The New raise of Binary Options Autotrading

Binary autotradingThe concept of automated trading is nothing new for the financial markets. It has already been adopted by the forex trading industry for decades. With advanced trading platforms like the , forex traders can easily configure their MT4 platform to trade automatically once the trading parameters are met. However, the same cannot be said of the binary trading industry. The binary options trading industry only started to take off in 2008 when the American Stock Exchange (Amex) and Chicago Board Options Exchange (CBOE) approved their listing on the exchange.

Due to the relatively young age of the binary industry, binary trading platforms are comparatively more primitive than those used in the forex industry. As such, automated trading system developers find it difficult to incorporate their systems with the brokers’ trading platforms. Nevertheless, there are a few developers which have managed to develop systems which are compatible to some binary brokers’ trading platforms.

We have recently discovered this excellent company and website, Binaryoptionrobot that provides a simple and cheap software (79$). You can use it with all the usual online brokers.

Trading Systems Used By Automated Trading Programs

Automated trading systems are usually designed based on one of the following systems:

Classic System
The simplest system of all, the classic system is based on continually trading the same amount (determined by the system’s user) on the assets which are predetermined by the user.

Fibonacci System
A Fibonacci trading system is where the amount traded is dependent on the previous trade. If the previous trade is a loss, then the amount to be traded will be increased. However, if the previous trade is a win, the subsequent amount traded will decrease. The system will automatically calculate the amount to be traded based on the Fibonacci number sequence.

Martingale System
With the Martingale trading system, the amount traded will be increased after a losing trade and then drop back down after a win to the initial lowest possible amount.

To derive the signals needed for a trade, automated trading systems rely on the use of several technical indicators such as:

Moving Average Convergence Divergence (MACD)
A signal is generated when two moving averages of different period crosses each other. A Call signal is generated when the longer period moving average crosses OVER the shorter time period moving average. A Put signal is generated when the longer period moving average crosses UNDER the shorter time period moving average.

Relative Strength Index (RSI)
RSI produces signals for overbought or oversold market conditions. A Call signal is generated when an oversold condition occurs. On the other, a Put signal is generated when an overbought situation occurs.

Stochastic Oscillator
The Stochastic Oscillator is also another indicator used for identifying overbought or oversold market conditions. it compares an asset’s closing price with a price range over.

Williams Percentage (WILLIAMS %R)
Similar to the workings of the Stochastic Oscillator, the WILLIAMS %R is a momentum indicator which identify overbought and oversold conditions by comparing an asset’s closing price to its high-low range over a given time period.

Commodity Channel Index (CCI)
The used for determining if an asset is overbought or oversold. It is obtained by quantifying the relationship between an asset’s price to its moving average and normal deviations from the moving average.

To prevent false signals, multiple indicators are used at the same time. The signals which they generated must be correlated with each other in order to get a trade execution signal.

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