As more traders start trading contracts with Binary Options, there is an increase in using binary options trading robots. It is a fast and efficient way to increase the chances of succeeding when trading Binary options and allows traders to be competitive in binary options.
Binary trading robots are available in most countries that legalise binary options. They are also free to download and use and are offered by many binary options trading brokers.
What is a binary options trading robot?
It is a software developed with advanced algorithms that scan for trading signals and executes binary trading. They are available on Binary trading platforms and offer competitive trading opportunities for traders.
Traders can also build a trading robot with the trading strategy they prefer to use when trading. The trading robot opens positions, trades with the trading strategy set and uses signals to make trading decisions.
How does the automated binary options trading robot work?
The automated trading robot uses an algorithm to scan the market for profitable trading signals for the trading asset. Unlike manual trading which a trader has to use multiple trading indicators and perform analysis before trading, automated trading only requires the trader to deposit funds and start trading.
The trader can initiate the robot to start trading it uses the signals it gets from the market to make trading decisions. Trading brokers offer trading robots inbuilt into the trading platform.
Other trading brokers have systems allowing traders to build their trading robots according to their trading strategies. Traders specify the entry and exit strategies and can also program the trading robot to use the risk management trading strategy.
The traders can also specify the type of trading indicators the trading robot can use. Although the trading robot has these advanced trading features, it does not guarantee 100% success rates. It is because it does not make decisions like a human being.
It can use some trading signals that mislead it and make wrong trading moves. The automated trading robot can get tested on the binary options simulator. It allows the trader to adjust trading strategies according to the market movement before applying them to the live trading account.
What are the advantages of using an automated binary options trading robot?
1. It is free from the emotional influence
Automated binary trading robots are not affected by emotions as manual trading would. Trader might base their trades on previous successes or failures to recover losses by overtrading. Automated trading robots only follow the orders made by the trader.
The trading robot can only trade according to what it is programmed to do. It eliminates making emotional mistakes with trading binary options.
2. It is fast
Since it uses algorithms, the trading robot is faster in conducting analysis. Manual trading requires the trader to study the underlying market, spend hours on fundamental analysis and find the accurate trading tools to employ when trading.
The automated trading robot uses advanced algorithms to scan the market and look for trading signals it can use. It follows the specific underlying market the trader is trading with binary options for any market news and announcements that could influence the price action.
3. It helps to diversify the trading portfolio
Trading robots can trade different accounts and apply trading strategies at a time. It means that traders can trade several financial markets at a time using binary options. It is a merit to the trader as they can spread the risk with different assets and reduce losses from only one.
It also offers a chance to hedge against a losing asset during trading. It reduces the risk of one market, especially if the market is volatile.
4. Backtesting capabilities
It means that the trader can backtest the robot using historical data to see its performance in that market. It allows traders to know how the computer will react in a similar trading environment. Traders can check if it can execute market orders as it is programmed.
It allows the trader to change any settings according to its performance and test the efficiency of the trading robot. The trader can change the trading strategy after using backtesting capabilities.
5. It is an option for traders unable to dedicate many hours to trading
Traders that have no time to monitor the market and do technical analysis can use automated trading. They only need to choose a trading robot and ensure it works according to their specifications. The trading robot can then execute its trades as they continue with its work.
They have to monitor after some time how the trading robot is performing. It eliminates wasting time looking at the screen and makes work easy for most traders.
Disadvantages of automated trading options
1. They are susceptible to failure
Although they use sophisticated software, they can fail to perform according to the trader’s specifications. The traders should not expect that the trading strategies applied would offer 100% returns which is not the case.
Many trading platforms promise their software is 100% effective and guarantees results. It lures traders to invest in platforms hoping to make profits within a short time. When these traders invest, they realize the binary broker is not genuine and lose investments.
Even though trading is sophisticated, regulation in various countries lacks, creating an environment for scam brokers to thrive. Traders should check the license of a binary options broker before registering a trading account.
Trading binary options with automated systems allow traders to stay competitive in the industry. Although using automated systems offers an efficient way of trading, it also has its setbacks, and traders should not rely on it for results.
It is also imperative that traders analyze the underlying market even if they use automated systems to trade. They should also learn to trade manually before employing trading robots to understand how to trade binary options.
Which markets can I trade using an automated trading robot with binary options?
Automated trading robots can trade any underlying markets accepted in the trader’s country with binary options.
Does automated trading guarantee 100% success rates when trading?
No trading system or strategy can offer 100% profits, every trader would be scrambling for it. Robotic trading systems offer efficiency but can get modified to increase the chances of making more profits than losses.