Introduction to Trading Signals


Trading signals are alerts either generated by experienced analysts or advanced software that tell a trader when to enter a given market and when to exit. In Forex trading they tend to be a lot more complicated due to the added complexity of having your winnings connected to the magnitude of the price action, rather than just the direction as in the case of binary options. Trading signals for binary options traders are still in their infancy but they are rapidly gaining ground and the relative simplicity of binary trading makes it a little easier, on the surface at least, to generate winning signals. This, however, also means that there are a great deal of inexperienced traders out there who fancy themselves as market wizards and if they don’t really know what they are doing they can lead you astray.

A binary trading signal will typically inform you what asset to trade on, for instance EUR/USD, or Gold, it will tell you when to get in (also known as the target price because in binary options the price you get in at and the price you want your trade to either expire above (call) or below (put) are the same), and what time to set the expiry of that position for. Many trading signal providers will also provide a detailed rundown of their previous signals and how they performed, so you can see for yourself the accuracy of the provider. You should be suspicious of trading signal websites that claim to have an unrealistic success rate. Remember, nobody gets it right 100% of the time, or even 90% for that matter, if they did then they probably wouldn’t be selling trading signals now would they? That’s not to say that you can’t get an advantage by subscribing to a trading signal service.

We would advise you not to bother with software generated signals; they rarely give a statistically significant advantage whereas signals generated by educated analysts employing a blend of both technical and fundamental analysis strategies can be quite profitable. Especially due to the relative simplicity of binary trading, systems come and go but for a while at least they do work. We’ve seen brokers maintain up to a 95% success rate for a short time at least before something changes in the sentiment governing that certain market and the system stops working. Traders often talk about being in tune with a market, It sounds airy-fairy but you’d be surprised how many experts sign off on a signal by using their gut feeling after all the lengthy analysis has been conducted. We’d advise you to browse forums and comment forms for real customer experiences whenever signing up with a trading signal provider. If they offer free trials, go in for them immediately, you don’t have to even use your own capital to test them, make a trial run on your demo account with the signal, or if your brokerage doesn’t provide you with one (they should) just test the signal out by monitoring the asset in question for the duration of the trade. Two successes out of three should be the bare minimum to convince you that you are dealing with signals that confer a statistically significant advantage to your trading sessions.