Why are some binary options signals free?
This is one of the first question that comes to mind to anyone who discovers a free binary trading signal service. Why would a service like this be available completely for free? Why would a person or a company spend significant amount of time and development resources to develop a signal service that then will be offered for free?
There are two reasons for this. First, some people create free signals in order to scam traders while others develop free signals and intend to monetize them differently later and through legitimate means.
Below you’ll find the main reasons why free binary signals exists, both the legit as well as the scammy reasons.
The brokers themselves developed them
Some binary options signals that are being offered for free were developed by some of the brokers themselves. These signals will claim that they are actually not affiliated with any broker but this is a lie.
You can know that a free signal was developed by a broker if it will force you to register at one specific broker only in order for you to be able to use the signals. In around 90% of the cases such a signal was developed by the broker itself.
If you have read my article about how binary options brokers make money you know that most brokers will lose money whenever you win. For this reason, you should never trust a signal service that was developed by a broker itself.
Why would that broker want to give you a signal tool that will help you win? It makes no sense because each time you win the broker loses. Usually, the signals developed by brokers are fake and are made so you would always lose in the end. They may let you win initially to get your hopes up and deposit more, after which you will always lose.
Stay away from broker-owned signals.
They get paid by the brokers
The majority of free binary options trading signals however were not developed by brokers but by so-called affiliate marketers. The trick is that for you to be able to use these free signals you will have to sign up at a specific broker. Each time someone signs up at a broker recommended by the signal app, the broker would pay the developers of the app a commission.
This does not always mean that the signal app in question is a scam. However, the vast majority of such signals are unfortunately either a scam or they just simply don’t work because they weren’t actually developed properly to work. They were developed to get people to sign up at the recommended brokers so that the app developers get paid the commission.
One of the very few broker-signup signals that are not a scam is Signals365. While it does require broker signup, meaning the broker will pay the app owners; this app actually does work and does deliver ITM winning rates of around 60% to 70%. It also has a paid version that does not require any recommended broker signup, meaning it works with any broker.
Like said, not all broker-signup free signals are a scam but the majority unfortunately are.
They make money by charging a commission
There is also the category of free binary options signals that make money by charging a commission from the profits you have made. These are some of the best signals because they only make money in case you make money as well. If you lose your money, then they will not make any money either.
Unfortunately, there aren’t many signals of this kind because such signals usually make less money for the owners, as they can only charge something like 1%-2% in commissions, otherwise they would cut too deep into traders’ own revenues.
Most of such signals do not work on a trading algorithm but instead allow traders to follow other traders and manually copy the actions taken by them. I can only hope that sometimes in the future it would be these signals that would dominate the market and not the broker-signup ones.
They offer a free trial
Another reason why a binary options signal service can be free is because it has a free trial. Some signals offer a free trial for a certain amount of time after which you will have to pay a regular subscription fee to use it.
You have to be very careful however when choosing such a signals service. If the signal will ask you to sign up at a broker to use it then it’s highly likely it’s a marketing scam (not always, but most of the time).
The optimal situation with free trial binary options signals is when you can get the trial without you being forced to sign up at a specific broker.
So, are free signals legit or a scam?
Like explained above, unfortunately most of the free signals offered at this moment are simply not working at all and they only exists to get you to sign up at a broker so that the people behind it can be paid a commission from the broker.
This does not however mean that all free binary options signals are fake. Like explained, Signals365 has both a paid broker-free and free broker-signup version and it’s a signal service that does actually work. However, such services are unfortunately in the minority, meaning you will have to pay a lot of attention where you sign up.