Binary options trading is one of the more polarizing types of investments out there. Some see it as simpler or more enjoyable than the typical purchase and sale of stocks and other assets. Others view it as an activity very much akin to gambling, and subject to rigged conditions and other scams.
To some extent, these competing views are subjective. Different people have different experiences with binary options trading, and there’s not necessarily a “correct” interpretation of whether it’s good, bad, safe, or dangerous. However, a more thorough understanding of binary options trading can help you to make up your mind.
How Binary Options Trading Works
Binary options trading is an investment that works more like a prediction that can be either right or wrong, but nowhere in between. An investor bets that a given asset will be above or below a certain point after a fixed amount of time. That time can vary greatly, but it can be as quick a turnaround as 60 seconds. If the prediction is correct, the investor will recoup his or her investment plus a bonus on top—if they’re wrong, the investor loses the entire amount put into the venture.
The Gambling Argument
There has long been a lively debate concerning whether or not binary options trading constitutes gambling. Binary options brokers tend to argue that it is not gambling, suggesting that there are third parties involved in payments (meaning it isn’t just the customer against the house), as well as that brokers collect no commission for a trade that ends in a “draw.” But these are fringe arguments. Many still argue that the basic format of making a prediction and either losing or making money on it fundamentally qualifies as a game of chance. The interesting question becomes whether or not this interpretation extends to all stock and asset trading.
Evidence Of Scams
People have always been concerned about the scam potential involved in binary options trading. Binary options trading firms set their own price indicators, which means that they tend to have the ability to manipulate numbers in their favor should they wish to do so. But it was last year when Banc de Binary had to pay an $11 million settlement that news on corruption and scams really moved to the forefront. This particular firm has since shut down, and binary options trading appears to be struggling to stay afloat as a means of investment.
It’s plain to see that there are some potential issues with this type of trading. While there’s little question that there’s a fair degree of chance it’s still a type of investment that continues have its own appeal, and under the right conditions it can still be worth consideration. How long it will continue to be an option remains to be seen.