What are binary options signals?
The idea behind signals is that less experienced traders, instead of trading by themselves and learning the hard way, can follow more experienced traders and copy their trades. Many experienced traders offer these services, usually for a fee as a way to earn extra money. Some software developers like Binary Today have even gone as far as to create automatic algorithms that send automatic signals to traders when they recognize a trend.
Could I use Forex signals to trade binaries?
The short answer to this is, NO. Forex signals are good for Forex trading. There are a number of reasons for this. For starters, Forex trades essentially don’t have a time limit, so you can exit the trades at your discretion. Binaries have fixed expiry times which are set in stone. Each time-frame would require a completely different strategy. Obviously, a 5 minute binary options signal would not work for an EOD (end of day) binary option. It is that very reason which makes Forex signals essentially irrelevant for binary option trading unless you can adapt it to a certain time-frame. Forex trades also require the asset to move a certain amount in order for it to be profitable. Binaries don’t need large movement, even 0.1% would be enough to get the full payout.
When there are options ranked and rated by sites like Binary Today, I see no reason why anyone would need to use Forex signals.
So, again, if you want to trade binary options, use binary options signals, not Forex.
Should I Use Signals Provided By My Broker?
Definitely not. A binary options broker giving you signals is a very severe conflict of interests. Almost all binary options brokers make money when the trader loses. Therefore, it would not make sense for them to help you make money by giving you good signals, simply because that would cause them to lose money. If you still want to do this, think long and hard and do a lot of research on the broker, especially if you can find any unbiased information on their signals system.
Also, if a trader is good enough, he won’t have to work for a broker. I borrowed this line from John Kane at Binary Today. He always says that.
For this very reason, also be very wary when your broker account manager offers you trading advice. There is absolutely no reason for them to give you good trading advice or signals. If you use their signals or advice and manage to be profitable, I guarantee you that it was pure chance.
How do I know if a signal provider is good?
Like all things in the world, all good things come at a price. So, if someone is offering you free signals, think long and hard as to what their ulterior motive for doing this is. They are definitely getting their money from somewhere, and if not from you, from where? If they’re getting paid by your broker and you’ve read the rest of this article, then I take it you already know what I’m going to say. No broker will pay a signals provider to send traders that will make the broker lose money.
So, I hope I’ve managed to clarify some things about signals providers. If anyone has any comments or questions, feel free to ask them in the comment boxes below.