MT2Trading Blog

News and updates from world's leading automated trading platform
Jan 06 2021
How does a Binary Options trading robot work?

The question of how a binary options robot works does not have a single answer, since, like everything in trading, there is a large division between types of trading and types of trading robots. Not all traders chose to do automatic trading, as they prefer to be the ones who control the flow of money and, putting a robot of this type in charge, it is likely that they will have to give a large part of the control of their accounts to the “machines”.

Automatic trading is not only possible, but it is also real and there are thousands of people around the world who are currently benefiting from it. However, how does it work? And why does it work for some and not for others? These are two questions that we will try to answer in this article. But first a couple of concepts:


What is auto trading or automatic trading in Binary Options?

Basically, as its name says, it is the use of tools that allow you to automate your trading process to, in theory, improve your performance and have more free time to dedicate to your private life.

However, Auto-Trading, like everything related to investments, carries a risk, since not all trading robots work the same. Some allow you to simply program a series of trading orders based on time and that gives you the freedom you to detach from the screen, knowing that once a certain time period has passed, the trading robot will close the positions.

What are the types of trading robots?

There are 3 types of automatic trading services that we could consider “Standard”, although there may also be much more complex programs that take much broader parameters into consideration. Trading robots can be classified according to the frequency of closing operations in:

1. Tight Stop robots

A type of robot that allows you to carry out short operations. The operations of these robots must be monitored, as they open and close operations depending on the time factor, detecting certain signals configured by the trader himself.

Tight stop robots are ideal for those who do not have much experience and allow for short-term operations. This type of robot is also useful for binary options since it complies very well with the operation times that usually apply to this type of investment.

2. Large stop or large-stop robot

This robot tends to open positions with longer expiry times, allowing those who better understand how the market works to earn big profits. But they tend to generate losses if they close the position with the market on a down trend. They are capable of detecting signals and do not require as much monitoring as the Tight Stop, but they tend to ignore most, concentrating only on the signals with the greatest  impact and that could generate important losses.

3. Non-Stop Robots

This robot tends to open trades without a stop, that is, ignoring all signals. It requires the trader to manage it efficiently because by not having a Stop, many operations can remain open in the negative.

It requires, as is easy to guess, a much deeper knowledge of trading, and they are not a good option for Binary Options, although they are to open long-term positions that aim to earn more money from operations.

How exactly does a binary options robot work?

Usually, when someone creates a trading robot for any form of trading and, of course, for Binary Options as well, they use programming languages ​​like C ++, MQL4, MQL5, Java, or any other language that they are capable of handling. In general, they focus on automation, in that it is capable of repeating a pattern of opening and closing positions as configured by the user. When it comes to a robot for trading, they usually try to add more features to it such as automatic data analysis, risk management, and other useful features.

How does MT2Trading Robot work?

Binary trading robots, and MT2Trading in particular, fall into the category of tight or tight stop robots, for the reasons we have already mentioned. However, MT2 is not limited only to open and close trades, but also offers numerous extra features, such as CopyTrading from its own user interface, Signal builder and back-tester, economic news & filters, risk management parameters, live market charts, access to a Telegram group where tips are shared with other users around the world and much more. 

One of the most important characteristics that make MT2Trading unique is that it is not like all robots of its kind, in the sense that it is not limited to perform repetitive operations. Thanks to a plugin that you can install in MetaTrader, you can connect both platforms (MetaTrader 4 and 5) and automatically obtain signals with which the robot will automatically plan and execute the transactions, reducing even more the chances of losing money in unfavorable transactions.

The operation of MT2 is based on complex algorithms that are responsible for integrating trading technical indicators with great accuracy, and to execute signals that can be customized by the user himself in order to open and close trades automatically on the user’s accounts, at an extremely fast rate.

MT2Trading is one of the most complete Binary Robots that exist today, being the optimal solution for anyone who needs to automate their operations within this market.

Automatic trading robots work according to the trading platform

When choosing a trading robot, you need to consider if it has compatibility with MetaTrader 4/5, as not all trading robots work with both platforms. Generally, MQL4 robots are required for MetaTrader 4 and MQL5 for MetaTrader 5.

MT2Trading Platform particularly offers MetaTrader 4 and 5 connectors plugins, which allows the technical indicators to be connected to perform operations directly from MetaTrader and display them on the bot’s interface. This feature is truly groundbreaking among the most sought after binary options robots on the internet.

What should be taken into consideration before installing a binary options robot?

Now that you know how robots work, you must bear in mind that these are only algorithms and as such they have their limitations. Therefore, you should never trust them blindly, but rather monitor them daily to observe the balance, correct adjustments, modify parameters and change guidelines to correct certain errors that may appear over time.

Among other things, robots can help you automate a trading strategy, one that can change as markets move. In the case of strategies with Binary Options, you must be even more incisive, because being operations that are based on the very short term can become more unpredictable.

Most Binary Options brokers allow the application of robots because they know that there are users who want to take this business to a better level and this is only possible if operations are carried automatically. However, before trading with binary trading robot on your broker you should consider the following points:

  • You should posses enough knowledge of trading that allows you to generate strategies that can be automated
  • You must know the dangers of over-optimizing, that is, wanting to cover too many markets at the same time, which can lead to losses
  • Before you start trading with a binary robot, you should try it with a demo account. For this, MT2Trading offers a completely free account with which you can simulate your trading and find out which is the best auto trading strategy for you.

Conclusion

Trading robots or automatic trading programs are computer algorithms used to automate operations at brokers: in the case of binary options, you should be much more careful, since it is a type of investment with higher risk. Fortunately, there are robots like MT2Trading that have been integrated with the most important brokers in the binary options market and have been approved by them.

The internal workings of automatic trading robots, like all computer programs, are based on complex algorithms, which are capable of performing operations in certain patterns that may or may not have been programmed by the user himself. Whenever you launch a trading robot, first try it out in a demo account for a considerable time and analyze its performance well, compare losses with profits and adjust the parameters to obtain the best possible result, and make sure to use risk management tools that you are cautious when trading in volatile markets.

Although trading robots are designed to do the work for you, you do need to take precautions in case they might fail, as sudden market movements can generate losses that even algorithms cannot predict 100%. Monitor them daily and modify guidelines as necessary and check the charts and news from time to time to make sure the result is the best.