropriate authorities.

Auto traders that are not scams

That said, auto-traders do in fact have their place in the world of binary option trading. Their capabilities are much more modest though than the above described scammers would have you believe. Auto traders are based on automated market analysis. This is the cause of their limitations. The analysis of the market fundamentals cannot be automated without some truly cutting-edge AI solutions, so the signal generating modules of auto traders are based exclusively on technical analysis elements. Most auto-traders use a combination of technical indicators which generate a trading signal, and then confirm and re-confirm it several times over, before they serve it up to the module which actually places the trades. This trading module features a number of filters, and traders can set various conditions under which the trades can be executed.

Every auto-trader needs a third module too, one that handles capital management. Through this module, traders can set an aggressive investment plan, which is based on the re-investment of their profits, they can opt for a martingale-like approach or they can be more conservative with their money.

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The bottom line about all this is though that sometimes – in spite of all the work put into them, and all the right settings being used – auto traders just do not work. Whenever there’s turbulence in the markets due to a fundamental factor (like the Non-Farm payrolls announcement), technical analysis falls by the side. The only reasonable way to deal with such high volatility is to simply turn the auto traders off for the duration of the shakeup. What this means is that traders need to keep an eye on their trading robots at all times. A good auto trader needs to support stop-losses too, in addition to its money-management module. Whenever the stop-loss is reached, the trading should be stopped, until further input from the trader.

There are robot-creation platforms out there which allow traders to create and set up their own auto-traders from scratch. Sharing is not only allowed on such platforms, it’s apparently mandatory, so anyone can just walk in, pick up the most successful auto trader created by someone else, and apply his/her own settings to it. Back-testing is available for these robots too and modular building can be done through special wizards. This is the future of automated binary option trading, and not the wild promises made by scammers.

The platforms where users can create trading robots actually rank these creations, based on profitability and popularity. What’s more, robot creators can pit their auto traders against one another in special trading tournaments, where rather substantial real-money prizes are awarded. Robot trading is indeed here to stay, but expecting it to be some sort of magic bullet to fabulous riches is the same as expecting to see Optimus Prime in an apron when hearing about a kitchen robot.

The bottom line

Keep your expectations on a realistic level auto trading-wise. If something sounds too good to be true, it is. Speak up against these scammers and support genuine auto -trading efforts.

Automated Binary Option Trading – The Rise of the Trading Robots
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