One of the most commonly asked questions in relation to binary options trading is, how effective are signals? Signals are trade indicators that are offered from a signal provider (almost always for a cost). Signal are widely advertised within the industry and are used by many traders. There is no denying that signals can be tempting, especially if you are not achieving the success rate that you’d like. Even so, there is much to consider prior to using them.
The first consideration should be just how effective binary options signals actually are. Most providers claim to develop signals by using a combination of high-tech market analysis software and expert human opinion. While this may be true, there really isn’t a way to know for certain on your end whether or not the signals being provided are highly accurate until you use them. Even when free trial and demo account are used, it can take some time to develop a clear picture of overall accuracy.
The next consideration is cost. Let’s assume that you’ve found a signal provider that you like and are ready to use the signals within your binary options platform. Now, if the signals cost $100 per month (a figure which is quite in line with their average price) then you will need to make that amount of money in order to cover the cost of your signals. If all goes well, you’re able to accomplish this. If not, you’ve had some or all of your profits drained, or even worse, have to pay this cost out of your pocket.
Some signal providers advertise that their signals are accurate as much as 70% of the time. Some claim a success percentage that is even higher than this. In order to verify these claims, you’d need to use 100% of the signals that are provided to you each month. Otherwise, the claim is nothing more than a claim. Is this something that you are prepared to do? Or something that you can afford to do? Those questions can be answered by you and you alone.
The fact of the matter is that signals can sometimes lead you to profitable trades. However, they should never serve as a replacement for a real strategy. There is no replacement for genuine analysis and you must consider that the market moves so quickly that circumstances can change between the time you receive the signal and the time the trade is executed. There are plenty of hazards and pitfalls to contend with when using signals, so proceed with extreme caution.