As a binary options trader, you generally have two choices of deciding when to enter a trade. Given that the concept of binary options is both simple and accessible to all, this decision generally comes down to a straightforward higher-or-lower purchase. How this decision comes about will depend on the method of analysis or strategy employed in order to generate the signal which indicates that a high probability trade may be imminent. Predicting the future movement of price, however, is neither a precise science nor a straightforward gamble and many strategies which pinpoint entry signals take time both to design and to screen the markets for opportunities. The two further options available to binary options traders are to design their own market screening strategy, or use signals generated by a binary options signals service.
What is a binary options signals service?
Binary options signals services instantly alert a trader to new trading opportunities based on a mechanical strategy or the trades of an expert options trader. These types of services usually charge a subscription fee and the strategy or method of analysing the market may never be known. Nevertheless, for those who want to be able to trade binary options without manually searching for trades, the use of a signals service may provide a profitable way to trade binary options without needing to look for the trades. Signals services generally work with an alert being generated, either automatically or manually by the signal provider, and sent to subscribers of the signals. Traders will then follow the entry instruction and expiry time for purchasing the options and await the next alert.
Problems with using a binary options signals service
The downside of using a binary options signals service is that they generally provide alerts which create ‘blind’ trading. This means that the trader will often have little knowledge of how or why the signal has been generated and simply risks capital on the basis of the past performance of the signal service. Whilst this may be fine for services which provide reliable and profitable signals, the problems may occur in finding a consistently profitable service. Another issue may be if the signals provider suddenly stops offering the service which would leave traders without the tools or knowledge of the strategy to continue following the system.
How a binary options signals service may be useful for new traders
Binary options signals services may be a great choice for new traders who want to get to grips with how to trade binary options before designing their own strategy but it is unlikely that they can be a long term solution. A more productive use of binary options signals may therefore be to use these alongside the development of a personal trading strategy. In designing this personal way of trading, and through generating individual trading signals, a binary options trader can become both self-sufficient and profitable in the longer term. This means that, not only will a binary options trader need to stop paying for the signals service, but will be able to continue trading in the long term, regardless of if the signals service continues.
The benefits of designing a personal trading strategy against using a third-party signals provider are obvious despite being a more time-consuming method of trading. The potential to be a profitable trader is both increased and far more sustainable when the rationale for trading is understood and executed based on knowledge of the trade. The simplicity of binary options, with no requirement for a stop-loss or take profit level, makes developing the trading strategy a straightforward decision on the entry signal and expiration time of the binary options trade.