Free Binary Options Signals – Are They Really Free?
There is a saying that if something good is for free it can’t be that good. There is some truth to this and I think that most people will agree with that statement. There are countless of examples that could be presented here to support this case.
Today, in the age of aggressive technological progress we are often bombarded by a multitude of products and services for free. However, as we all know, these so called freebies always have a catch.
If you’re a Google user or Facebook user you know that the catch of their free platform is your identity and dependency on it. The more you use it the more you are dependent on it, and that’s exactly what these corporations want and they are built with your help as you use them. This whole point is to illustrate that free offers, even when the seem completely free, they’re not really free.
Let’s now focus our attention to binary options signals which are supposedly offered to users for free. There are three major promotional tools that push the offer of free signals online:
- Free automated signals offered for users via a trading robot
- Free signals when users join a specific binary broker
- Free signals by self-proclaimed ‘trading gurus’
- Trading indicators with free signals
In many cases all three promotional setups and methods ultimately lead to the same purpose, to get the users to sign up to a specific broker. Binary brokers spend a lot of money on various promotional tools to get as many people trading on their platform as possible. Running this blog we also get offers from many binary options brokers who want a platform to advertise their service.
Free signals offered for users if they subscribe to a trading robot
There are many binary options trading robots available online. They are often being marketed as free signals. Most of the binary options robots are free to sign up, however as trading requires to deposit money with a binary broker, many free trading robots force users to sign up to a specific broker. Sometimes the user is offered a few brokers to choose from within their trading robot system.
One of the reasons the trading robot signals are offered for free is because with each new user sign up the trading robot owners will be paid commission from each user and also a percentage from his/her additional deposits. Most brokers pay about $200-400 per each new qualified user (a client that deposits money), so 50 new users per month will make 10.000-20,000.
Letting a robot trade your account using fully automated signals can be extremely risky, especially when you consider that winning is not really in the best interest of neither the trading robot company nor the broker they are affiliated with. The main aim of both is to construct a system that has people pour into it as much money as possible.
The truth is that even when a robot company tries to build a winning automated system for binary options it won’t be able to due to the random nature of the markets. To build an automated system that would trade 24/5 with consistent 75% winning rate is simply impossible.
One of the most widely advertised binary robots online is the Option Robot, here is a screenshot of their home page so that you can recognize it when you see it online.
This company has functioned not too long ago under a completely different name. They got a bad reputation so they changed the name and the website but still offer similar service. This is one to watch out for, if you don’t want to lose any money.
This service gives users free signals but they are traded automatically by a robot (set of trading indicators – see below) attached to your trading account. It’s a very risky set up where your money is basically controlled by a set of algorithms and although they have built their software so that users can make certain decisions on how the robots should trade, it is still largely dependent on fully automated trading.
Personally I think many people heard of high-frequency trading by robots and AI that is used in Forex on daily basis and they assume this is very similar. However, this type of automated binary options signalling service has nothing to do with high-frequency trading capabilities. They use very expensive and complex AI systems and computers directly connected to the markets, this is not the case with binary option robots.
Free signals when users join a specific binary broker
Many brokers have realized the potential of acquiring new clients by offering them a binary options signal service. Usually they guarantee a certain percentage of wins. It used to be that these signals were issued by the actual brokers themselves, but now the signal services offered by brokers are provided by a third party company or professional freelance traders.
This makes the system a little bit more neutral because there seems to be no conflict of interest. Remember that when you trade binary options you essentially trade against your broker and other traders. For this reason some brokers have recently closed free signals offers in exchange for other incentives.
If you find a broker that still offers a free signals service remember that just as we mentioned in the beginning of this article, nothing is free. The idea is that when you sign up to a signal service with a particular broker you will trade on the signals. The more you trade the more money the broker is able to make. It’s that simple. Although the binary options signals might achieve a certain rate, reaching that level in a live environment is seldom possible due to server delays, late entries, or other aspects.
Free signals by self-proclaimed ‘trading gurus’
There are also many traders who offer free binary options trading signals to their subscribers. The reason they are free is the same as in the previous example. The subscription emails include offers to various brokers or one specific broker the ‘trading guru’ is affiliated with and gets a commission from them for each new sign up.
Alternatively there might be a different catch such as premium signalling service for which you need to pay a monthly subscription fee. So the free signals will be quite poor but the premium, subscription based signals will be much more accurate.
The free binary option signals offered by a ‘trading guru’ usually also include guidance, trading advice, as well as other information. Subscribing to this type of service is actually least invasive of all three. Usually it only involves giving out your name and email, as oppose to your mailing address and credit card.
Although this type of service might actually work well and be very informative, many of the ‘trading gurus’ take the easiest way out and send signals that are actually fully automated. They usually use custom indicators (see below) to construct a free binary options signalling service. One of the most widely advertised free signals are John Anthony’s which supposedly are completely free. But let’s have a look at the most recent 18 trades based on those signals.
As you can see in the above screenshot out of 18 trades the signals were correct only 9 times, that’s 50% success rate. With this type of winning rate you would lose most of your money. To understand the advantage that is necessary to win at binary options please read our post on whether it’s possible to make money in binary options.
So despite the fact that John Anthony’s signals are completely free, what use are they if you lose money on them? The only way to use such signals is for reference only, they are not to be traded on. An experienced trader who receives such a signal should take a very good look at the charts and decide, using his or her market and analytical knowledge to confirm each signal. Unfortunately if you at this level of trading you don’t need to use a signalling service. You can create your own signals.
Binary option indicators with free signals
Another way to obtain free signals is via a trading indicator for MT4/MT5 or other trading software. Indicators are simply trading algorithms that are programmed for a specific trading platform such as Metatrader. These platforms are free of charge and can be downloaded online and installed on your computer and used completely free of charge.
By default they come with the most common indicators, such as Moving Average , Commodity Channel Index, Volumes, etc. but there are thousands of custom indicators that are designed to do a lot more than the available indicators.
Custom indicators are usually built with a few indicators and their main use is to find trading opportunities and produce alerts. These trading signals can be visible on the chart, issue a pop up alert, or even send an email or text message to your phone alerting you of a trading opportunity.
There are many free custom indicators but there are also many paid ones also that often include support and whose coding is usually written to a much higher standard.
Remember, stay safe and test all signals on a demo account first!Published in Education