A trading signal is a trade alert sent out by a signals provider to traders to make a prediction on a particular financial asset at a particular time or date and with a particular expiry time. The aim is to enable the subscriber to the signals service to perform trades without necessarily having the requisite knowledge of how to analyze and trade binary options.
Trading signals are therefore built to enable traders who are too busy and cannot trade on their own, or who are not very proficient in binary trading, to be able to trade the binary market for money.
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Binary options trading signals services made their advent in the market at the turn of the decade. This section of the market blossomed as traders began to seek ways of bypassing the rigorous process of learning to trade binaries. The first signals were sent out to traders using text messages and email messages. Since then, other forms of sending out trading tips and signals have evolved and are now replacing the traditional methods which were used several years ago. This has enabled traders to make better opportunity of these services.
How are Binary Options Signals Delivered?
The traditional method of sending out trading signals was via the use of text messaging and emails. While these methods worked very well in the forex market, they did not serve traders too well because of the peculiar nature of prediction options. One of the reasons for this was that binary options all come with expiry times. The extremely time-sensitive nature of binary trading meant that any trading tips that came in by email or by SMS had to be used within a certain period of time, after which they were effectively useless. It was not very easy to ensure prompt delivery of text messages carrying trading tips as network delays or even battery downtimes for phones could affect the receipt of these alerts. There was also the problem of trade alerts sent via email getting into the spam mail folders instead of the inboxes of clients, where they could get lost or be deleted entirely by the email server of the receiver.
These problems means that newer and more effective ways of delivering messages had to be devised. Thanks to the entry of the smartphones, a new way of alerting traders through push notifications came on board. With any smartphone today, the trader can receive a sound alert on the phone whenever an email or SMS carrying a trade alert comes in.
Furthermore, the trade signals services have also evolved new methods of ensuring that the signals they deliver actually get implemented on their clients’ accounts. Subscribers now have the option of signing up for services which automatically execute the trade setups received as alerts on their accounts. There are also software which can generate trade signals at the trader’s backend, and are delivered to subscribers through a special front-end webpage, enabling real-time access to trading tips and successful predictions.
Another way that the signals are delivered to subscribers is via the use of trading rooms. Some providers provide secure, password-protected access to a webpage where they can watch the signals provider generate the signals used to trade the market in real-time. This method has the advantage of allowing the user to ask questions and to learn from what is going on.
These new technologies have improved the efficiency of binary trading signals services.
Regulation of Binary Options Signals
Are signals services regulated? Presently, there is no regulatory framework for binary signals services, so the job of ensuring that there is protection for traders if anything goes wrong lies squarely on the shoulders of the traders themselves. What this means is that the trader has the sole responsibility of ensuring that there are no issues with the signals service signed up for, and that the best deal is obtained after paying the subscription fee.
Certain signals services come as a social trading package offered by brokers. In these instances, it is essential to make sure that the broker offering the service is regulated, as this will rub off on how the signals service is run.
Avoiding Binary Options Signals Scams
The signals industry has had its fair share of scams. Just as there are very genuine providers of signals services, there are also many such services which are complete scams. Some regulators in certain countries actually maintain a blacklist which features some of these companies. That is why the trader must do a lot of due diligence before signing up for such a service.
One way of avoiding a signals scam is to evaluate the performance of the service before you subscribe. This can be done by requesting a free trial period, or by paying a fraction of the subscription fee to try out the service for a few days. This way, you can quickly test to see if the service is actually worth paying for. Many brokers of binaries do not provide a demo account which can be used for such evaluations. The trader can sign up with a broker that offers a no deposit account. If the trader cannot access these, a small deposit can be made to a live account with deposit methods such as digital wallets. These deposit methods are fast and can allow for quick assessment of the service on a small-cap live account.
Another method you can use is to visit websites which provide objective and actual reviews of these services as told by those who have actually used a binary options signals service. This is an inexpensive and yet very effective method of investigating a signals service before you pay for it.
How Do Binary Options Signals Work?
Binary options signals should contain the following information:
- The financial asset to be traded.
- The type of binary option to be traded (e.g. CALL, PUT, TOUCH UP or TOUCH DOWN).
- The entry price for the trade.
- The expiry time to be used for the trade (e.g. 15 minutes, 45 minutes, 1 hour, etc).
- The cut-off time within which the signal must be implemented before it becomes invalid.
- Some providers will also add the date and time the signal was generated.
Advantages of Using Binary Options Signals
Using a binary options signals service has some advantages. Some of these advantages are as follows:
- A binary options signals service provides a solution to traders who are too busy to analyze the markets, cannot combine manual trading with their current jobs, or want to earn from the market with no prior trading knowledge or experience. It takes a great deal of time to learn and master binary options. If you have someone who can tell you what to trade and how to trade, then this is a good thing.
- Subscribing to a binary options signals trading room can greatly enhance your learning process, while at the same time providing you with trading tips that can enable you benefit from the market.
- Some providers pay an affiliate income to those who can refer their friends to pay for a signals service. So in addition to earning from trading tips sent out by others, you can make extra income referring others to the service.
Binary Options Signals Best Practices
Here are a few tips to enable you get the best of any binary options trading signals services that you use.
- Do not be in a hurry to pay for a signals service. Always investigate the service properly before you buy. We have already identified how to use online forums that contain unbiased reviews as a means of sourcing for the best fit out there.
- Never use the appearance of the websites to gauge how the signals services work. Never take the profit statements on face value.
- Before you sign up to use a binary options signal service, use a free trial to evaluate the service.
- You must re-evaluate your binary options signals service periodically. If the service starts to falter, do not be afraid to change your binary options signals provider. It is your money which is at stake.
Q: What are trading signals?
Answer: Trading signals are alerts sent out by a signal provider to traders. They can be in the form of an email or an SMS message. They contain important information for the trader to follow. Eg. What trade to place, when and how. High potential signals are those signals that have a good return rate eg. more wins that losses. Signals can be created by market analysts who sit and look for good market entry and exit points, or by robots like algorithms that automatically identify these opportunities. Bear in mind this is not automated trading, meaning you will still have to place the trades yourself.
Q: What kind of information will I receive in a signal?
Answer: You will receive the name of the asset, the time to open it and whether you should place a PUT or CALL option. With forex signals you will receive more information such as the take profit and stop loss levels to implement..
Q: Should I risk signing up to signals?
Answer: More and more brokers offer you free signals when you deposit with them. It’s important to find out the overall win rate of these signals, you can ask to see history or a track record. Otherwise there are paid services you can subscribe to in order to receive trading signals. Most of these providers will offer you a free trial or greatly reduced trial price. It’s well worth taking the opportunity to try out their signals for free.