Why (some) binary robots are a scam and why (few) others are OK
In this paper I will give you 10 tips to choose your binary robot
We will explain the reasons why most people lose money in trading,
why they would need artificial intelligence or algorithmic trading software or robots,
why some binary option robots are a real scam,
which robots to avoid and which robots are worth buying.
What is a binary option?
According to Wikipedia,
“binary option is a type of option in which the payoff can take only two possible outcomes, either some fixed monetary amount of some asset or nothing at all (in contrast to ordinary financial options that typically have a continuous spectrum of payoff).“
What it means is that if you buy a binary option and the trade is successful, you make between 70% and 85% of return, if the trade is not successful you lose all.
So for example if you invest $100 you end up with $170-185 if the trade is successful, but you end up with nothing if you lose the trade.
In the last years the binary option industry has grown a lot, and the binary trading have become quite popular due to the easy way of understanding (presumably) binary options and of handling the purchase orders.
The discussion around the real nature of the binary option, whether it is real investing or just gambling, is still open; this paper does not want to investigate this aspect.
We think that binary options can make you money, but they can also make you lose money, like forex, futures, stock or vanilla options.
Many people have lost money in binary options, and many are blaming the way binary options are structured, but we should remember also how many people lose money every day in forex, stocks, real estates, any other kind of business.
So let’s leave aside for one moment this dispute and let’s move on.
Why do people fail in making money trading?
The main reason why people fail to make money by trading in the financial markets is not due to lack of knowledge or tools,
but most of the times is lack of discipline.
Until they make money everything is ok and the discipline is not an issue.
As they lose the first trades, they get eager to recover the losses.
Quite often this “urgency” creates an undisciplined way of trading, like anticipating the entry point, making operations even if the trading signal is not there, increasing the value of the trade against money management principles.
What do people need to make money?
A good way of overcoming the problem of staying disciplined is to have a software that generates trading signals.
The software does not need to be necessarily 100% automated in processing even the actual trades.
Having a trading software or robot that will guide you in avoiding the main mistakes you will (probably) not anticipate the entry point,
you will (probably) not enter into a trade if there are not the trading conditions,
you will (probably) stick to sane money management rules.
Why using automated or semiautomated trading software?
More trading signals and more trades
Being a software, it will spot more trading signals than you watching the screen.
If the software is fully automated, it will make more trades than you manually processing the trades.
If you follow the software 100% you will be not emotionally vulnerable.
If the robot is a 100% hands-off software, it will trade for you anytime you want
No learning curve
You will not learn how to trade, and you will rely only on the software to receive trading signals.
In case the software executes actual trades, it could also demotivate you in not being an active part of the game.
You can’t modify the robot
If the market conditions change, the Robot may not be as profitable as before, and you do not have the competence or anyway the insights as to change the parameters.
It could be that you have to find the best settings, even though usually the vendors restrict as much as possible the different options and inform the client of the best settings.
10 Tips to understand which binary robots might be a “scam” and which ones are “honest” binary trading software or robots
Tip 1: avoid binary robots without a “REAL” trial period
A REAL trial period is when you do not have to open a binary account in order to use the robot.
Because the vendor will receive a CPA from the broker in exchange of any new account opened and funded.
And guess what?
If the robot does not work, even if you end up not losing much money, you spend nothing for the robot but the vendor of the robot still receives the CPA and that’s enough for him.
This could be a genuine and honest thing to do by the vendor if he openly declares the CPA issue.
There is nothing wrong in doing this if the robot is a valuable tool.
It might happen that the robot does not work for that specific week but still remains a good product.
But here the real doubt that I have is whether the intent of the vendor is to ONLY get the cpa!
Like in this binary option site, at some point the offer introduces also the free version of the robot through opening and funding a new brokerage account.
We could even understand if the vendor of the robot wants to make some money with CPAs, but that must be additional, and the robot must work regardless of any new account opening.
Tip 2: the website of the vendor must be at least 1 year old
Typically, the vendors of the robots which are intended only the get the CPA have new websites, and actually the vendors open on purpose new sites to promote a “CPA-producing” robot and then leave the site to quietly die.
To check the age simply go to http://www.whois.net/ and put the url of the site; under the “creation date” line you will see how old the website is.
Tip 3: you should see real statements showing real trades
Do not trust blindly “photoshop” pictures (as I call them) published in the vendor website before you have made a thourough investigation.
Real statements are like this, where you see at least the full session and not just a few trades of a session, as it might be that some trades were good and some were bad, and the whole session was negative.
Example of a real binary session statement
Tip 4: Beware of the vendors who invite you to buy the robot after the trial period “using the money made by trading with the robot during the same trial period” and using a binary account that you will open from the robot software.
Also in this case, the risk of having a robot software just aiming at getting CPAs is even higher.
Tip 5: read the reviews of the robot
It seems trivial to say, but it is always a good idea to read reviews.
Even though some could be “guided”, the higher the number of the votes the more reliable the reviews are.
Tip 6: check if the vendor offers a money-back guarantee
Many vendors, expecially those selling through affiliate networks, do offer a 60-days money back guarantee.
This means that you can get back the money if you are not satisfied within a relatively long period, usually 30 or 60 days and with the “no questions asked” formula.
This is the purchase page of Auto Binary Signals, which leads you to the Clickbank checkout page.
Here you can see the Clickbank return policy link.
Following this link you can reach the text of the return policy.
Having the confirmation of the money back guarantee from Clickbank is even more important as Clickbank is one of the leading company in handling online payments and with the highest standards and the best practice in the industry.
Tip 7: send an email to the vendor customer support and check the responsiveness of the vendor in answering to your email
One check that we make regularly is to send an email to the contact page email and see how long it will take to get an answer.
Usually, the scam robot vendor do not even bother to answer and only try to build contact lists to send marketing emails.
Tip 8: do prefer vendors with phone numbers published in the Contact page
Also this is a sign of seriousness and professionality.
Scam binary robot vendors usually do not publish phone numbers, they usually do not have an office and they usually open website to only sell CPA-generating robots and close after the bulk of the money is made.
Tip 9: beware of incredibly high returns
Some vendors publish the results like this but I would say “sorry, if you don’t show me the trading sessions I don’t believe that!”
Tip 10: read carefully the information given by the vendor
The majority of the vendors declare everything, but you have to be careful in reading it all.
Look for example at this case: the vendor of the robot says that your trades are insured up to $500,000.
That’s true, but there is a “but”: if you carefully read the bottom of the broker’s statement you notice that this insurance is given:
- only to the extent of your deposit, and
- only for the first 7 days
So you have the insured trades only for 7 days (and probably the 7 days start immediately after the deposit, and not even from the first day of actual trading) and yes, you will get losses refunds of $500,000 but only if you deposit $500,000!
This promo (reimbursing the first trades in case of loss) is given by many brokers, in other words it is not an unusual promo.
Our preferred binary option robots
Having said all the above tips, the next question is: which are the robots that you prefer?
Read the next post and find it out.
- What is a binary option?
- Why using automated or semiautomated trading software?
- 10 Tips to understand which binary robots might be a “scam” and which ones are “honest” binary trading software or robots
- Tip 1: avoid binary robots without a “REAL” trial period
- Tip 2: the website of the vendor must be at least 1 year old
- Tip 3: you should see real statements showing real trades
- Tip 4: Beware of the vendors who invite you to buy the robot after the trial period “using the money made by trading with the robot during the same trial period” and using a binary account that you will open from the robot software.
- Tip 5: read the reviews of the robot
- Tip 6: check if the vendor offers a money-back guarantee
- Tip 7: send an email to the vendor customer support and check the responsiveness of the vendor in answering to your email
- Tip 8: do prefer vendors with phone numbers published in the Contact page
- Tip 9: beware of incredibly high returns
- Tip 10: read carefully the information given by the vendor
- Our preferred binary option robots