Managed accounts on binary options promise to make you money while you sleep, but the system is flawed. luckily. There are three alternatives that better serve traders while maintaining more control. This article presents these alternatives, advantages and disadvantages.
Here’s what you learn in detail:
- Why this is not a managed account
- Alternative #1: Signal
- Alternative #2: Robot
- Alternative #3: Social Trading
This information will help you choose the right type of automated binary options trading.
Why not managed accounts
A managed binary account promises that the account manager will manage your money the same way a mutual fund manager would when investing in stock market funds. Unfortunately, there are many problems with this concept.
- Some brokers get scammed using managed accounts. The account manager freezes the money claiming they need full control, but eventually everything will be gone in a series of bad luck transactions.
- Your account manager is paid by your broker and your broker makes money when you lose.
- Because many trades are done with binary options, even a small fee may not be profitable to trade.
- It is often difficult to determine if an account manager is truly an expert and knows what they are doing.
As this list of issues suggests, using managed accounts is risky. There are many unknowns, especially for newcomers. It can be difficult for someone who has never traded binary options before to determine whether their account manager is a seasoned professional or a complete novice. These services often claim to be ideal for beginners. And vice versa.
Nonetheless, the idea of managed accounts is appealing. Hire trade people for you and save and time to make more money. If you want to pursue this idea without obtaining a managed account, there are several alternatives.
Let’s take a look at the three most popular options.
Alternative #1: Signals
Signals is based on a simple principle. A professional trader or professional trading program will tell you how to trade, but they have the last word. If you like the signal, follow the directions. If you don’t like it, you won’t do anything.
Most signals come as text messages or emails on your cell phone. Common signs include:
dow jones, long, 2 hours
When to Trade
This signal instructs you to invest in the rising price of the Dow Jones and use the 2-hour expiry. Signals are popular with traders because they are easy to execute and easy to understand.
Most signal providers charge $99 per month for a subscription fee. Worth the money if their signal is good. A good sign is that even if you have little money, you can easily make over $100 a month.
A good signal provider can win about 70% of their trades, which is good enough to make money with binary options. Almost all providers generate signals for high and low options, so you need to win at least 60% of your trades to turn a profit. Anything more than that is worth making money.
Signal providers use two methods of writing signals.
- An automated computer program. Some signal providers use computer programs that monitor the market and automatically generate signals when the current market environment meets certain conditions. These trading strategies are standard for short-term investing and are highly profitable.
- Human traders send letters of recommendation. Some signal providers use traders made of flesh and blood who monitor the markets and send recommendations. The profitability of this system depends on the quality of the traders. That said, if you find a signal provider that employs qualified professionals, that’s pretty good.
Some signal providers are also trying to scam you. They give you random signals and hope you stay with them long enough to at least get some money.
your research
Luckily, you can recognize reliable signal providers with money-back guarantees. All signal providers who are committed to getting you to trade with integrity give you the chance to test their signals risk-free. Typically, this comes in the form of a 60-day money-back guarantee, where you can test signals for two months, terminate the service at any time and get all your money back. Do not subscribe to signal providers that reject this testing step.
Compared to managed accounts, signals give you the advantage of having full control over your account. You can recognize problems early and decide whether to trade every single signal.
The downside of signals is that you have to stay involved in the trading process. You must be able to react quickly when you receive a signal. Depending on your job and daily schedule, this may not be possible.
Alternative #2: Robots
Robot has an idea to take the signal one step further. Like signals, it monitors the market and searches for profitable trading opportunities. The difference is that when the robot sees an opportunity, it automatically invests on your behalf.
The way robots generate signals is similar to that of signal providers. Some use automated computer programs. Some use real traders.
The robot must be connected to your trading account to automatically trigger signals. This means you share access to your login information and money with other companies. Some traders squash that process and would rather stay in the signal, making it a legitimate decision. However, you might decide to do this step if you feel familiar with the robot provider.
The available combinations of robot and broker are limited by the fact that the robot needs to be linked to an account. You can always ask the broker’s customer support team whether it is possible to connect the robot to the broker, but in some cases this is not possible due to technical reasons.
Choose your own broker
Some bots even use a list of recommended brokers that are best for bots. This list is how robot providers make money. The broker takes a commission when delivering clients to the broker, and offers to use this convenient place for any technical need to close your current account and create a new one. Be wary of what these types of robots offer.
The advantage of robots is that the trading process can be completely outsourced. This means you can minimize your mistakes and entrust your trading to the best experts you can find.
Compared to managed accounts, robots offer the advantage that brokers do not pay you, thus solving the conflict of interest of an account manager hired by a broker that benefits you when you lose money. The robot provider is making money as you continue to subscribe to their services. This is a much more customer-friendly business model.
Monitor carefully
The downside of robots is that you give up full control over your account. A robot cannot steal your money, but it can be traded so badly that you lose everything. Unless you monitor your account regularly and stop the bad robots before they ruin you, you take a high risk.
In any case, you should check the robot carefully before signing
Alternative #3: Social Trading
A third alternative to managed accounts is social trading. Social trading allows you to copy trades from other traders like you to your account.
You will see a list of all available traders and their odds of winning to decide which traders to follow. Now trader Dave has won 80% of his past trades and can choose whether to automatically copy future trades to his account.
Most brokers also display the number of times a trader has traded or invested in the past month. Choose traders who have done a lot of trading. Otherwise, you run the risk of following someone who has made a handful of trades. That means the odds of winning in such a small sample say nothing about a trader’s ability.
Trader
Typically, binary options brokers allow you to adjust the amount you invest in every single trade. This makes sense because the traders you follow are often successful and invest a lot of money. For new traders, it is impossible to reflect how much people are investing. By allowing you to decide how much you want to invest, the broker can practice effective money management.
Most brokers also allow you to set a time limit on how long they will follow the trader and a stop loss limit that will follow the trader if he has no trades or loses a certain amount of money.
These tools further increase your potential to protect your money. Even if a trader won 80% of their trades in the past, they may lose 80% of their trades in the future. If you use social trading long enough, you will eventually follow the losers coming on the hot streak. The ability to effectively protect your money to survive these events is a great tool.
Compared to managed accounts, social trading has improved.
- You always get up-to-date stats from traders investing on your behalf.
- You can manage your money yourself
- Get an effective fail-safe tool.
These tools minimize the disadvantages of automated trading and maximize the disadvantages.
Managed accounts overview
There are legitimate alternatives to binary options managed accounts. These alternatives cater to different kinds of customers with different goals. The main alternatives you should be aware of are:
- signal,
- Robot
- Social transaction.
Use signals to fully control the trades you trade. If you want to completely outsource your trades to someone unrelated to the middleman, choose a robot. Use social trading to use a mix of automation and control.
