I’ve only recently looked into binary options even though they’ve been around for years. Are they a scam?
I’m going to be perfectly honest: the answer is no. But at the same time there is a huge grey area and scenarios where you need to understand what you’re getting yourself into.
What are Binary options? Let me explain:
In a nutshell, binary options are basically “bets” you make on stocks where the only choices are up/down, meaning if a stock goes up and you bet it would, you will earn money, if not, you will lose it.
The big difference between trading stocks the traditional way and “trading” binary options is that with the latter you don’t actually own the stock. You are simply “gambling” on whether or not stock “X” will go up or down based on whatever resource you have:
- Insider information.
- Educated guess.
Have you ever bet on a sports event between friends or with other people through websites? If so then binary options will be much easier for you to understand. It’s basically betting/trading “outside” the stock market system.
Now as to why it’s NOT a scam, let me explain:
There is a HUGE difference between doing binary options through credible sources & trying to use systems which promise you riches or some secret formula to beating the system.
When you’re doing binary options, you are essentially admitting to playing a game of chance. You put in a certain amount of money, guess as to whether or not a stock will go up/down and then see what happens. There is no scam in this because you acknowledge the risk/rewards from the get go.
To say this is a scam would be like tossing a coin, guessing tails before it falls and then when it turned up heads calling the game a scam. It’s ridiculous.
However when it comes to products/programs which say they can help you succeed in binary options, that’s where scams are running a muck. These things are mainly a scam because:
There is NO way to accurately predict the future of stocks unless you possess insider information. Even if 99% of people agree a stock will rise/fall, in the end the chance of you guessing right is STILL 50/50 so all the predictions these fancy machines/programs make still fall under the 50/50 category.
Is binary options trading a huge gamble?
Yes.
There are people who succeed with it and maybe there are ways they can predict the future, but in the end like I said before, it’s still 50/50. I personally plan on experimenting with binary options in the near future. In my mind, I’d try to implement my knowledge of current events and place bets on stocks I “know” would rise.
For example: If there is ever some sort of economic downturn or prediction of one in the world, I notice many times the price of gold rises. This is probably because people fear currencies falling so they hedge themselves with gold/silver, ect…
If this cause/effect constantly applies, I could technically bet on a gold stock going up using binary options and make some quick money. That’s really theory, but no matter how “solid” it is, it’s still a gamble. Anything can happen. People and even experts can predict one thing and then events may totally unfold a different way. It happens ALL the time.
Long story short: Unless you possess insider information, you’re gambling with binary options. Don’t invest more than you’re willing to lose if you decide to do it.
How much can you lose betting with Binary Options?
This really depends on which binary options app you use.
From what I understand most if not all of them are free to register with, but you to put down an X amount of money to start. With that investment, you’ll be making the bets on stocks. Each time you bet a certain amount, you put it all in, meaning if you lose the bet, you lose the money. If you win, you keep going.
Other issues I see with using Binary Options:
It’s not overseen/regulated by any governmental institution. This can be a good/bad thing. I’m not a fan of governmental intrusion into the free market which I believe binary options are a product off, but you could certainly find reasons to be hesitant of this industry, it’s mainly because it isn’t being monitored by an outside body.
There are already tons of scams being produced which try to get you to believe you can beat the binary options system with their approach and if you get scammed, it’s going to be a pain in the you know what to get your money back.
As I’m getting more and more into this binary options industry, I’ll be looking up programs which deal with binary options and tell you whether or not they are scams. In fact if you currently know of any, please let me know.
My best advice would be to NOT fall for ANY company/program which says you can easily succeed with binary options using their system/approach. Again, it’s not possible, because the whole business is build on a guess and there’s no way to accurately predict the future. It’s always changing.
Pros:
- It’s not a scam.
- There is potential to make a lot of money within this business.
- Less red tape to go through than with traditional stock trading.
Cons:
- Too many scams popping up which promise success with binary options trading.
- It’s essentially a coin flip. Either you guess right/wrong.
- Each time you bet on a stock, you risk losing 100% of the investment.
- The biggest issue is using fake programs which promise to hedge your risks with binary options. Here’s one example of a Binary Options scam.
My final thoughts:
As I said before, I’m very much considering trying this out in the near future. It is a form of making money online and as such, I feel I need to explore this and let people know if there’s really good potential behind it.
But even in the most optimistic scenario, the industry is still a gamble. Anyone who goes into it with the mindset that they’ll get rich is fooling themselves with that “lottery mentality” or what some call shiny object syndrome.
Binary options has potential, but if you’re looking to build an online business and make long term money online, I wouldn’t suggest it. I would instead suggest a more stable course like starting a legitimate online business.
If you have any questions on this subject, agree/disagree with me on it, I’d love to hear what you have to say! Also if you have some tips on how to succeed in the industry and don’t mind sharing it, I wouldn’t mind hearing about that too!