Binary options robots, or “bots”, have become increasingly popular. Auto trading software has attracted many traders new to binaries. They are inherently risky however, and binary trading should be fully understood before any robot service is considered. Here we explain how a trading robot works, review the top services, and illustrate what you need to know and be aware of when comparing binary trading robots.
We will detail how and where to get demo accounts and also explain why risk increases hugely when using automated trading.
We recommend learning binary trading completely before even contemplating robot services. Despite being sold as such, they are not a good choice for beginners.
A robot is a piece of software designed to identify and analyse market signals, pinpoint suitable trades and execute orders automatically without human interference.
Whether or not a trade is placed is all dependent upon whether the market conditions meet the rules and parameters defined by the trader. A trading bot isn’t ‘intelligent’; it’s merely executing orders defined in advance by its creator.
These Automated Trading Systems (ATS) have been making headlines for some time. Volatile price movements are often blamed on trading bots. From Wall Street to London this form of trading is dominating markets.
Robot software and auto trading algorithms combine a signal service with automated trading. So the software will attempt to identify profitable trades, and will then place the trades automatically. This automated element takes signal services a step forward, and actually place the trades as well – rather than leaving that to the trader.
The MetaTrader (mt4 or mt5) platform is especially effective at enabling you to receive signals through its ‘Expert Advisor’ facility. Here, you can go so far as creating your own alerts system by setting the parameters to be followed by your very own Expert Advisor – or you can download a program from elsewhere and put it to work, simply by dragging and dropping it into the interface.
These systems will have differing levels of risk management – from stop losses, to daily fixed spend limits. The automated element however, does increase the financial risk for traders overall. The feedback and comments we receive generally focus on whether risks were hidden from traders before they opened an account. Make the financial risk is fully understood.
There is also a growing trend for brokers to provide their traders with the ability to configure their own ‘bots’ or automated trading systems. These tend to simplify the the process, letting traders “drag and drop” technical indicators into their system. The best bespoke robot features also allow traders to run their robot in a demo account, in order to trial it risk free.
Brokers are keen to promote robots, because they create higher trade volume, and therefore reduce risk for the broker. They can be a great tool for traders too – but as ever in binary options – any promises of profits are an immediate ‘red flag’. Robots, like binaries themselves, need to be fully understood before use, and they are not a route to guaranteed profits.
Auto trading, or trading via robots, has a number of benefits:
Equally, there are some disadvantages to auto trading:
The automated nature of this style of trading is fraught with danger. If ever a trader hands control of their trading over to someone else, the level of risk grows hugely. Our scams page details some of the red flags to look for (including a list of scam services), but robots and auto trading in particular attracts a lot of scam operations.
Here are a few reasons why:
Warning signs of a scam will include a lack of transparency (win rate results that are not verifiable), forcing users to use a particular broker, and the most obvious – the promises of guaranteed or very high profits. If it was easy, everyone would be doing it. Tread very carefully if proceeding with auto traders. The risk of scams is considerable. Here is a checklist of warning signs:
Some blacklisted services that pretend to provide signals and automatic trading are:
The Brit Method / Jason Taylor
These all promote binary options as an easy way to make money, and they should ALL be avoided.
The settings or indicators used within a robot are crucial. They will determine the success or otherwise, of the strategy. The number and flexibility of settings or parameters within a robot platform, are a useful comparison factor when judging different firms.
The best settings will depend on individual trading strategy – but the basic parameters should not be overlooked. Trade size and expiry time are two simple settings, but traders can forget to check if the size and time frame they want to use are available with the robot they are comparing.
Moving averages and volume are popular indicators, and almost any candlestick pattern can be set as a signal. The self build bot at Binary.com offers the most flexibility of settings. Some of the poorer services do not provide any. Some programs offer money management settings too. Martingale is best avoided, especially for novices.
The better firms will offer a free demo or virtual account to trial the service. This allows traders to amend settings, and find a money management plan, that works for them. The best demo accounts will be open ended, and even topped up if the balance runs out.
Some demos may require a software download, but the majority will not. Login details will transfer to the real money account when and if they are upgraded. Many providers offer mobile apps, and again, most will be compatible on android, iOS (iPad and iPhone) and Windows.
Binary.com also deliver the ability to design and create an auto trading bot. Binary.com are licensed in the UK and Malta, but based in Malaysia and popular in the region, particularly Indonesia and Singapore.
Often referred to as the broker for advanced traders, Binary.com now provide a series of ‘advanced platforms’ – including the ‘Binary bot’ platform which provides the ‘tool set’ for users to create their own algorithm of auto-trade software.
So the platform enables self build auto trading tools, but – as is often the case with this brand, they again provide for the more advanced client. The tools and settings available, offer greater depth than at rival broker. This enables users to target more complex strategies. In turn, this can led to more accurate and specific trading.
Binary Bot fits in with the rest of the Binary.com look and feel. Some of the distracting elements of other platforms has been removed, and replaced with more depth and features – typical of the brand. Read more about the trading platform in the Binary.com review.