How to select a binary auto trader
...or how to assess your risk and, more importantly, their bullshit.Â
I do not know when was the last time I have seen so much hype in the binary options industry as with the arrival of various auto trading solutions. While in many ways this is a welcome development, for customers it seems to get even more confusing as various providers across the Internet use various systems and claim win rates that in the real world cannot be achieved consistently.Â
Surviving the bullshit jungle
I have dealt with many of these auto trading providers and must say that really it is a jungle out there. There are several big providers that seem to own most of the market. There are also many incumbents and providers that have been popular once but have never caught up with the new swath of web-based services.
There are always those scammy sites that throw thousand of $$$’s in your face effectively claiming money is guaranteed. In essence, all of them are liars, as any other company engaging in advertising is.Â
As I already wrote, they try to use our lack of information and our biases to steer our decision making. That is mostly ok if they are making us look the other way. If they are withholding information we need to make an informed decision, they are crossing those thin borders of ethical behaviour.
If you read my previous posts on stupidity - at least what you should have taken with you was the fact that there is no easy money. This is the level of stupidity I have hoped to eradicate with my writing and I think should be at least be base in order to objectively assess a service you are interested in.Â
So, if there is no easy money, why should I trust binary options auto trading services such as the Binary Option Robot,  Binary Auto Trader, or that website with an hour long video explaining “how can you make money using a stick”.Â
Look at that douche with the stick!Â
Should you trust this guy?
You should not - you should be able to read trough the bullshit and find a service that will provide you with realistic return rates, or at least advertise win rate that is closest to real life. Sometimes, that will mean overriding your instinct to go after that amazing weekly income that is being promised.
So, where is the catch with binary robots?
The catch is all in your head. Traders should be able to distinguish clever marketing from idiotic (it would be better to call it “idiot-targeting”) marketing the same way they should be able to use the aforementioned basic understanding of making money (no easy money!) to differentiate various offers. Â
If a provider claims $59K in a week, you should be clever enough to understand that mere fact that if this strategy worked
everyone would use it to get rich
market arbitrage would simply make the opportunity disappear from the market quickly. Anyone's chances of using the same “secret formula” successfully would slowly evaporate as the arbitrage opportunity is closed.
The catch is to differentiate rational analysis from the spam that is trying to get in your head, using your emotions and triggering your System 1 - impulsive reaction, combined with a lack of knowledge to make you deposit money and probably lose it soon after.Â
What should I look for before I choose a binary robot / auto trading provider?
Well, as mentioned, first thing is to forget about crazy notions of “doubling your money while you sleep”. This means remembering that there is no easy way to make money overnight - especially not the crazy sums of money as some services promise on the website.Â
Take a look at that sweet money promised by AutoBinarySignals. com.Â
Don’t be stupid! These things are easy - if it is too good to be true, then probably it is not true! Someone is playing with your poor brain by tossing arbitrary numbers as that Nigerian prince that emails you occasionally!
source:Â Flickr/AmRosario
If there is no easy money, what can I expect from binary options auto trading?
It is important to understand that even with great win rates, the goal is to gain more money than leaving your money on the bank account or some other investment vehicle. Currently in advanced economies, banks are flushed with cash so they are paying next to zero [0%] to their customers. Anything above that, after adjusted for your risk preference, is good.
Your easy-Internet-money expectations make you the perfect target
By now you understand that your expectations are the key. If they are following the base rate and the understanding of “no-easy-money” rule, you are protected from your own stupidity in most cases.Â
Achievable returns in binary auto trading
Rates of return tend to be much lower than the worst idiot targeting websites promise, however, still there is a chance to outperform bank deposit or even indices. These can change from month to month and I will certainly not make a claim that the rates one can achieve are guaranteed in the long run...
You probably will not get $59K profit in one week
Fair Binary Options, in one of their early assessments of the Binary Option Robot, tried to see how much one of the “ProTraders” (analysts that generate signals) managed to hit (May 2015). The results were such that about 65% of trades were winners and rate of return that could be achieved (with assumptions) was 6%. They did not calculate returns in latter analyses. See part of their infographic below.
They clumsily compared it to S&P500 that month. I wrote “clumsily” because they did not take in consideration the fact that S&P500 companies pay dividends (quarterly).Â
But, nonetheless, this was one of the sincere looking analyses out there. In any case, those cute charts that show your capital growing like crazy with the auto trader you are assessing, are probably not very close to the true. So next time you see this:
...just close the browser tab.
They are probably right about this one - the code to financial success is actually  finding enough people who suffer from various kinds of stupidity that will buy the $59,177 a week story. The financial success, in this case, will be felt by whoever set up this auto trader website.Â
Customer, or sucker, who buys up the “Top Secret Profit Formula” crap does not deserve any success nor will she find it, ever. Don’t be mad, it is part of the evolutionary process behind our survival - natural selection. This made us a species we are today...able to create amazing things, while at the same time not being able to override System 1 to act rationally.
Read disclaimers when looking at binary robot results
This is also something Fair Binary mentioned in their infographics of the Binary Option Robot’s results. The software has many settings to choose from, so rates in the infographic are not representative across all the population of this Robot’s traders, but only those who have actually had the same set of settings and used the same ProTrader.Â
Since only their VIP members can get this, we guess the results are indicative of the average results achieved per month, that month, but not nearly close to being statistically significant enough to say that one can use them as a guideline for own returns on the service in the future.
This one is probably one of my favorites. It nicely shows why most of these services include a disclaimer in their T&Cs (terms & conditions of service) that frees them from any liability and responsibility for the information they feature on their website. They leave fact checking to the customer and define it as her responsibility. Below is example from Top Binary Signals
Many binary auto traders or signal providers will award themselves existing and made up awards, with accompanying logo or a seal, claiming they have been awarded because they are amazing or whatever. Check out these false awards from Top Binary SignalsÂ
It is very easy and it does not take much time to figure out that there is only one source on the Internet mentioning Top Binary Signals getting these awards - it is their own website. Just go ahead and check it by googling.
Unfortunately, people fall prey to their confirmation bias.Â
They first see the promise of returns and they want the money.Â
After that, any little thing that reassures them is seen as a reason to go for itÂ
while it should be seen as a deliberate plot to increase credibility where there never was any.
there is no easy way to make money online
use the first point to moderate your expectations and avoid traps
if it sounds too good to be true, it’s probably a trap /for your System 1
Some practical guidelines for avoiding “stupid” binary robot choices that hurt mother Earth’s intelligence:
even if the data on win rates provided by the auto trader looks really legit, understand that any calculations of profit they may offer are just illustrations but not promises or guarantees
if they imply there is a guarantee and that trading is risk-free, run away immediately with a self-congratulatory “I'm not stupid” grin on your face
robots listing individual signals that later can be checked easily will probably be closer to the realistic reporting on their win rates unless...
sometimes they lie about the win rate (this will be obvious) orÂ
they highlight one month’s result and let your little head make the mistake of extrapolating these results in the future
obviously - past returns are not indicative of future returns
returns are there, but be mindful of first two points and don't be a sucker
some guy on a video is not any more credible than some offshore company, no matter how sincere he seems (remember, System 1 makes stupid mistakes sometimes, the base rate is that there is no easy money)
the guy on a video, carrying a stick he calls trading strategy that brings “dough” is laughing about the gullibility of his customers every time someone deposits
Robots will probably trade more successfully and have higher win rate than average trader (keep in mind, arithmetic mean is skewed towards inexperienced population that makes a huge portion of traders)
keep an eye on details on binary robots’ websites - false awards, stupid testimonials, a long video presentation that actually repeats the same thing over and over, false awards or regulation logos on the website - many of these things can be easily checked for correctness if you just take some time to google it.
