Trading Software – Quick Guide
The most marketable and easy to sell product in this word is… the DREAM; dreams of a new house with a swimming pool and a two car garage, dreams of a famous actress as your girlfriend, a private jet or a private exotic island or just the dream of financial freedom, without all the flashy things, but freedom to do whatever you want and be your own boss. In our constant attempt to fulfill our dreams, we turn to trading and more specifically, options trading. But some of us turn to the trading software advertised everywhere these days, with claims of phenomenal and quick profits. Can this software really help us or is it going to be the beginning of our trading account’s demise? There several types of trading software. Let’s go a little deeper and talk about each one.
In our constant attempt to fulfill our dreams, we turn to trading and more specifically, binary options trading. But some of us turn to the trading software advertised everywhere these days, with claims of phenomenal and quick profits. Can this software really help us or is it going to be the beginning of our trading account’s demise? There are several types of trading software. Let’s go a little deeper and talk about each one.
I’m gonna start with this one because it’s one of the first things you need when you start trading Binary Options. Everywhere you look you see stuff like “Binary Options are easy, just select Call or Put and wait for expiry”. True, the mechanics of placing a binary trade are not complicated at all, you don’t have to calculate lots, position sizes based on your Stop Loss or Take Profit orders, you don’t have to worry about leverage or margins. Easy, just pick Call or Put!
But that’s actually the toughest challenge: will it go up or down? To make an educated prediction you need technical analysis (fundamental too, but you won’t see that on a chart) and the charts offered by the binary brokers simply don’t cut it. That’s why you need a proper charting software/package, that allows you to use indicators, to draw trend lines, support and resistance levels, to change time frames so you see the bigger picture… simply put: technical analysis. After you’ve done your analysis on a serious charting package, you can switch to your binary options platform and place the Call or Put.
Now that I’ve convinced you (hopefully) that you need a charting software, I have to tell you which one to use and where to get it but I’ll do even better: we’ve prepared not one but three reviews and “how to” guides for the most widely used charting packages: Meta Trader 4, NetDania ChartStation and TradingView. These are all free and I strongly recommend you use one of them Or you can use a charting package of your choice, but please don’t limit yourself to the barebone version offered by binary options brokers.
Many Expert Advisors (EAs) used in forex trading have a high level of utility, as they can alert traders to market changes that might have been missed otherwise. There are many places to find forex EAs on the internet but it should always be remembered, however, that some drawbacks exist in these offerings as well. So, it always makes sense to run these applications in your demo trading account before using real money.
The internet is full of trading software (trading robots, expert advisors, etc) that you can purchase or get for free in some cases and then apply it to your MT4 trading terminal. After the implementation of the software, you will receive graphic trading advice in the form of up or down arrows printed on the chart, or a pop-up alert or even in some cases, an email delivered to your inbox just in case you are not in front of your PC. Cool, eh?
Now the next step is pretty simple: go to your Binary Options platform and trade according to the signal you got from your Forex trading software. Needless to say that if you get an Up arrow on EUR/USD, you will select Call on EUR/USD on the Binary platform. I am sure that in the future we will see some sort of expert advisors (or autotraders) for Binary Options, so you won’t have to switch between MT4 and your binary options broker but that time is not here yet.
Robots and Autotraders
Two years after writing this article I decided to revisit it, to brush it up a little and of course to update it because it seems I can read the future. Wait…what was that? Did you hear that sound? That was my modesty flying out the window. On a more serious note, I told you 2 years ago (or one paragraph above) that we will probably see automated software for Binary Options, similar to Expert Advisors for Forex. Indeed, this type of software is a big part of today’s binary industry but unfortunately, it’s not profitable so far. Many of you are aware of it by now, mainly because the marketing for these binary options robots is over the top and very aggressive. But first let’s talk a little about how these robots work (for an in-depth look, please follow the link above). The long story short is this: the robot/ autotrader/ software takes over your binary options account and places trades automatically, based on the strategy and parameters built-in by its creator. Of course, you have an “Off” button, you can alter some settings and you can make it stop placing trades at any time.
The problem with these robots is that their creators are advertising them as the next best thing since… oxygen. If you listen to them, you will supposedly be rich be the next sunrise, all without risk and without you doing anything. You click the “On” button and that’s it, all your money problems are gone. Usually, this type of software is offered for free but you have to use only the brokers recommended by the software creator. Why? Because they make money when you deposit with that brokerage. At the moment we haven’t encountered a binary options robot that actually makes money consistently, but if we do, I will be the first to use it.
In most cases, Binary Options software will focus on a particular market (such as stock indices, forex, or commodities). But the reality is that there is no reason to focus on a single asset class — especially if the strategies being used are purely based on chart analysis (ie. economic fundamentals have no influence). So, if you do see a technical analysis system that claims to be designed specifically for forex (or any other market), a certain level of skepticism is needed from your part.
The next element to consider trade functionality. The automated trading software will have to be compatible with the software platform that is offered by your broker. Spot forex trading differs greatly from most Binary Options offerings in that the software is less centralized (most of the trading is conducted through a few different applications, such as MetaTrader or TradeStation). Most Binary Options brokers have their own proprietary software that is web-based and exclusive. This could potentially mean that a software trading system you buy might not even work with your current trading account.
Usually, signal providers are expert traders that are willing to share their actual trades in real time with you, in exchange for a fee of course. You didn’t think it was free, did you? These guys usually work through a website where, once you become a member, you can see their signals/trades. Another way for them to provide you trading information is through software that alerts you about their signals or more recently through Skype and other forms of messaging. Once they place a trade or give a signal, all you have to do is to mimic their signal on your Binary platform. The downside is that you have to be in front of your computer to receive the signal and place the trade on your platform, or at least have your smartphone ready if your broker offers a mobile platform.
This is somewhat farther from trading software than an EA or a binary options robot, but it’s very important and should be mentioned. Trading has become very social lately, as some people feel the need to share their knowledge and others are in need of that learning source. With the risk of being subjective, I’m gonna tell you that the best Social Platform is CommuniTraders which is a Forum where you can talk about strategies, brokers, fundamental and technical analysis. You can also open a Trading Diary to track your progress and can stay up to date with the latest economic and political news.
If used carefully, trading software can be profitable, assuming you find the right one. By “used carefully,” I mean observed on a demo account for enough time and used conservatively when on live accounts. Also, try to learn something in the process, try to see the logic behind those trades, don’t just follow them blindly. Each one of our experiences, good or bad must leave us with a lesson learned and using trading software or signal providers can help with your trading, but… beware of scams! There are programs that perform poorly but are not scams and on the other hand, we have low life scammers that know their software is crap and still try to sell it to the unaware novice that would do anything to reach his dream of a private island in the tropics.