The Algorithm Behind the ‘Robot’

The concept of trading robots within the binary options industry evokes mixed feelings. Skeptics out there tend to believe it is a scam, while enthusiastic entrepreneurs and traders looking for the edge, say it is the future. Well, the future is already here and has been for a few years now. The binary options industry did not invent those trading robots; it probably did invent their name. The real face of these robots, probably looks quite like the face of your own PC, albeit the heart of the computer(s) doing the trading must be much more powerful. The brains however, are 100% human. Trading robots operate according to an algorithm developed by smart mathematicians and the real news is that it gives traders an edge in volatile markets when developed appropriately.

It turns out that traders in volatile energy markets, like the German power market, use these super computers. The algorithm ‘instructs’ the ‘robot’ to make trades based on demand, supply and – as much as it may sound completely unrelated – the weather. Germany produces a large enough amount of its electricity through renewables, chiefly solar PV and wind. This means that the weather has a significant impact on the minute by minute price of the electricity generated. These quick changes take place at speeds that only a robot will be able to react to. The mathematician just programs the robot through an algorithm that instructs it to react according to certain parameters. The human brain behind the robot stays with the robot in order to override the automated trading parameters if he or she sees an advantage in doing so.

 

Match Made in Volatility Heaven

Weather changes on a minute by minute basis, affecting power generation wherever solar PV or wind generation takes place. Binary options with contracts expiring anywhere between 60 seconds to an hour, are probably as volatile as the German power markets. Moreover, if a given trader is placing a put or a call on a commodity like oil, on a binary option platform, that trader is probably doubling or tripling the risk due to volatility. That is investing in the energy markets with a binary option short term contract. Any trader investing in oil over the last few days can surely attest to how every comment coming from Saudi officials made the markets jitter. These jitters affected not only oil, but also any oil dependent currency pairs, especially the ones involving the Canadian dollar or by extension the Australian and New Zealand dollar. This is where robots can help traders profit.

 

Algorithms for Binary

Traders looking for robots to help them profit in volatile markets, must look for the right kind of brain behind the robot. Ironically, it is the humans behind the computers that will deliver. This is why investors should look for reviews and robots that have quality employees behind them. Not everyone can develop the right algorithm, and not everyone is interested in the investor.

Traders should also watch out for scams. Robots are not a magical making machine, and should not be regarded as such. However they can definitely help those smart mathematicians that develop these complex algorithms, make money, even in the binary industry.