Binary Options & Trading Robots: A Perfect Match?

Also known as auto trading or algo trading, robots can be used to place trades for you automatically based on instructions that you have given it. If specific market conditions are met, the robot will put in the designated trades automatically.

Many times, after you have developed a trading system, you are supposed to follow it religiously. If the indicators lined up, you need to make the trade whether you like it or not as you are supposed to believe that in the long run, it will pan out well. Doesn't matter what your gut feeling is telling you, you are supposed to trade without emotions.

Guess what, a binary options trading robot is perfect for the job!

Unlike humans, robots have no emotion and do not need to rest, so they can make a lot more trades than humanly possible, in a highly consistent manner. A robot will not suddenly decide to make a trade simply because it feels like it. As the saying goes, never send a human to do a machine's job.

Why Robots are Perfect for Binary Options Trading

Unlike other types of trading such as stocks or futures, binary options brokers do not charge any commission for placing trades. This means that placing a thousand $1 trades costs the same as a single $1000 trade. If you were to use a robot to trade stocks, the commissions payable to the broker for a 1000 trades will be a thousand times more.

Also, binary option brokers let you trade in amounts as low as $1. This greatly reduces the need to maintain a large account to ride out the bad trading days.

And because binary option brokers don't let you trade on margin, there is also no risk of a sudden market move that bust your stop losses and wipe out your account, as in the case of those highly leveraged forex trading.

Do remember that while well-designed robots can help you make money automatically, on the flip side, badly design robots can also help you lose money equally fast.

If both strategy and execution are good, then the overall result will most likely be a success.

However, perfect execution of a flawed strategy will only bring about greater failure. So, if you are thinking that it will be easy, think again. You the human will still need to spend time researching and evaluating the best strategies to employ.

The good news is that these days, with modern technologies, you can always test your trading robots against historical data rather quickly and easily. While past performance also does not 100% guarantee future performance, it is still a pretty reliable indicator.

Time to Retire? Not So Fast!

Having robots to trade on your behalf doesn't mean you can now chill in the carribbean with a pina colada. It simply means that instead of trading, you will now take on the new job of managing and fine-tuning your robots.

Even the best trading systems will not give you very high win rates. As the payout for binary options is usually only 70 to 80%, your trading system needs to generate a win rate in excess of 60% in order to be profitable in the long run.

Still, the robot is not going to replace the human when it comes to designing a winning trading strategy. Artificial intelligence could but they are too expensive for ordinary folks like us. Only the big Wall Street firms can afford these high tech multi-million dollar trading machines.

So for now, if you are someone who can come up with a good strategy but unable to execute them properly, you will not achieve the desired result unless you can find someone to execute your strategy well. If that's the case, a robot will come in handy.

Also, when it comes to using robots, always try to use the law of large numbers to one's advantage.

So instead of using 1 robot to make $10 trades, I would rather use 10 robots making $1 per trade. This ensures that if one robot's strategy is starting to fail, it will not cause you to lose all your money and you will have ample time to replace this non-performing robot with another more effective one.

Continue Reading...

What are the Main Types of Binary Options?

Learn how the One-Touch, No-Touch and Range/Boundary binary options differ from the common high-low viety and how to trade them...[Read on...]

What Assets can be Traded using Binary Options?

Many of the most popular financial instruments such as currency pairs, equities and commodities are available to trade using binary options. ...[Read on...]

Binary Options: Trading or Gambling?

Is binary option a legitimate financial instrument or just another form of gambling....[Read on...]

Binary Options & Trading Robots: A Perfect Match?

Unlike humans, robots have no emotion and do not need to rest, so they can make a lot more trades than humanly possible, combined with perfect consistency....[Read on...]

Is Binary Options Trading a Scam?

Learn how you can get scammed when trading binary options if you are not careful... [Read on...]

How to Select a Binary Options Broker?

With so many scam brokers out there, before you learn how to trade, one must know how to separate the wheat from the chaff and find a trustworthy binary options brokerage....[Read on...]

Binary Options: Calculating Breakeven Win-Rate for a Given Payout

How often does my trades need to be successful in order to be consistently profitable in the long run when trading binary options?....[Read on...]

From Around The Web

Follow Us on Facebook to Get Daily Strategies & Tips!

Binary Options Basics

Main Types of Binary Options

Binary Option FAQ