Ranking Binary Options Signals For Increased Profits!
If you’ve come here looking for a ranking of binary options signals services scams this is not the article for you. This is a look at how to rank your own signals, the signals from the strategy you are using or about to learn, in order to determine which ones have higher probabilities of winning, to weed out false signals and to help pick appropriate expiry. It is of course necessary to weed out false signals, and that is what a strategy is for, to set up the good signals. This article goes beyond the basics and looks at how and why you want to rank your good signals once you weed out the bad ones, and just as a hint, the reason is for profits.
You may be sitting back at this point thinking to yourself, I don’t use signals, I use indicators and analysis to pick my entries. Well friend, let me tell you something, you are indeed using signals because that is what trading is all about, finding signals and trading on them. Strategies and systems are designed, hopefully, to provide good signals for high probability trades that will make money. Otherwise you are just guessing and little more than a clueless gambler and I know that that is not the case.
Basic Binary Options Signals
First, lets define what a binary options signal is. It is a set of predetermined criteria that must be met before entering a trade. This can be based on indicators, price action, news, data, earnings, your lucky pair of underwear or any other bit of insight that gives you a clue into the direction of the market. Now you may be thinking to yourself that if it takes a preset list of conditions to fire a signal doesn’t that mean all signals are the same? The answer is no. First off, we can’t assume that all strategies are equal so all signals can’t be equal either. The reality is that even in a good strategy not all signals are good, and not all good signals are as good as each other.
Thinks about a simple MACD strategy. It assumes that when prices cross above 0 from below that momentum is positive, on the rise and that entering a call would be appropriate. On a basic level this is a good signal, and equal to all other basic signals, but it is lacking in strength. When you add another level to it, such as trend analysis, it becomes stronger. If you use a trend analysis, and only take bullish crossovers when the asset is trending up, you reduce the chances of false signals and increase the chances your trade will be profitable. You have also elevated your simple MACD signal into a stronger MACD signal. The basic signal is still OK, and can be traded, but the stronger signal is better and should be traded differently.
Trading Binary Options Signals, Weak And Strong
What I am getting at is not that you need to avoid a weaker signal over a stronger one, so long as they are all good signals. Many weak signals are still good, you just need to understand that it is a weak signal and trade appropriately. For binary options trading this may mean a shorter or longer expiry, or a small trade amount, or both. In order to rank your signals you will need to define what makes an entry for a call or put that leads to any movement in the stock. This may mean a move of only a few candles or the start of a longer term trend, and could be as simple as trend following MACD crossovers. Once you’ve done that isolate the signals that result in the major market moves, the really big moves, and determine what is different about those moves compared to the average move.
In terms of MACD it may be something like time frame, support/resistance or moving averages. If the trend is up on the daily charts, with bullish and rising MACD, and you see an uptrend and get a bullish signal on the hourly charts, it could easily result in a much stronger signal than if you find a good bullish crossover on the hourly charts but MACD is waning or bearish on the daily charts. In terms of support/resistance a good bullish crossover would be stronger if it occurred above support, rather than below resistance, or if it occurred while price was breaking resistance.
The Point Of Ranking Signals Is Profits!
The point of all this is to make profits, or rather, to enhance profits. I will assume that you are already making what I will call average profits with your strategy, treating each signal equally and winning more trades than you lose. If you aren’t then maybe you should read Bogdan’s guide to create your own binary options strategy step by step.
If you isolate the strong signals from the weak signals you can not only maintain or improve your current win ratio, you can also greatly enhance your returns. How? The stronger signals have a greater chance of profiting right? All you have to do is adjust your risk management to account for signal strength so you can still take all the trades you were taking before. In my case a 3% trade is great for the average signal, but I may up that to 5% or 10% on a stronger trade. Why? Because it has a higher chance of success so warrants an increased risk.