Robots can automate your trading. But many traders ask themselves: Can a binary options robot make me rich? To answer this question, this article will take a good look at binary options robots, how they work, and how much money they can make for you. In detail, it will answer these questions:
- Can I really earn money using a binary options robot?
- Can a binary options robot make me rich?
- Are there any robots free of any risk?
With the answers to these questions, you will immediately be able to estimate the money you can make with a binary options broker, and you will be able to find the right robot for you.
Can I really earn money using a binary options robot?
The simple answer to this question is yes. Nonetheless, of course, not all robots can make you money. When you want to know whether the robot in front of you has potential, you have to understand the difference between a good robot and a bad one, and you have to learn how to evaluate robots. Both tasks are not that difficult, so let’s take a look at how you can accomplish them.
Finding a robot that can earn you money, step 1: evaluating the robot’s accuracy
The most important indicator of a robot’s potential to earn you money is its accuracy. A robot’s accuracy defines the percentage of trades that you would win with this robot.
- A robot with a higher accuracy will win you a higher percentage of your trades than a robot with a lower accuracy.
- A robot with an accuracy of 70 percent would win you 70 percent of your trades.
- A robot with an accuracy of 60 percent would win you 70 percent of your trades.
- With all other things being equal, the robot that would win you 70 percent of your trades would make you more money than the robot that would win you 60 percent of your trades.
- Simply put the higher the accuracy of a robot, the better.
To estimate the accuracy of a robot, look at the robots past results. Robots trade by using a system called technical analysis that uses trading strategies that analyze the market according to precisely defined criteria. These criteria make the robot’s trading repeatable – if a strategy has worked in the past, it will also work in the future, which allows you to take a robot’s past accuracy and project it into the future.
Most robots publish a record of their past signals. Often they even evaluate these signals for you, listing the average winning percentage and other key factors along with the results. If your robot does evaluate its past signals for you, you have to do it yourself. Simply divide the number of winning signals by the total number of signals, and you know which percentage of its trades this robot has won in the past.
Finding a robot that can earn you money, step 2: evaluating the robot’s average payout
The other important value in determining a robot’s potential to make you money is the average payout. When you win a binary option, you get your investment back plus a profit. The payout determines the size of this profit.
- With a payout of 80 percent, you get your investment back plus 80 percent of your investment in profit.
- With a payout of 250 percent, you get your investment back plus 250 percent of your investment in profit.
- Payouts vary slightly depending on the current market environment and your broker but heavily depending on the binary options type that you are trading.
- If you invested $100 in a trade with a payout of 80 percent and won, you would make a profit of $80. If you invested $100 in a trade with a payout of 85 percent and won, you would make a profit of $85 and win – a free $5 gain for the same trade.
- Simply put, the higher the payout, the better.
Evaluating a robot’s payout is a little more difficult than evaluating its accuracy. There are no lists with already evaluated criteria because your robot does not decide your final payout. Your final payout depends on your broker. Your robot will send its trading signal to the broker which you connected it, and then the broker will define the payout for this trade. When you chose a bad broker, you get a lower payout, but that is not your robots fault.
Luckily, there is one thing you can do: you can pick a broker from our top list. We have tested all relevant binary options brokers and listed the best of them in our top list, complete with their average payout. To find a good broker, simply pick a broker from this list, and you will be fine.
Finding a robot that can earn you money, step 3: combining accuracy and payout
Once you have found a robot with a high accuracy and a broker with a high payout, the odds are pretty good that this system can make you money. But what if you want to know for sure? Well, with a little bit of math, you can find that out, too.
To know whether a combination of a robot and a broker can make you money, you have to calculate the system’s winning expectancy. If the winning expectancy is high enough, the system is sure to make you money.
To calculate the winning expectancy, you have to multiply your robot’s accuracy with your broker’s total return, which is the sum of your payout and your initial invest, or, simply put, your payout plus 100 percent.
The complete formula looks like this: Winning expectancy = accuracy x (average payout + 100 percent)
The winning expectancy essentially calculates your return on an average trade. While you will never get precisely this return on a single trade, over a large number of trades, this is the average return you can expect.
- If the winning expectancy is over 100 percent, you will make money on an average trade.
- If the winning expectancy is under 100 percent, you will lose money on an average trade.
- The value of 100 percent equals your initial investment. If your winning expectancy is over 100 percent, an average trade gets you all your money back and then some – you make a profit. If your winning percentage is under 100 percent, you get less than your investment back – you lose money.
- To create a profitable system, you have to combine a robot and a broker that create a winning expectancy of over 100 percent.
- A higher winning expectancy indicates a more profitable system. When you have to choose between multiple brokers and/or robots, pick those that create the highest winning expectancy for your system.
Pay attention to your system’s winning expectancy, and you can really earn money using a binary options robot.
Can a binary options robot make me rich?
Okay, now we have taken the first step: a binary options robot can make you money. But can a binary options robot make you rich? After all, you are probably not trying to earn $1 here; you want to earn a lot more. For the investment in a binary options robot to make sense, it has to provide at least a sizeable profit that makes some difference financially.
How can find out whether a binary options robot can make you rich? Well, let’s do the math again. First of all, let’s understand the criteria we are talking about here.
- Accuracy: An average binary options robot has an accuracy between 70 percent and 80 percent. Generally, if your robot has an accuracy of under 70 percent, you should easily be able to find a better robot. So let’s assume the minimum accuracy every system should be able to achieve and let’s do the calculation with an accuracy of 70 percent.
- Average payout: The average payouts of binary options brokers range between 65 percent and 80 percent. Once again, you should be able to find a broker with an average payout of 70 percent, so let’s use this value. Please note: there are binary options types that offer much higher payouts of up to 1,500 percent, but these binary options types involve more risk, and you will win fewer trades with them. Robots work only with high/low options, which are the most common binary options type and offer the payouts that we use in our example.
- Trades per day: Another important value to estimate a system’s profitability is the number of trades per day. When a system has a positive winning expectancy, more trades per day mean more profits and more money in your pocket. Binary options robots make between 5 and 15 trades per day. Let’s use the worst-case-scenario and calculate the winning expectancy of a robot with 5 trades per day.
The system in our example wins 70 percent of its trades, has an average payout of 70 percent, and makes 5 trades a day. How much money would such a system make over the course of one year?
Let’s calculate the winning expectancy first. 70 percent x 170 percent = 119 percent. In other words: on your average trade you can expect to make a profit of 19 percent of your investment per trade.
With 5 trades a day and roughly 200 trading days a year, you would make 1,000 trades in a year, and win 70 percent (700 trades) of them. If you keep investing the same amount for a year, you will make the same 19 percent of profit for 700 times, resulting in a total profit of 13,300 percent of your investment per trade.
- If you invested $10 per trade, you would earn a yearly profit $1,330.
- If you invested $25 per trade, you would earn a yearly profit of $3,325.
- If you invested $100 per trade, you would earn a yearly profit of $13,300.
While those are nice profits, they are far from the limit. The important point to understand is that you should always invest only a small percentage of your account balance per trade, ideally between 2 and 5 percent. With an account balance of $1,000, for example, you should invest somewhere between $20 and $50. Even if you play it safe and invest only $25, this system would triple your account balance within one year. That means you could triple your investment, too, and make much more money the next year. They year after that, you can repeat the process, and so on.
Within five years, this system would grow your account balance by the factor of 3 x 3 x 3 x 3 x 3, which is 243. Even if you started with an account balance of $1,000, you would now have $243,000 – that would qualify as making you rich.
In this way, binary options can use the power of cumulative interest to make you rich. All you have to do for this system to work is combine a broker and a robot that create a positive winning expectancy. After that, you simply let them work their magic.
Are there any robots free of any risk?
Now that we have established that a binary options robot can indeed make you rich, we have to take a look at the other side: the risk factor. How risky are binary options robot? Are there robots that are free of any risk?
Well, let’s get the most obvious point out of the way: obviously, there are no robots that are completely free of any risk. Even if you have a system with the highest winning expectancy in the world, there is always the chance that an incredible stroke of bad luck could lose you 100 trades in a row and ruin you. There are no certainties in life, and there is always a risk.
With a positive winning expectancy and an investment of 2 to 5 percent of your overall account balance per trade, you should be fine, though. With such a system, you have done everything to contain your risk, and similar systems have worked for thousands of traders before you.
This leaves you with the task of testing your system well and knowing your winning expectancy. Avoid cutting this process short. Most broker’s offer demo accounts that allow you to trade risk-free and most robots provide a 60-day money back guarantee, which is why you can easily afford to take your time and have the tools to go through the entire process risk-free – use them.
Binary options robots can earn you money, and they can even make you rich. All you have to do is create a system that combines a robot with a high accuracy and a broker with a high payout. On our website, you find lists with links to both. Calculate the winning expectancy of your system, and if it is over 100 percent, you should be fine. Enjoy!