By John Anthony
Binary option trading is already a widespread practice on the Internet. Certain countries have actually already legalized and officially regulated this form of online trading. The majority of binary options brokers that operate on the web are companies that are officially licensed in at least one country.
The newest trend in the binary trading business is signal trading. Signal trading is a method of automatically or in certain cases manually copy the actions performed by other traders. Below in this article we’ll reveal to you what signal trading is and how it works.
However, before we get there we’ve taken the liberty to give you an overview about binary options trading itself.
What are Binary Options?
Binary trading is a practice that allows people to bet on the future movement of various assets such as gold, silver, stocks, currency pairs and more. It’s basically a combination between investing and spread betting, as pointed out on www.optionsadvice.com.
In order to better understand this you should consider the example below:
• The exchange rate between USD and EUR is at 1.35 at this moment
• You predict that this will move up in about 2 days
Now, at a binary options broker you will have the possibility to accept a bet that will state that the USD/EUR exchange rate will indeed go up. The broker in question may offer you the following possibility:
• You can invest $100
• The broker offers a payout rate of 95%
In case your prediction will indeed come true, then you will receive a total of $195 from the broker. However, in case your prediction will not come true, then you will lose all the money you have invested. So, binary betting is actually quite risky.
Can you really win?
Yes, you can definitely win in binary options if you are experienced in the world of business and finance. If you are just an amateur, then for you binary options will not be more than just a glorified form of sports betting.
It’s not that you should not trade binary options at all in case you aren’t experienced in the world of finance and business; it’s just that you should be aware of the fact that if you aren’t skilled enough in certain areas of finance then essentially you won’t be investing in the traditional sense of the word but you would be merely betting, much like in sports.
What are Binary Options Signals?
Now that you know what binary options are (in case you didn’t knew it already), we’ll reveal you what signal trading is. Binary options signal trading is the act of following other people and coping the actions performed by them.
As explained above, under normal circumstances only experts are able to make accurate predictions in binary options. As such, amateurs will most of the time not be able to generate consistent profits. However, there is a solution to this.
Certain experts will permit normal people to watch their actions in real time and copy them. – At first sight this might seem counterintuitive. Why on Earth would experts show other people their actions as well as the trading strategies they have developed?
It’s actually really simple. It’s because of money. In signal trading when you copy an action performed by an expert and if that action leads to you making profits, then that expert will receive a certain small commission of your profits.
However, the expert that has provided you the “signal” to you will only make money on the successful trades you make. So, if the actions performed by an expert and copied by you will not lead to profits then the expert will not get any commission at all from you.
So, in other words, it’s a mutually beneficial partnership. You make money by following and copying the actions performed by experts while the expert will receive a certain percentage of the profits you make.
But how do I copy the actions of others?
This whole process will be taken care of by a signal-trading platform. Both you and the expert will have to sign up to such a platform. Once an expert has signed up, normal traders will have the possibility to follow him.
After this, the system will automatically send you notifications (signals) each time the expert you have followed has performed an action. And finally, you will have the possibility to either act on this signal and execute the same trade the followed expert has executed or ignore the signal and do nothing.
And this is how signal trading in binary options works. It’s actually really easy and as you can see it’s a process in which every party benefits. Signal providers (the experts) will not make any money at all if they provide bad signals; in fact they will be losing money themselves in such cases.
How much do signal software providers charge?
Perhaps the only downside regarding signal trading is the fact that most of the time it’s not the experts themselves that develop the signal trading platforms. It’s independent companies or standalone programmers that most commonly develop signal-trading platforms.
As such, these developers will require you to pay a certain fee to use their services. Most commonly, this fee is around $50-$100 per month. This might seem a lot, but if you manage to discover a really competent signal provider that will generate constant profits then this sum will actually turn out to be very small in comparison to the profits you will be making.
So, at the end of the day, binary trading is indeed only for experts or people who are confident in their skills regarding financial trading. However, this can be circumvented with the help of signal trading.
Binary options copy trading gives ordinary people the possibility to copy the actions performed by experts and as such make money without having to actually do any kind of market research of technical analysis. However, people are advised to seek out only reputable and trusted providers of such services