By now it’s difficult to avoid the growing industry of binary option trading. Despite the influx of brokers, money and increased regulation – binary option trading is still a grey area in some legal jurisdictions. The primary problem lies in classification (is binary option trading a legitimate form of investment or merely a type of gambling?) and lack of regulations to keep scammers away.
Binary option trading is classified as a form of ‘exotic investment’, but is better described as a simplified form of trading. If you are unsure as to whether binary option trading is right for you, read on to find out what is entailed in this increasingly popular form of investment by exploring its facts and common myths.
Myth: Binary option trading is easy.
This isn’t technically a myth – trading binary options is indeed easy, but doing so successfully is a different matter. It is perfectly possible to make regular returns from this form of investment, but only around 10% of binary option traders are able to do so. To be successful, one has to study their market of choice for years and have an extensive understanding of economics. Only with this knowledge are traders ever really ever going to make wise predictions in binary option trading. This form of investment may be simple in terms of trade mechanism and structure does not equate to binary option trading being easy money. The need for economic insight and market study is as important with binary options as with any other form of trading.
Fact: Binary options allow for a simplified means of trading within the financial market.
When compared to more traditional forms of investing, it’s safe to say binary options provide a much more accessible means of trading within the financial market than many of its alternatives. A trader must only invest a set price for each binary, and thereby have their potential loss limited to that amount. The return, too, is fixed – and instant upon expiration of the binary. There are only two directions the binary option can go in – resulting in either a definite loss or definite return.
Fact: Successful traders can make money fast with binary options.
It is true that payouts for most binary options are fast, and a binary option expires quickly meaning there is little waiting around for the result of your investment.
Myth: It is possible to get rich through binary option trading.
Perhaps possible – but extremely unlikely. The margin of profit made through binary option trading might provide a nice side income, but is not sufficiently substantial to get rich from unless you spend your every woken moment trading and at a 90% success rate. Binary option trading is, put simple, not a get-rich-quick investment. It is worth noting that many brokers put limits on how much return you can see through trading on their website, such as by limiting the size of the trade. Other brokers will only allow success up to a certain rate – often determined by how much you have already invested in buying binary options.
Fact: The binary option industry is a hot spot for scammers.
Unfortunately, due in part to lack of regulation and to the vulnerability of inexperienced traders – the binary option industry suffers its share of scam websites and shady brokers. In fact, the prevalence of illegal operations posing as legitimate scammers is one of the many reasons binary option trading has failed to gain a respectable reputation. Ironically, the lack of legitimization from governments and international standards only enables scam artists to fool unsuspecting traders. The best way to avoid scammers is to only trade through verified brokers which have been vetted by binary option review sites like Binaly.com While the prevalence of scammers shouldn’t put you off binary option trading, it should encourage you to be careful and vigilant when choosing the brokers with which to trade. If an offer sounds too good to be true, it most probably is.
Myth: Binary option will only continue to rise in popularity.
Binary option trading may be gaining momentum, but its future remains uncertain for several reasons. The US has implemented a lot of regulation in the industry in recent years, making US binary option trading specific and safer than in other countries. The UK, similarly, is taking a liberal approach in creating a space where binary option trading can exist as a legitimate and regulated form of investment. Countries such as Israel, however, has taken an opposing view and recently banned the sale of binary options. Simply put, the future of binary option trading is subject to public attitude and governmental classification of the practise.
Hopefully this guide will have clarified some of the facts on binary option trading. The bottom line for any trader is to not view binary option trading as a means of getting rich quick, nor disregard it as another scam. Binary option trading is not for everyone – but for those who are able to experience success with this exotic investment, binary option trading provides a fun and straight-forwards means of scoring small amounts of return.