The problem with binary options trading!

A fair bit of spotlight/scrutiny has been placed on binary options in the past years, with warnings issued from central banks such as the MAS (MAS-Cautions-Investors-on-Risks-in-Trading-Binary-Options-with-Unregulated-Platforms, SEC warns against Binary Options and scams such as the-wolves-of-tel-aviv-israels-exposed.

Likewise, we hope to take this chance to educate investors on this highly risky investment product and advise everyone to think twice before hopping on this bandwagon.

What are Binary Options?

For those who might have chanced upon a Binary trading advert or some sort of get rich scheme, you might be familiar with the below:

Trading with Binary options is to predict whether a stock, or an index, or a commodity or a forex pair, would go up or down within a certain time frame.

Binary options "are based on a simple 'yes' or 'no' proposition: Will an underlying asset be above a certain price at a certain time?

Correct, you are NOT actually buying anything, you don't wait for something to go up and sell at a profit, not at all. You invest in putting down an option that, for example OIL, will have increased in price by the time your option expires, or the other way around, that it will close lower.

If you are right, you will make a profit of 65-90% on your invested amount.

These option time frames can be as little as 30 seconds, to 2 minutes, to 15 minutes, to 1 hour, .... It all depends on what you chose.

Is it a scam?

Short answer is yes & no.

In fact, it is not a scam when u consider that Binary options are in fact about as legitimate as your roulette wheel or soccer betting. Also, Binary options are simple to digest and much easier to peddle as a "transparent trading instrument", thus attributing to its popularity.

However, very often, you end up taking the other side of the market as your broker, i.e. If you win, the broker loses and vice versa. This creates a skewed conflict of interest and their ability to adjust the payout ratio (Odds/multiplier) amplifies that.

The Scam

The scam comes in when certain brokers get greedier and you start seeing instances like refusal to credit customer accounts or reimburse funds to customers; identity theft; and manipulation of software to generate losing trades.

Do not trade Binary Options.

Long story short, you have no business dabbling with binary options. You run the risk of dealing with an illegitimate broker and even if you manage to find a proper broker, you end up facing insurmountable house odds with negative expected value.

If the gambling bug bites, you might just be better off playing the lower house edge games in the casino like baccarat or blackjack.

In conclusion, there is no quick and easy money to be earned. Instead, do your homework and read.
Good luck.

Comments (42)

Apr 30, 2017 - 6:20pm
Disjoint, what's your opinion? Comment below:

Didn't read the whole post, only the conclusion.

I've sold structured products that had a binary content to them. Some large funds trade them. It's an investment with associated risks like any other. Sure some people might try to rip your eyeballs out in the retail market but otherwise all good..

Mar 31, 2018 - 7:44pm
Pump and Dump, what's your opinion? Comment below:

Futures and Options are the same thing, just betting on movement (but by definition, you have the right to delivery/right to 100 shares yadda yadda) but we all know no one actually does that. Just a nice way around the definition of gambling.

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Best Response
Mar 31, 2018 - 8:15pm
dm100, what's your opinion? Comment below:

P&D, I would respectfully disagree that options trading is nothing more than structured gambling, if that is your position.

I've been an active options trader for many years, but even though I have a level 4 options trading clearance w/my brokerage account, IRAs allow for only level 1 (2 at some institutions). Level 1 meaning I can buy/sell calls/puts. Period. Level 4 allows me the ability to trade calls, puts, spreads, straddles, strangles, condors and a few other strategies. However, I keep my strategies pretty simple, keep my timeframes to weeklys or monthlys, and I use my strategies to get into a position at a cost below the CMV (by collecting premium to lower my cost basis if I'm getting assigned shares by selling puts), or by liquidating a position for above CMV by collecting premium by selling calls). Also, I like to sell straddles around earnings season, when I anticipate increased volatility. I don't like LEAPS simply b/c it ties up my excess capital for too long.

Trading options isn't for everyone, but they are a valuable, powerful tool when used properly. On the flip side, they can be monetary weapons of mass destruction when used improperly. The OCC (Options Clearinghouse Corp) is an excellent resource for those who want to trade options to start out. They used to have mock accounts that would allow people to practice w/o using real money. Don't know if they still allow for that, but I found some valuable tools on the site that I hadn't found in a number of books I've read on the topic.

Long-winded post I know. I'm pretty passionate about the practice, though. I have not come out on the winning side of every options trade, but all-in-all, I've done quite nicely, often times picking up anywhere from $300 - $2300 in a week without actually liquidating a single share in my portfolios.

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Mar 31, 2018 - 9:39pm
Pump and Dump, what's your opinion? Comment below:

I started out with options, I lost some doing stupid stuff with SPX weeklies (that's not why I said what I said in my post above) but made all of it back and then some by simply doing directional vertical spreads. Keeps the theta low, low cost upfront, and if you have a measured move you can adjust your strike legs accordingly and up your RR ratio. Some strats are really cool and can even do for income (ie covered calls)! I actually don't hate options, I just found I was doing great with directional plays so just went with futures. No theta decay, no expiration. I didn't need to wait at expiration for my max profit. The money you can make in a 20 point day in /ES is vastly different than a 20 point out spread on SPX, very wide in terms of profit.

Just by reading that you keep your time frame to weekly and monthly already shows you know what you're doing 100% (doesn't mean a lot coming from me lol). Unfortunately this isn't the case for 95% of traders. Most do options for the massive leverage, and doubt they even care about the whole "right to 100 shares @ a specific strike @ a specific date," or any of the strategies that you have mentioned. There was a report I read, most option-traders blow up because they buy super low expy options, they are just betting on the direction in such a short time frame, similar to binary options. In other words, they get stuck on the level 1 approval, lol.

That's awesome to hear, I seen your other posts, and I always love speaking to those who have been in the trading game for a while. I've only been in the game for around a year now, and I love it. Still very young but can't wait to see if I can emulate what I've learn and applied to a much larger account size. I personally believe that the market is simple, and the people who win are those who don't overcomplicate it.

EDIT: I generally believe selling premium is kind-of-meh at times. I mean, you're risking like 3:1 or sometimes 5:1 for a higher probability of profit. 5-10 wins can get wiped out in 1 loss sometimes. BUT, whatever works works. Making money in the end is all that matters. the positive expectancy is all that matters.

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Mar 31, 2018 - 8:51pm
dm100, what's your opinion? Comment below:

I would agree trader, binaries are not really trading option, even though the call them binary options. Just a clever game of word-play to attempt to add some credence to a sham of an investment scheme.

Mar 31, 2018 - 9:38pm
traderlife, what's your opinion? Comment below:

I took a quick look at them when they popped up here. Aren't they basically the equivalent of gambling prop bets?

But they have nothing to do with finance

Apr 12, 2018 - 8:58am
Terry-Jones, what's your opinion? Comment below:

I lost money to binary option scam

Apr 16, 2018 - 8:01pm
preeti22, what's your opinion? Comment below:

How to Trade Binary Options (Originally Posted: 10/16/2012)

I came across new investment option that is binary trading system. can anybody member post some details of this trading system. ????

Apr 16, 2018 - 8:04pm
SirTradesaLot, what's your opinion? Comment below:

http://www.wallstreetoasis.com/forums/binary-options

Apr 16, 2018 - 8:06pm
Mathilde, what's your opinion? Comment below:

You can find out about binary options and providers at chiefbinaryoptions. com/en/option-web-review. Moreover, this broker provides demo account for practising, so you can try trading and understand the main features.

Apr 16, 2018 - 8:07pm
RowanMarino, what's your opinion? Comment below:

Binary Options have been around quite a long time now, typically become a great hit among the new traders. To get started, its important to explore the site like verifyproducts that covers all strategies and fundamental of binary options trading. Then you need to open free demo account on any platform and then practice the strategies to gain profit with real money.

Apr 16, 2018 - 8:08pm
victoria296, what's your opinion? Comment below:

search on Google or find out at chiefbinaryoptions. com

http://couponsohot.com/stores/adam-and-eve-coupons/
Apr 16, 2018 - 8:09pm
gamma45, what's your opinion? Comment below:

this is a very fast way to lose alot of money - if you want to trade try spot FX, binary options is basically coin flipping your payoff is all or nothing

Apr 16, 2018 - 8:10pm
Katherine Burr, what's your opinion? Comment below:

Choosing the right broker for binary options trading (Originally Posted: 04/15/2013)

Which points should take in mind while choosing broker?

Apr 16, 2018 - 8:13pm
Bhusal, what's your opinion? Comment below:

Selecting the right broker for your trading a trader can consider Some of these factors are: Regulations Company Capitalization Trading Platforms Broker Types Customer Services

Apr 16, 2018 - 8:14pm
thestockwalker, what's your opinion? Comment below:

you don't trade binary options unless you want to lose money

Apr 16, 2018 - 8:15pm
John_, what's your opinion? Comment below:

You can find more information about binary options from this cool forex newswebsite called 7binaryoptions.

Apr 16, 2018 - 8:17pm
index, what's your opinion? Comment below:

Troll/baiting thread. Needs to be deleted.

Array
Apr 16, 2018 - 8:18pm
Cmoss, what's your opinion? Comment below:
TXEcon:

Troll/baiting thread. Needs to be deleted.

Yup 10000%

Apr 16, 2018 - 8:19pm
Ophelia, what's your opinion? Comment below:

I can suggest you to check out binary brokers reviews (chiefbinaryoptions. com/en/best-binary-options-brokers), to decide which one is the best for you. To read about its regulation, assets index, services, popularity.

Apr 16, 2018 - 8:20pm
chrishart6501atgmail.com, what's your opinion? Comment below:

Do enough research and recommendations. I got scammed by a broker not long ago, I had to hire a refund professional to get my funds back.

Apr 16, 2018 - 8:21pm
silaroy461, what's your opinion? Comment below:

all about binary options (Originally Posted: 03/16/2013)

On a day like today i would think making money using Binary Options would be very easy..just keep adding to your position as the index falls away....though i think trading opens at 11 am so the big fall/move of the day would be missed.

Jul 26, 2021 - 1:53pm
ShittyShit, what's your opinion? Comment below:

JFC can we delete this abortion of a thread 

Apr 28, 2022 - 12:01pm
yasthomas, what's your opinion? Comment below:

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Jun 20, 2022 - 8:30pm
kirstenschmitz33, what's your opinion? Comment below:

A huge philosophy in making tremendous wealth lies in the understanding of global economics & finances. The reliance of stock exchange on fake media & wall street rumours is apathetic and for the rich to manipulate global economics for their wallets. Although I'll admit I belong to such class of citizens but before I could afford to be here called wealthy I had to liaise with a good hedge fund and stock trade manager that increased my current networth then from 70,000$ to $4.3 million via margin trading in just 1 and a half year and still growing. If you have my knowledge, connections and network you'll make a lot of money. It's not always about whose smarter but who got the best opportunity at the right time. I know professionals in the game now for 15 years. I can increase your networth

Jun 23, 2022 - 4:23pm
noahlucas, what's your opinion? Comment below:

Bitcoin and other cryptocurrency scams are becoming rampant as the day goes by. One should be careful when dealing with people online especially when it has to do with your funds. Getting back your stolen bitcoins is very easy but they are lots of fraudulent recovery firms out there so you need to be careful not to end up being defrauded again. Fartechrecovery @ gmail C0M is the most trusted and reliable recovery firm online. They are the best recovery firm out there now. They are very fast and efficient in the recovery of your funds.

Aug 18, 2022 - 1:45pm
revereamber2, what's your opinion? Comment below:

For a very long time i have not been able to have a good sleep without thinking about my loss. I was a victim of binary option trading scam which has totally ruined many without a bit any form of pity from these fraudulent souls. I can only be thankful to Proasset recovery  for guiding me to a swift recovery of my lost funds after so many trials on getting a refund of my money back from these scam brokers. best advice i will pass to victims like me is to get on your feet and also get yours back. Reach out to him via p[email protected] gmail com. WhatsApp +1 (913) 210‑1809. 
 

Aug 28, 2022 - 6:46pm
johnny111, what's your opinion? Comment below:

If you been scammed I suggest you should first file a complaint with your local law enforcement and then, gather all the evidence and contact a cyber security specialist/digital forensic expert. In my case, the process took a week. I was able to get back a substantial amount of the money lost, you can get in touch with Nicolas Ivanov on Quora  or email at [email protected] , If you have been a victim to internet related frauds contact them, they're reliable.

Aug 30, 2022 - 10:02am
jessicamitchell, what's your opinion? Comment below:

Since I lost my husband I am responsible for the money he left us and managing it wisely because of my son so he will not feel the absence of his late dad but things got out of hand when I invested in binary options and airdrop where binary option keep asking me to pay more to get my invested funds and my wallet got hacked on the money I invested on my bitcoin wallet, It was more difficult when the bank was about to take all my husband property and my son hates me so much that he doesn't want to see me. I am given up and got crazy about it and I had to see a therapist when I tried to commit suicide the second time. I explained myself to Julian and she told me about Andrew, the hacker Andrew Banks

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who was able to get back one of her client funds that had been lost for 2 years and she gave me 100 percent assurance that I will get my fund that it's just 6 months lost I contacted Mr. Andrew and I knew that money is freedom as Mr. Andrew was able to get my binary funds for me in just a few weeks and my lost fund that was hacked from my wallet in a just a month. Mr. Andrew did everything with an attitude of excellence and I am grateful to Julian as well as she later told me my faith lifts me above my fear
 

Sep 13, 2022 - 8:37pm
ruthsmith, what's your opinion? Comment below:

Words can not explain how happy i am to see a testimony about Andrew Banks because i am grateful after what he did when he got my fund from the damn brokers, after loosing all my money without leaving me a penny. Andrew is a man of honor and he will never promise what he cannot do

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Sep 19, 2022 - 7:34am
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Sep 19, 2022 - 7:37am
Stambaughalbertson0, what's your opinion? Comment below:

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thermaldorcas, what's your opinion? Comment below:

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