What is binary options trading?

Hello,

Let’s start with the Quick and Boring Answer:

Binary options are deceptively simple to understand, making them a popular choice for low-skilled traders. The most commonly traded instrument is a high-low or fixed-return option that provides access to stocks, indices, commodities and foreign exchange. These options have a clearly-stated expiration date, time and strike price. If a trader wagers correctly on the market's direction and price at the time of expiration, he or she is paid a fixed return regardless of how much the instrument has moved since the transaction, while an incorrect wager loses the original investment.

Warning:Surprisingly (or not), all the positive answers related to this subject about positive results are always including to “BO Brokers” (or called like that) and links to amazing winning strategies…

Time to get back to something more serious.

By the way, new European regulation totally banished Binary Options for those who are in EU and brokers in the world have to follow this new rule. A clear signal of the risks linked to BO.

What is binary options trading

I wrote a Full Article on this subject on Quora if you want to learn more and have a better understanding of new regulation (Yes it seems not the most funny, but I tried to make it entertaining)

The answer to save you from the hell

A Professional Point of View

If you ask professional traders about the different way to makes money on the market, you will hear about Forex, Commodities, Stocks, Futures, Index, Bonds, etc some about Crypto (more risky but you can give try and some funds are coming on it). But strangely, none of them is speaking about Binary Option. Are they dumb ? I don’t think so.Binary Option are always presented at the simplest version of trading, in a certain way, yes, you just have to make one clic “upper or under the current price”. If it’s so simple, why professional with deep knowledge on the market, many years of expertises are not jumping it ? Probably because it’s not as clean as many website are trying to awkwardly promote it !

Simplicity & Mathematical point of view ? Really ?

On a mathematical point of view, you just have two options, Win or Loss. You put 100$ and you can expect to win 80% of it, meaning 80$ (Yes 80$, I know at this point, you think, one clic and I win my daily salary or more, amazing!! stay tune).So for 100$, you can win 80$ or loose 100$. The ratio is equal to 0.8 this is under 1. As the probability of wining is 50% ( 1 on 2, win or loose). If you multiply to infinity the expected value tend to 0, meaning no more money for you, nothing, nada, empty pocket. Whatever…

Here, some people will jump in saying, that probability is not 50% win or loss because you can do technical analysis to improve this score.

Yes, but no !Let’s compare with Forex trading. One of the key component is the Risk Management. Which is how many are you ready to loose for each trade. If you structure well your approach you would never go to any trade were you plan to have a ratio less than 1:1. Meaning you can loose 100$ if your target is to reach at least 100$ positive. Often you are more looking for 1:2 or 1:3. You can decide your return.

The second important point, it’s not time constrained. Binary Option are too simple and are added a contrains, the time. You bid for a price being upper or under the current value in 15 / 30 min / 1h or whatever.On traditional trading you are not impacted by that. If you plan the price going up to your take profit goal, it cans take 1h, 1day, or 1 month it’s not a problem. Till your stop loss (-100$ in my exemple) is not it, you are still in the run.In binary option if for example price is at 1.2000 you bid on up in 15 min and price is at 1.19999 at that moment, well you loose your 100$. In forex classical trading you will just be at -1$ floating (depending of your position size and leverage) and if it move up later on you don’t care.

So yes, it’s look simple, one clic and in 15 min you can get a bit more of money or not, but it’s not sustainable and mathematically designed for making loosing money. Technical Analysis can help you to predict the direction of the trend, but is NOT able to predict if it will be in 5min, 1h or more ! There is not proper strategy able to do it, just probabilities but it’s doesn’t make sense to go in that!

Remember, there is not free or easy money !

Brokers Behind Binary Options

Finally, let’s touch the surface of Brokers.In order to bid and make money, you do not have the choice and need to use a broker. Unfortunately, many companies jumped in this business to take your money.

Many of so called Broker for Crypto are just fake website / fake companies. Take a look to there locations, many are based in Malta or in Eastern countries. It’s not real brokers, they are not regulated by any law and giving your money to them is like throwing it by the window during a storm. They is several list of banned companies / broker. Check it twice !

Did you know that you can open a fake Binary Option website for only 10k$, yes ! So be sure that many people with bad behaviors did it and some companies are specialized in creating such platforms!

Many of them are never connected to the market, you are not passing orders on the market, it’s just in a black box controled by the so called broker. Often they bid against you, and make money from this way, o big warning here !

Finally some of them have develop a sales team. You make a try with 500 euros and make a bunch of money. A sale guy call you and motivate you to try with more, you do it, win again (system is develop to do so and to give you confidence), then you put 10k$ in order to make at least 50k$ (the best deal ever) and surprisingly (or not!) no more call, nothing accessible, and no more contacts. You get scammed (well done) !

If after that you still want to give a chance to binary options (I would have warned you, but that’s not my money, so do what you want) I encourage you to use a well known broker on the market doing Forex, Stocks with effective offices in a proper country.

Cheers,

Galpa Herry