Are you ready to invest in binary options?
Considering a binary signals service to enhance your results?
If you are unsure about the efficacy of binary signals, read this review and learn the pros and cons of using this tool during your online trading sessions.
Understanding binary options signals
To discover whether binary options signals are useful or harmful to your trading success, it is worth understanding where signals emerged from.
This information is important for you because it will help you differentiate between a scam and a reliable tool with which to improve your predictions. You need to knowledge to avoid being fooled into buying an inaccurate product, which will cost you twice:
- the price of the signals software you’ll purchase
- the loss that an inefficient binary signals service will generate
Financial signals have their roots in futures trading. Future contracts developed as a result of manufacturers needing to protect themselves from heavy losses. Unable to predict the price of the commodity they were producing or crop they were cultivating, farmers and producers needed a mechanism that would free them from excessive risk. Thus the contracts were created.
Hedgers, and mostly speculators, turned this raw-material protection tool it into an investment opportunity where the contract, and not the commodity, traded hands. The subsequent need to accurately predict expiry prices on these speculative contracts lead to the development of financial signals.
Automated trading systems
One major problem with the efficiency of binary options signals software is that futures contracts do not function at all like binary options:
- a. These derivatives have longer, fixed expiries
- b. Unlike binary options, they are tradable
Thus, the signals developed for future contracts aim at predicting the best time at which to buy or sell a futures contract, while assuming that it can be traded at any time. This assumption is a big part of the equations used to create financial signals.
This important fact has enabled the creation of automated trading systems which are used in a very large portion of all stock purchases made in Wall Street and many other major stock markets. According to some estimates, more than half of the operations realized in the stock market today are originated by software.
Meanwhile, binary options trading does not involve actual trading. Additionaly, most of the time the entire investment begins and ends within minutes. Can signals function under these circumstances?
Binary options live signals
Online digital options are very short term financial derivatives. Once an option is purchased, it cannot effectively be traded. Although some binary brokers allow you to “sell” the option before expiration, this is mostly to either guarantee a level of profit or avoid further loss. It is not a trade but rather an early liquidation of your position.
This is why a binary options signals scam is claimed by many in the business. There are four reasons that raise serious doubts as to the effectivness of binary options signals:
- Binary options are a highly speculative derivative
- They have very short term expirations
- They are not a contract or asset which can be traded
- The odds are stacked against the buyer
What does all this mean? The bottom line is that the ingredients that form binary trading will not function properly with equations that use financial data. We explain why.
Binary options signals software
The main feature of binary options signals software is to use different sets of real time data to forecast a probable outcome. What the software does is to try and predict the price level, or the trend of an asset, up until the expiry time.
By using the information financial markets offer, binary signals software are supposed to give you a better chance of choosing profitable results. Why does this fail to occur in most instances?
These signals software does not calculate the probability of success based on odds, but rather on market data. In other words, it is using financial information from the markets to try and create a prognosis.
Yet, the way binary trading is structured, that will rarely work. The better trading strategy for financial instruments such as binary options is probability axioms. These formulas calculate the probability of the very next result, using a previous set of events.
It resembles the calculations used in chance games. Here, a randomized device (the finite binary outcome of a trade in digital options) should be used to set a “signal” off. This signal registers the the amount of money to be invested, the optimal time at which to invest, and most importantly, when to exit the trading platform within the profit curve.
Such probability formulas are much more adaptable to the type of information available during live trades.
Binary options signals Summary
- Binary option signals are the consequence of the evolution of financial trading signals
- Such signals began to be used to help in the speculative use of futures trading
- Nowadays, automated trading systems, which buy and sell stocks automatically based on current data, are extremely popular
- Nonetheless, the use of signals in Forex, and then in binary options trading, whould avoid using the same mathematical structure
- As a result, binary options signals can rarely help consistently, and in some cases, are probably a scam
- A more adequate binary options strategy is the use of probability rules
- Learning such axioms can seriously leverage your ability to profit from this financial derivative