I’ve spent the majority of my working life in the finance industry. As a result, I’ve gotten to watch as the way we invest and trade has evolved. One of the newer movements in this evolution is a shift toward short term trading; binary options trading to be exact. In fact, it wasn’t until the year 2008 that this trading vehicle really started to take off. While I understand the excitement surrounding binary options, it’s incredibly important that traders know that there is a dark side to them. Today, we’ll talk about why binary options are leading to so much excitement and the dark side that you need to know about.
Why Binary Options Trading Is Becoming So Popular
As mentioned above, binary options are a relatively new trading vehicle. However, they are growing in popularity incredibly quickly. The reason for this is simple. Binary options brokers generally market their products as an easy way to trade that comes with incredibly high returns. Think about it. Do you want to make easy money… fast? Of course you do, everyone does. Essentially, it is this chase of riches that’s leading to such popularity surrounding binary options.
The Dark Side Of The Binary Options Industry
While binary options may look like a shiny, safe new trading vehicle, the vehicle definitely has a dark side. Here are some important facts that you need to know about binary options…
Regulation – One of the biggest issues with binary options isn’t the trading vehicle itself. In fact, it has very little to do with how you trade. At the end of the day, because binary options are such a new trading vehicle, there is very little regulation surrounding the industry. With little regulation, finding a regulated broker can be incredibly difficult. Sadly, this has opened the door to scams. In fact, scam brokers are all over the industry. These brokers may fix the numbers so that you never win, they may offer one touch programs that are made for you to lose money, they may even simply take your money and never respond. With that said, if you do decide to trade binary options, it’s incredibly important to do your research and choose an honest, regulated broker.
Simplicity Is Over-Exaggerated – One of the big aspects to marketing for binary options companies is simplicity. When trading binary options, it’s your job to make short term predictions with regard to whether or not the value of a financial asset will head upward or downward. If your prediction is correct, you earn big gains. However, if your prediction is incorrect, you lose 100% or close to 100% of your initial investment. Seems simple enough right? Unfortunately, it really isn’t that simple. The truth is that it takes an incredibly talented technical trader to make short term predictions with regard to market movements. While there is simplicity in making these predictions and understanding the trade, making a profit trading binary options really isn’t simple at all.
All Or Nothing Is Rarely A Good Investment – Binary options trading is nothing more or less than making an all or nothing prediction. If you win, you get it all, but if you lose, you lose it all. The very nature of binary options leads to reckless decision making and can lead to an emotional trading process. Unfortunately, emotions lead to skewed views and more losses. At the end of the day, if you’re going to trade binary options, make sure that you have the ability to separate emotions entirely from the trading process.
The truth is that binary options trading can be a very profitable way to go. However, it takes a very talented trader to make the kind of money that most binary options ads lead you to believe can be made. Also, it’s important to watch for scam brokers as they are everywhere. Nonetheless, if you’re willing to do your research to find a solid broker, and you consider yourself a talented person when it comes to predicting market movements, this could be a good way to go.