The binary options market has grown over the last few years to become one of the world’s largest online trading marketplaces. Prior to the early 2010s, there were only a couple dozen binary options brokers with very few tied to a regulated company.

However, over the last few years, several regulatory authorities including Cyprus Securities and Exchange Commission (CySEC), UK’s Financial Conduct Authority (FCA), and Financial Services Board (FSB) South Africa, among others, have embraced this new form of trading in the derivatives market, which has led to the increase in the number of binary options brokers. And while at first most were operating without any regulatory licenses, some binary options companies are now regulated by more than one body thereby giving them license to operate in multiple countries.

This has created a vibrant trading community in the binary options market opening the doors for traders from several parts of the world. The market has attracted different types of traders including those with experience in trading options, Forex, and stocks, as well as, novice traders who had no prior experience trading online.

However, for such inexperienced traders, they need not worry much because the binary options market has also attracted third party companies that provide auxiliary services including trading signals and robots that provide high win-rates. Some systems are developed in such a way that they can automatically send binary options signals to your smartphone or email thereby enabling you to trade even when you are away from your computer.

What exactly are binary options signals and how are they generated?

Binary options signals are simply trading tips, but with more details than just a trade recommendation to buy a stock. Binary options signals have a specific time frame within which a trader must execute, otherwise, after that time passes, they expire.

In addition, the signal also includes information about the asset to be traded, the period within which to remain long/short the position on the asset (this gives the trader an idea of what option type to apply the signal—some signals tell the traders the option type right away—e.g. 1 hour option, 30-minute option, or simply, long-term or short-term).

Most binary options signals claim to average a win-rate of 70% while a few, claim to have delivered win-rates of up to 85%. As a novice trader, it is important to be aware of a possible scam especially when you come across a provider whose average win-rates are too good to be true.

Also, it’s good to try to understand how the signals are generated. Some providers have this information on their websites. However, in general terms, binary options signals are generated using popular technical indicators that are readily available on several trading platforms, including the MT4, the cTrader, and Trading Station, among others.

The MACD, Relative Strength Index (RSI), the Parabolic SAR (PSAR), and Elliot Wave analysis, are some of the most commonly utilized trading indicators. Nonetheless, some binary options signals providers also employ customized algorithms to give their signals a little bit of an edge against rivals. These customized algorithms are also added to filter signals in such a way that they are sensitive to major market events that are likely to affect the quality of trading signals generated.

The system used to generate signals is tweaked to identify buy/sell signals based on several indicators as noted above. Some services utilize up to 8 indicators while others use three. There are also others that rely on a single indicator, but then the trader is made aware of this before signing up for the service.

So, do you need to be an expert to make money in binary options?

Now, based on current technological advances and the way it is revolutionizing trading, you do not really need to be an expert to make money in binary options. Signal services, trading robots, and social trading services that help traders to copy the trades of expert traders can help novice traders to make money in binary options.

However, there is a catch.

First, you must make sure that the service you choose is not a scam disguised to reap you off your hard-earned money, or even steal critical information from you. This is where the identification of a regulated company becomes important.

Second, the trading signal service provider would provide a high degree of reliability if they have proof of results. Some providers update this automatically on their platforms the moment a signal expires (the option type it was meant for expires). Others do the updates by uploading a screenshot at the end of the trading session, but some never provide this information.

Third, if possible, try out a free signal service before signing up for a premium package. This way, you’ve got nothing to lose.

Conclusion

In summary, the binary options market provides traders with short-term trading opportunities. It’s one of the most easily accessible markets in online trading due to the low deposit requirements, moderate trading conditions (e.g. no margin requirements), and a variety of trading assets (currencies, stocks, indices, and commodities, as well as, pairs).

In addition to this, traders now do not necessarily require trading experience to make money in the market because there are plenty of trading signal service providers, trading robots, as well as, social/copy trading services. But of course, always watch out for scam brokers and scam signal service providers before committing your finances.