Trading Rules and Procedures
The “binary” in “binary options” is borrowed from mathematics and computer science, where it is used to indicate that only two possibilities exist. Binary options, therefore, can yield only two possibilities − up or down. When you purchase a binary option, therefore, you are betting one of two ways − either that its value will rise or fall by a fixed amount at the expiry time − the predetermined point at which trading is closed and settled. If the option’s value rises at the expiry time, you earn money. If it falls, you lose it.
- It’s a simple way to take advantage of price fluctuations in the global market
- It’s easy to understand
- You pick the stock or commodity and the size of your investment
- Trading can be done any day, at any time and at any place you find it convenient − at home, at work or even over a smartphone
- And if you win, it’s quick money
- If you win, brokers will keep up to 30%
- If you lose, brokers get the difference between the sum they keep on a losing trade and the amount they pay out on a winning trade
- They’re short-term trades, which is always risky since it’s nearly impossible to beat the market 100% of the time
- Losses are huge – and the investor can easily lose all of the principal
- And unlike the stock exchange, you don’t purchase a tangible asset, you’re only guessing the direction it will move in the market, so there’s nothing to sell off when your predictions are incorrect
In some countries, binary options are traded on regulated exchanges, but generally they are not. Moreover, since it is impossible to predict with any certainty if a certain option will close higher lower at an arbitrary point in the future, binary options resembles gambling more than legitimate trading. In fact, in Britain, binary options platforms are defined as a form of gambling. Legitimate binary options brokerages based in the United Kingdom, therefore, require gambling licenses.
Caveat Emptor: Buyer Beware
There are two crucial factors to keep in mind when considering online binary options trading:
- Binary options trading is not regulated well enough or widely enough to be considered a universally reliable investment alternative. The location and management of internet-based platforms can easily be disguised to escape law enforcement and governmental oversight.
- The internet is Ground Zero for binary options scams. There are a plethora of fraudulent binary options scam trading sites operated by firms that claim to be legitimate brokerages but, in reality, are not licensed to conduct trade and are not plugged in to any market.
In response, some countries have taken action. The United States permits binary options trading only on domestic, regulated exchanges. Australia and Belgium outlawed the offering of binary options to their citizens. France has banned binary options firms from advertising electronically. The Netherlands totally prohibited their advertisement. Canada and Israel have enacted outright blanket prohibitions of binary options. And the European Securities and Markets Authority (ESMA) announced in March 2018 that it was prohibiting the marketing, distribution and sale of binary options to retail investors.
Are You a Victim of a Binary Options Scam?
Perhaps you were first attracted to a website by a pop-up ad, or a social media post. You clicked and found an attractive, professional-looking presentation promising you:
- A quick, profitable return with an immediate bonus
- An easy-to-manage online binary options platform
You signed up and were soon contacted by one of their representatives, who introduced himself as your “broker.” And then you transferred funds, most likely using your Visa® or Mastercard.® Soon, you found yourself trading on stocks or foreign currencies, indices and commodities. To help you out, your “broker” courteously provides personal coaching and timely recommendations (which would be illegal if he were a real broker, a sure indication that he’s employed by a binary options scam).
It’s a Video Game
In your case, the unregulated firm’s state-of-the-art internet site, which you presumed would allow you to trade, is, in fact, nothing more than a video game. The binary options platform it operates does not follow obligatory trading rules and procedures. In fact, it’s not even plugged into a true market exchange. In this case, the gains you supposedly made and the losses you supposedly suffered are imaginary, nothing more than smoke and mirrors intended to placate you into thinking it’s for real.
If you think you have been victimized by a binary options scam, consult with our fund recovery experts at MyChargeBack