[Don't Be Fooled This Way!] Features of a trustworthy sign tool for BO (Binary Options)

This time I will summarize how to distinguish between many unusable signal tools and somewhat reliable signal tools.

【Table of Contents】

• Backtest Period
• Entry Time
• Supported Currency Pairs
• Daily Average Number of Trades
• Win Rate
• Maximum Drawdown

【Reliable Factor①】Backtest Period

The first is about the backtest period.

It's obvious, but….
There are too many signal creators who publish for such a short period!
(If you're not motivated, just quit!)

Please backtest at least 10 years.
Three months or one year provides no reliability.

Why?
Because when you create indicators, you realize that if entry is only by signals, you can obtain many backtests!

The downside of taking many backtests is only a few minutes to a few hours of waiting time.
Nowadays, dedicated software can backtest automatically.

Still, taking only a tiny amount of backtests is full of suspicion, isn't it?
Even with 10 years, a win rate of 56% can, in a surge month, become 80% when filtered.

First, pay attention to the gap between period and win rate.

【Reliable Factor②】Entry Time

Second, also pay attention to the entry time.

Among people issuing signal indicators, some publish backtest screenshots.

Therefore, look carefully at the entry times.

Most likely, HighLow Australia cannot trade certain currency pairs during late night hours.

In the morning, you cannot trade all currency pairs, right?

Why is that?

Because those are the times when profits can be made.

Some currency pairs like GOLD or AUDNZD that could be traded before have been removed, and some pairs have lower payout rates.

Why is that?

Because they are currency pairs that can generate profits.

For the operation, if you earn too much, the service cannot continue operating.
They seem to be implementing various countermeasures.

So what does that mean?

If backtests show morning-entry checks…

there will be a large discrepancy between actual trading and win rate, as well as trading frequency.

Even if they boast a 65% win rate, having checks for all times and a daily average of 10 trades is wasted.

It’s a waste.

With just that, you can tell whether it is a data-driven system trader or not.

【Reliable Factor③】Supported Currency Pairs

Third, about supported currency pairs.

If the number of supported pairs is half-hearted, trust is low.
If they prune to GBP-related pairs for some reason, that’s okay, butif they use arbitrary currency pairs with no relation, beware.

This is because the characteristics of currency pair movements and indicators can make win rates rise by chance.

It doesn’t mean win rate exactly matches expectations in all cases, but for trading on HighLow Australia, having 16 currency pairs with guaranteed win rate gives a clear edge in trade frequency and stability.

【Reliable Factor④】Daily Average Number of Trades

Fourth, the daily average number of trades.

No matter how high the win rate, if there are only two opportunities per month across 16 pairs, when will you make a profit!
That’s how it feels.

Even a famous binary options YouTuber (now mainly updates a community) had a signal indicator with a border of about 60% win rate and 15–20 trades per day.From my experience, others who craft signals with proper candlestick analysis seem to hit this border as a limit.

I have never seen a genuine one that far exceeds this border with the same win rate as shown.

Because it’s discretionary, slower than candlesticks, those that exceed this border would have been released by overseas traders long ago.

By the way, keeping an 80% win rate through discretion is possible, so it’s understandable that non-discretionary signals with win rates around 60% are the typical limit.

If a signal indicator claims to exceed this, be wary of non-sensical daily trade counts near 0–0.3 or backtest periods of 1 month.

If martingale is present, there’s a high chance of hitting the maximum drawdown described below and going bankrupt.

It might seem like the answer came from item ④, butIf you introduce currency strength and correlation controls, there might be a chance, but since you have to program controls for each currency pair, it’s more practical to use discretion.the win rate limit for non-discretionary tools in the BO community is in the 60sI think.

This is because any programmer, system trader, or discretionary trader finds 60% range as the current limit for non-discretionary signals.

Normally it would converge to around 50%, so only a 10% gain is already remarkable.

There are signals that boast 80% or 90% win rate without discretion, but usually they have obvious issues like daily trade counts near 0–0.3, backtest period of 1 month, or other red flags.

Also check whether martingale is used.

If martingale exists, you will likely hit the maximum drawdown discussed later and go bankrupt.

Maximum drawdown is discussed below.

As of now, the non-discretionary win rate barrier in the BO community is around 70%.

There might be a chance if you add currency strength and correlation controls, but since you’d have to program controls for each currency pair, it’s more efficient to rely on discretionary trading.

【Reliable Factor⑤】Win Rate【Reliable Factor⑥】Maximum Drawdown

Lastly, maximum drawdown.

Maximum drawdown is the maximum loss incurred at any point (not the maximum consecutive losses or the BaLaSAr bankruptcy probability).

Without this stated, even a signal with good win rate could bankrupt users.

For example, suppose you entry with 1000 yen and the maximum drawdown is 100,000 yen.
If the user’s balance is 50,000 yen and they enter 1000 yen, they could go bankrupt before the balance reaches 100,000 yen.
If the drawdown reaches 100,000 yen before the balance is recovered, funds run out.

Having no funds is a terrible situation, isn’t it.
If you have extra funds you’re willing to risk, maybe, but most people are aiming to grow their capital.

This is what differentiates “the seller earns” from “the buyer fails.”

Therefore I believe it is mandatory for signal indicator sellers to disclose and understand maximum drawdown.

This is essential for system trading (completely hands-off investing).

In conclusion

How was it?

Just knowing these will help you discern a lot of products as garbage or not.

↑ My tone might be harsh, but it’s due to irresponsible sellers; it’s not gossip, it’s a fact!

This content focuses on signal indicators, so I’ve summarized the minimum data necessary for system trading.

Discretion will be a bit different, so I’ll write about that another time.