Binary Options - Scam or Real?

  • In this article, we will be discussing the concept and dangers of binary options trading. Consumers may feel protected against internet scams with an adequate amount of research; however, this program could pose a threat to your well-being and financial security for a variety of reasons. We will present a brief overview of binary options trading and provide you with examples and tips to avoid being scammed out of your hard-earned money.

    What Is Binary Options Trading?

    Seasoned investors and newcomers alike may fall for the concept of binary options trading. The idea sounds simple: you predict that your chosen stock, foreign exchange, or other investments will make a certain amount of money by a set date. Consumers then buy that stock at the asking price when presented with the opportunity. If your bid is more than the final selling price, you lose your money. If your wager meets or is lower than the total value, you gain more money than you had originally invested.

    This concept is presented by its "binary" values. Investments run from a price of $1 to $100. While you will never have a 50/50 chance of making your money back, you could either lose it all or come out richer than your original wager.

    We'll break it down in an example.

    Jane sees a special on sale at the supermarket for apples. The promotion reads "Grab a voucher for $3 on a dozen apples and get $7 back if our apples sell at $10 next week!" Jane reads the fine print that states she will lose her investment if the apples are unwanted by the cutoff date.

    Jane is confident in her decision to buy three vouchers for $9 and determines that she will obtain her three bags of apples and make $21 in the process.

    The Appeal of Binary Options Trading

    So what are the best and worst case scenarios for Jane? She could return to the supermarket next week and collect her apples, as well as her cash reward. In a worst case scenario, Jane could make the trek to the shop and find that the apples have gone rotten and are now worth $0. This leaves her $9 poorer and her original bet has proven to be a waste.

    Seasoned investors and new traders are attracted to binary options trading by the gamble. Many will compare this concept to sports betting. The over/under technique of sports betting lets people make a predetermined guess on their team's advantages. Bettors conduct a sportsbook center for their predictions on certain statistics pertaining to the game. These statistics may include the overall points for both teams or predetermined point differences in the case of football.

    Bettors place their wager that the statistics could be over or under the sportsbook prediction. If they oorrectly choose either value, they win the bet. However, the manager of the sportsbook can adjust the value of the bet during the game depending on the number of the bettors and certain events that happen in gameplay, such as a player's injury.

    The appeal of both binary options trading and sports betting can be found in its risk/reward concept. Traders and bettors will never lose more than their initial investment and stand a chance of making their money back with a gain.

    The Dangers of Binary Options Trading

    Binary options trading is not federally regulated, therefore it is not an illegal process. However, this process stands more at a risky standpoint than a reward system.

    Here are some of the many dangers of purchasing binary options.

    Much like gambling, binary options trading can be addictive. Trading websites present flashy graphics urging the consumer to invest with the chance of a huge payout. A consumer may lose their money on a few investments and keep repeating the process for another chance at a reward. Certain websites will pay the visitor even if they predict the value wrong. A person could spend $50 on a wager with the guarantee that they will receive $10 even if they lose. This looks like a trustworthy process but still results in the consumer losing money. Because binary options trading is unregulated, consumers cannot report a fraudulent process and be compensated for their monetary losses.

    The bottom line is that binary options trading is simply too good to be true. Websites promise a positive payout with minimal work, but the majority of consumers end up losing their money.

    How Can I Protect Myself From Binary Options Trading Scams?

    The simplest solution to protecting yourself is to not get involved with a binary options website. If the appeal of these options are too tempting, consult an advisor and invest through a reputable source.

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