Why Do Most People Have A Negative Idea Of Binary Options?
Why Do Most People Have A Negative Idea Of Binary Options?
One of the things that people all over the world are looking for are ways to make money in order to improve the quality of life. While money isn’t everything, having enough of it available that a person doesn’t have to worry about debt, proper medical care, or adequate schooling for children are all understandable concerns. Because of that, even people with jobs that pay a monthly salary are often interested in ways to bring in a bit more money, or even find a better occupation that pays more in less time.
This is one of the reasons why speculative trading has, in recent years, become a more popular activity for people all around the globe. This type of trade lets people jump into trading and investing with much lower amounts of money, but still offers the same chance to make a profit, sometimes in a very short period of time.
However, with any new, popular trend, there can sometimes also be controversy, and things like binary options trading is no different. For every success story about people finding new ways to improve their income, there are sad stories about people that have lost their savings, and this has created a lot confusion. So why is there a new fear growing around binary options trading? Why do people have a negative idea of it? We’ll go into some of the reasons now.
Binary Options Trading Is Gambling
This is a common misconception, but it’s an easy one to make because of the similarities speculative trading has to less ethical means of making money. Gambling, of course, is both regulated and unregulated, can be conducted in casinos or in back alleys, can be run by honest businesses, or by simply as a matter of fun between friends.
However, both gambling and speculative trading share one thing in common, and that is a similar method of profit. They both rely on people putting down money based on a prediction. In most forms of gambling, this kind of betting is about the outcome of a game of chance, or even a prediction on an event, such as a sporting event like horse racing, or even professional fights or football matches.
Binary options trading is reliant on traders investing, or “betting” on how the price of an asset is going to move. On the surface, this also seems like a game of chance, since that immediately means a person has a 50% chance of being right about a price moving upwards or downwards. That 50% doesn’t seem like good odds on first glance, and pragmatically, it’s not.
The real secret of binary options trading is that an understanding of the market forces is what boosts a trade from a random guess with a 50% chance of success to an informed investment with a success rate of 90% or higher. But this, of course, takes a lot of effort, discipline, and above all, study, in order to reach this level. For people unwilling to put in the time, binary options certainly seems like random guessing, but that’s far from the truth.
Binary Options Makes People Lose Money On Bad Trades
Another common complaint for people who don’t understand binary options trading are stories of people being “bullied” by brokers and advisors into making trades they aren’t sure about, only to lose that money when the trade doesn’t yield the expected results. There are two issues at work here with this particular fear.
The first is that the marketplace can be an unpredictable place. Sudden corporate scandals, the outbreak of war, or even natural disasters such as hurricanes can all unexpectedly alter the trajectory of what might otherwise be a smooth, mostly predictable market. This can sometimes mean that even a financial advisor, with sound reasons for making a recommendation can be wrong. The unexpected happens, and even experts can be unprepared for the financial ramifications.
On the other hand, some brokers and financial advisors really are bullies. They may push a client to make trades they are not sure about, and as long as a client does not exercise his or her legal right to refuse, that broker or advisor will continue to boss them around. If you find yourself making trades you don’t even want to make, because you feel your financial advisor is bullying you, and the majority of your financial decisions aren’t your own, that’s not the fault of binary options trading, but of your relationship with your broker. It’s better to find an advisor or broker with whom you have a cooperative relationship, rather than an adversarial one.
There Are Scammers Out There
Unfortunately, perhaps the biggest reason that there is some skepticism about binary options and some negative feeling is because, like with any rising trend, people move in to exploit it. Binary options trading is no different. People have set up false brokerages, offering hopeful new investors the chance to start trading. However, these brokers have no actual legitimate connection to the stock market, and thus, when people make trades based on their false stock data, they are told their trade was poor and the money is pocketed.
It’s difficult to tell the real brokers apart from the scam ones if they’re not licensed. While it is true that all brokers that have a license are legitimate, it is not true that all unlicensed brokers are scams. Some brokers choose to forego a license in order to be able to serve American clients, for example, because if they hold a license, it would be illegal for them to do so.
This means that people who want to use an unlicensed broker need to do an extra bit legwork and research in order to make sure that their potential new broker is a reputable one. In the end, taking the time to simply do the homework required on binary options trading, and the quality and reputation of specific brokers is usually enough to avoid making serious mistakes and falling for a scam.
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