It is a natural tendency for human nature to be attempting to make money by taking advantage of the experience and expertise of someone else. This is why many binary options traders, especially those who are new to online trading altogether, choose not to learn to read charts and monitor the markets, but instead to pay a binary options signals provider in order to send them trade signals, which they hope that if they implement will lead them to big returns. However, none should rush to give out their money just like that, without careful thought and without taking into account several warning signs that might act as useful deterrents thus averting a trader from trusting a signals provider that shouldn’t be trusted, not with his subscription money and neither with risking their capital by following signals that are not trustworthy.
Absence of a Free Trial
The first sign that should make one suspicious is the absence of a free trial being offered by a binary options signals provider. If a provider does not have a free trial period available for you to put what they are offering to the test and be able to judge for yourself based on a real sample, then this might mean that they have something to hide, or that they do not have confidence in the accuracy of their signals and would not risk you receiving them for free for a while, but would rather grab your money quickly and run.
Relying on bots and robots
Be very careful and skeptical of automated programs, such as bots, robots or EAs and keep in mind that they trade signals provided by such methods are completely automated and thus lack any sort of discretion. Perhaps the fact that the emotional factor is eliminated from the trading decision through this process can be seen as positive, however the down side is that bots are pre-programmed using back tested data. Don’t be fooled by the claims of signal providers that their bots can actually adapt and adjust to the changing market conditions, because in reality this is rarely the case. Of course this is not to argue that all bots are useless because it is true that such programs do generate roughly 25% of the trades done at the NYSE. However these bots are much different than those being marketed to you, because they are of much superior quality, cost much more and have a lot of monitoring and support behind them by skillful programmers.
Not all Signals can turn to trades
Bear in mind that the total number of signals sent out by the signals provider every day does not equate to the number of trades you will end up placing, because in actual fact a lot of signals end up not being tradable for a variety of reasons. One of the reasons is that signals might come with conditions attached which if the market does not meet will render the signal useful since the trade will not be possible. So, do not be carried away by the plethora of signals sent out, but try to discern how many will turn out to be actual trade signals.
Can you really trust the statistics?
Most providers will quote impressive statistics to try to lure customers. A common claim is a figure more than 85% being shown as the winning trades. But do you really know what this figure represents? Over which time frame has it been achieved? Is it since they started the signal service, or a daily record? Or worse still, is it based on optimised historical data? Don’t take the statistics at face value and ask the provider to prove their claim also requesting any other clarification you deem necessary. If your questions are not answered promptly and clearly then it is perhaps best to avoid the specific signals providers.
Lack of Long and Credible Track Record
The best binary options signals providers to trust are those who have been around for a long time and have simultaneously proven their skill by beating the markets consistently over the time they have been around. However, not surprisingly, such providers are very hard to find because most of them have simply not been around long enough to have to show a long, proven and credible, successful track record. Therefore, because a history of success is important in trading, don’t be carried away by successful trades of a few months, because these may well be a result of randomness instead of true worth and skill.
It shouldn’t be them deciding, but you!
Often signal providers do not just tell you what to trade but how much you to trade each time as well. This is highly problematic and such services should be avoided because the provider doesn’t know how much capital you have, or what your risk tolerance is. Since it is your money on the line controlling the risk you take should be down to you and not the signal provider. Besides providers make money by sending out signals but risk no capital if they sent out 10 unsuccessful signals in a row, you on the other hand will stand to make substantial loses if this happens and still have to pay for those signals you received…doesn’t sound like such a fair deal after all….!
Delivering clearly communicated signals in a timely manner should be a characteristic of all good binary options signal providers. This means that each subscriber should be able to receive the signal, be able to read it and understand it, and then have enough time to place the trade. The problem is that you will not know if this will happen before signing up and this is why it would be useful to have a free trial period to check all this out.
To Sum Up
Since signal providers will come and go perhaps the most wise move you need to do as a trader is not to invest in a signal service, but instead invest in yourself, in terms of the time and effort that is needed to train yourself how trading works and how to place trades effectively. In the long term being able to rely solely on yourself will pay off and will rid you from the trouble of relying on anyone else, such as a signals provider or from the worry that you will be scammed. If however, you insist on subscribing to a binary options signals service then verify all their claims and ask all your questions so that everything is clear and makes sense, having in mind that if a signals provider is truly reliable and reputable then they will be open about their service and will have no inhibition in answering any of your questions.
George Milios is the founder of onlineforextrading.net, the binary options and forex news portal which is dedicated to providing you with all the information you need to successfully trade.