Signals for binary options are a great tool to make money – but they also have some disadvantages. We explain the pros and cons of signals. Understanding whether signals are right for you is key in creating the right type of trading strategy for you. In detail, the article will answer these questions:
With the answers to these questions, you will be able to decide for yourself whether you want to use binary options for your trading, and you will understand how you can start your journey to binary options success.
There are plenty of pros and cons of signals. Let’s work through in alternating order, always grouping a pro and a con that directly influence each other. Try to understand that there is no such thing as a perfect solution, and that, just like with people, every strength also can be a weakness in a different light. It is important that you pick the strengths that you like best and that you learn to live with the weaknesses without expecting a perfect solution.
With that being said, let’s get started.
When you first start to learn technical analysis, you have a long way ahead of you. Mastering all the details to a point where you regularly can make a profit will take you at least a year, even if you are very talented. For less talented traders, the way might be significantly longer.
With signals, you can take a shortcut. You can simply import the knowledge of professional traders and focus only on managing your money and making the investment itself, which is much easier and much quicker to learn. This way, you can take years of the normal learning process, which is a great help for traders who need money now and nor in ten years.
If you are impatient or simply see no reason to wait years for what you can have now, signals are the tool for you.
The advantage of signals is also a disadvantage. Since signals allow you to trade without having to learn technical analysis, there is no motivation for you ever to learn technical analysis, which is why you are highly likely never to try to learn it or make a half-hearted attempt and fail.
As a signal user, you will always remain dependent on signals. That is not necessarily a bad thing, since you can easily create a money-making system with signals, but if you want to learn how to trade for yourself, you should stay away from signals and go through the learning process. It might be a long, hard road, but if it were easy, everyone would do it.
Decide for yourself whether learning technical analysis is so important to you that you want to stay away from signals. As long as you only want to earn some money, you can ignore this point. Signals are the perfect tool to help even complete newcomers to make money.
For binary options traders, market analysis takes up 99 percent of the time. To analyze the market well, this is a point that cannot be cut short, and trying to perform market analysis on the quick and easy is one of the main reasons why traders lose money.
To know what is going on in the market, you have to understand what the entire market is doing, what the asset you are looking at is doing on the longest time scale, and then work your way down through each shorter time scale. This process takes at least half an hour preparation before you start to trade and a few minutes for each new asset.
With signals, you can let someone else put in the time for you. You get the signal; you invest – the entire process takes less than a minute per trade, and it can be fit into your daily schedule, regardless of what you do.
If you have better things to do with your time than stare at a computer screen, signals can be a great tool for you.
Of course, signals are unable to automate all of your trading. Once you get a signal, you still have to invest some time to log in to your account and execute the trade. This process is quick and easy, but it still takes time.
For busy traders that have a lot of work to do or want to spend time with their loved ones, signals are a step in the right direction, but they might not be a step far enough. Still, while the idea of fully automating your trading sounds appealing, please consider our next point before you make a decision on whether this con of signals is important to you.
There are some ways to automate all of your binary options trading, and we will take a closer look at them later in this article. For now, though, please consider the implications of turning your trading over to a machine.
When you completely automate your trading, a machine will make every single decision of your trading process. It will decide when to invest, how much money to invest, and how often to invest. Wrong choices on these decisions can quickly ruin you. You might go to bed in the evening with a nice amount of money in your account, and when you wake up in the morning, you are broke.
Signals allow you to avoid this nightmare scenario by keeping you involved in the process. You decide how much to invest and whether to make an investment at all. If you should lose money with a system, you will notice it right away, and you will be able to react appropriately before the system ruins you.
You get this possibly-lifesaving control for the price of investing a few seconds on every single trade. Decide for yourself whether this price is worth it, but many traders decided that this is an advantage is priceless.
While signals for binary options allow you to stay in full control of your trading process, you surrender control of your signal creation process. This means, while you will always be able to pull the plug if you should start losing money with your current signals, you will be unable to avoid these initial few losses.
There is no way for you to recognize worsening signals before they lose you some trades. The strategy of a signal is just as secret as the Coca-Cola recipe because if everybody knew it, they could copy it easily and there would be no need to pay for it. Therefore, you are unable to evaluate the strategy behind your signals; you can only evaluate its results, which is one step later.
Of course, if you analyze the market for yourself, you are in a similar situation. It usually takes some losses to realize mistakes, and if you are getting sloppy in one are, it will probably cost you some money, too, before you can fix the problem. It takes a highly professional trader to realize mistakes before they influence his profits.
Consequently, this point is something you should know, but not necessarily a con. Keep a close watch on your returns and make sure that you realize problems early. This way, you will be able to avoid this con altogether. With signals, as with any trading style, complacency can become a problem. Avoid it, and you will be fine.
Many traders who want to make money with binary options hope that signals can be their way to guaranteed profit. Unfortunately, things are a not that easy.
As we already pointed out, you are unable to evaluate the strategy a signal provider uses. Consequently, you could sign up with a provider that uses an ineffective strategy that is unable to make you money. If that were the case, there would be no way for you to get the money back that you lost with your trades.
There is no guarantee that you will get rich with binary signals. But we can give you the next best thing: a guarantee that you will not lose money. You make money, or you can quit without losing anything. That is not quite a guarantee that you will get rich, but it is almost the same thing.
So here’s what you have to do.
The key instrument in our plan is the demo account by IQ Option. IQ Option is one of the best brokers that you can get, and they offer some of the highest payouts you can get on high/low options, which is ideal for traders who want to execute signals.
With their demo, IQ Option allows you to use a fully functioning account with play money. You get all the functions and can trade just like you would in real trading, but you can do so without having to fear any losses. This is the ideal environment to test your binary options signals before you trade them with real money.
The IQ Option demo also has another advantage. You can get if as easy as a game on your mobile phone, simply by signing in with your Facebook account, your Google account, or your email address. Other demos are more difficult to get, requiring you to deposit at least $250 and to get a regular trading account before you can access the demo. The IQ Option demo is easily accessible for everyone and provides the best trading environment for high/low options – the ideal combination to test your signals.
To test your signals risk-free, your system would look like this:
With this system, you can test whether signals work for you. If they do, you have found your way to get rich. If they do not, you can exit the entire system right there, richer for the experience. Either way, you win.
Additionally, almost all signal providers offer a 60-day money back guarantee. This guarantee puts you in the perfect position to test signals completely risk-free for two months. If you do not like the service, you can quit without having paid a single Cent. This is the ideal setup for anyone looking to make some money by trading the financial markets.
We already mentioned that there also is a way to automate all of your trading. This way is using a binary robot. Robots do the exact same thing as signals – they find trading opportunities. But, while signals alert you to these opportunities and leave their execution up to you, robots also execute the signals on their own. They connect to your broker and make a trade in your name.
This system is completely automatic. There is nothing you have to do. You can simply set up your robot and let it trade for you while you go about your day.
For this system to work, you define a fixed investment amount that your robot uses on every trade. If you choose an investment amount of $10, for example, your robot will invest $10 in every signal its strategy creates.
At first, the difference between robots and signals might seem minor, but this difference has some significant implications. Let’s look at them individually:
These are the main differences between robots and signals. Other than that, both types of service are similar. They cost the same monthly fee (around $97 to $99), use similar methods to generate signals, and provide money back guarantees.
Signals for binary options can help you to make money with binary options without having to learn technical analysis. They are safe, simple to use, and can reduce the time you have to invest into your trading significantly.
The downsides of signals are that you still have to execute every trade yourself and that you will never become a pro at technical analysis if you let someone else do your technical analysis for you. For most traders, the added safety compared to a completely automated system and the saved time compared to completely trading for yourself more than make up for these small disadvantages, making binary options signals the ideal way for newcomers to start their trading careers.
To find the best signal provider for you, take a look at our list of the best signal providers available.