I have recently seen a lot of attention being paid online to automated Binary Option trading products. These products claim that they can automate Binary Option trading in a way that will be profitable for the user. The most publicized of these programs is Option Bot, which is essentially a piece of software which claims to allow individuals to successfully trade Forex Binary Options. However I’m very dubious of the claims made by the Bots producer.
How does the bot work? Essentially Option Bot follows 15 different currency pairings and monitors their recent price movements giving you alerts when a currency pairing has moved a sufficient number of Pips in one direction during the selected time period. Both the period of time and the significance of the movement can be altered by the user. However, in the demo video the user has the Bot set to monitor for 3 Pip movements in either direction within the last 15 minutes. The creator of the bots then suggests that the user opens a trade in the opposite direction of the alert.
So for instance, say the Bot has noticed a particular currency pair rise by 3 Pips in the last 15 minutes. The user of the Bot should then place a 15 minute Put (Down) trade in that particular currency pairing. The idea seems to be that if the price of a currency pairing has moved a significant amount in the last 15 minutes, then there is likely to be a price reversal in the next 15 minutes. But does this make for a good trading strategy?
I would have to say NO. While such a strategy may work occasionally when there is little volatility in a particular instrument there are going to be occasions when the Forex markets are going to be very volatile. It also doesn’t have a way of distinguishing between general price fluctuations and trending. For instance if a currency pairing was to go on an extended rally a trader could lose several traders in a row using such a strategy. All of this makes me very suspicious of the program and the creators claimed 90% success rate seems very dubious to me.
The simplicity of such trading systems lead to many new to trading purchasing such programs in the hopes that they can make significant returns on their investment. Option Bot is currently on sale for $75, though I do not suggest that anyone goes out there and purchases the product. However the product is available for a 7 day free trial and I suspect that those who try the product for a trial period will have my suspicions regarding this Binary Options trading system confirmed.