Binary options robots are software that generate and trade signals on a binary options platform on behalf of the trader, with as little manual input as possible. This means that binary options robots are not always programmed to perform all functions that range from trade analysis, signal generation and trade execution. There are some binary options robots that leave final execution of the trade to the trader.
A distinction must be made between binary options robots and binary options signals. Most binary options signals services use robots to get their signals, but ultimately sell these signals to clients. These signals have to be dispatched using emails or SMS. For binary options robots which generate signals and leave the execution to the trader, the signals strictly show up as pop-ups on the trade platforms and all that needs to be done is for the trader to manually click a trade execution button.
Binary Options Robots: How Did They Come About?
Manual trading is hard work. The CEO of a popular UK-based proprietary trading firm had in a session discussion, indicated that it took a minimum of 18 months to train a greenhorn with no previous experience in the markets to become a professional trader. Not many people have 18 months on their hands to devote to learning how to trade on a full-time basis. Even after undergoing trading, it still takes a lot of professional mentorship and psychological training to be able to handle the pressure of trading the market daily.
Where there is a need, a solution has to be found to satisfy the need. With such great need for some form of assisted trading to help out the thousands of prospective traders stuck in this predicament, it was just natural that the market for binary options robots would develop. The advent of binary options robots simply mimicked that of the expert advisors in the forex market.
Types of Binary Options Robots
Functionally speaking, there are two types of binary options robots.
- Fully automated binary options robots perform everything from analysis to signal generation and trade execution. There is no form of manual input from the trader. It is a bit like a “set and forget” system. The advantage is that the trader can pay attention to other things such as working a day job while the robot does the trading. The disadvantage is that a bad robot can wreak havoc on a trader’s account as the trader is just about helpless to do anything about it.
- Semi-automated binary options robots perform trade analysis and signal generation, but leave the final part of the equation to the trader to handle (trade execution). The advantage is that the trader still has control over the account, so is able to put a lid on any losses being sustained as a result of faulty trade signals. The obvious disadvantage is that the semi-automated binary options robots still require manual input and therefore the trader will still have to devote time and effort that could have been used for other things to utilize the software.
Advantages of Binary Options Robots
There are several advantages to the use of binary options robots. Some of these are as follows:
- Binary options robots provide a low hanging fruit for those who want to profit from the binary options market but do not have the time to acquire the knowledge needed to execute trades profitably.
- Websites like Quora are filled with people asking if they can combine binary options trading with their day jobs. This is not surprising, as most people do not want to sacrifice the security of a weekly or monthly pay check for the uncertainties of trading. Such fears are not unfounded; it takes a long time to master how to profit from the market. But with a binary options robot doing the trading, the user can focus on the day job and allow the robot focus on the market.
Disadvantages of Binary Options Robots
Many traders, especially those with some level of experience, do not usually like to have total control of their accounts taken off their hands. After all, the trader is the one who has to work to get money to trade, not the robot. A bad robot will place trades anyhow and a run of bad results can decimate a trader’s account without the trader being able to do anything about it.
Latest Trends in Binary Options Robot Design and Function
As we head into the last years of the 2010s decade, traders in binary options are looking to get more out of their binary options robot software. Many traders in the binary options market are also traders in the other traditional markets. They are therefore looking for better integration between trading platforms on all sides of the divide.
One method of binary options robot development that is trending now is the construction of bridge software. The bridge software link a forex platform (complete with interactive charts) to a binary options platform. The robot is constructed using the programming language of the platform, generates its signals from the platform, and uses a “bridge” to transmit these signals to the binary options platform for execution.
Some companies are also developing a system whereby manual generation of signals by experts in a back end software is performed, and as the expected trade is performed by the backend trade team, the same signals are automatically transmitted to the front end of the software on the trader’s platform.
There is a binary options company which has also developed the first downloadable binary options platform. This is a departure from the web-based designs we have been used to over the years. This is going to change the way binary options robots are developed in future, as it will now be possible for traders to work with developers to design their own robots that will be plugged in within the desktop versions of the binary options platforms, much like what we have with the MT4, JForex and TradeStation platforms in the forex market.
It promises to be an exciting time as developers unveil their new ideas for binary options robots as we head into the next decade.