These are the most popular questions asked by traders about binary options on Quora, Reddit and other online communities.
1. Is binary trading legal in the U.S.A., U.K., Europe, Asia, and Africa? Where is it illegal?
Binary options trading is legal in virtually all countries. However, individual countries may have different laws governing binary options trading. In the U.S., binary options trading is legal. But at the moment, only Nadex is licensed to offer the same in the country. Stringent requirements have made it impossible for offshore brokers to apply for licenses.
In places like India and the U.S.A., there are no “legal” offshore brokers. That only means that the brokers don’t have licenses, but traders are still able to use those brokers.
Trading with binary options is not illegal in any democratic country. But in some places—like in South America or North Korea—you could potentially be committing a crime.
2. Can you really make money with binary options?
The truth is that you can make money with binary options. But things are not as good as they look like, and even if you can make some profits out of it, you can’t live off binary options.
Binary options trading is a method of investing by predicting the movement of resources like silver or gold.
This form of investment is similar to others, such as Forex and stock trading. This method of investment is simpler than other methods, but it owns a few risks that you should know.
You need to understand that there are no easy ways to make a lot of money fast. In the world of binary options, 95% of the traders lose their money, especially when they are beginners. But if you are an experienced trader, then you will have a lot more chances to make good profits out of it.
This kind of trading requires that you start to learn about the market. You need to make some research and study a lot. But the most important thing is to understand that you are not going to make a lot of money as soon as you start. It requires time, and you are going to have a lot of losses at the beginning. Some people even quit and leave without their earnings.
You may be interested in How do Binary Options Brokers Make Money.
3. Are binary options legit?
Yes, the binary options are legit. The people may look at them as a scam because, if you are lucky enough, you can make a lot of money in a short time. But the truth is that it doesn’t happen all the time, and you need to be lucky and smart to have important profits.
This is a legitimate investment form and a true trading product. In that way, it’s just like Forex pairs and other trading types. You need to be aware of how much money you are going to invest. Remember, invest only the money you afford to lose.
Binary options trading is legit but incredibly risky. If you feel like you can’t deal with the fact of losing money sometimes—or you can’t sit down and wait for the best to come—maybe this is not for you.
The binary options have many bad reviews in the trading market. This is because a lot of people have lost large amounts of money doing this kind of trading. Those people have invested too much money. Most of them were beginners in the binary options trading world.
To be good in binary options, you will have to make research and read some broker reviews. This is to get a lot of understanding of any available trading feature you can find.
But the most important thing is to have access to the market news. You also need to constantly check the reports of other traders that are working on the same asset that you are.
4. Is binary options trading safe?
As I said before, this is a way of trading that you can trust because it’s legit. But in regards to the safety of your money, there is a 50% chance for you to lose the money you invested. However, there is also a 50% chance for you to become a winner.
That is the main reason why you need to think twice about how much you want to invest at the moment of trading. Even though you can earn double of what you invested, you can also lose that amount.
Of course, you can try to avoid that by studying the market and learning new trading skills.
Traders guess or predict if the value of assets (like gold or silver) will increase or decrease during a time period.
That means that if your predictions come true, you will be able to make some incredible profits. This of course depends on how much you invest in that specific trade.
But, if the value doesn’t change as you predicted, or if it stays the same, then you will lose what you invested on that move. The losses will depend on the amount of money that you invest.
Even though this is not a scam, it works more like a sport. That’s why you shouldn’t take this as your only source of income.
Sometimes, you have really bad luck. That definitely doesn’t mean that this is not a legitimate way of trading.
5. Are binary options a form of gambling?
In fact, binary options are a way of gambling. Because, in general terms, any form of investment is a gamble. Gambling means wagering money with an uncertain outcome. That is exactly what happens with the binary options. Motivation and faith are the principal motors of the trader aiming to make profits.
The risks of the binary options are different. The risk level depends on the value of an asset that can fluctuate. This applies as long as they are been traded during a determinate period of time.
Binary options are a new online investment type. They are based on predicting the movement of the assets in a specific time in the future. This is the reason this is a combination of gambling and trading.
You need to study the market as much as you can and understand how it works. Determine if you think you can work with it, but you need to have luck to make good profits.
If you are an experienced trader, you know that this is not an easy way to make money. It requires time and effort. And if you are a beginner, then that is information that will be useful for your career as a trader.
6. Which is better: Forex or binary options?
Both Forex and binary options have their own set of advantages and disadvantages.
One of the advantages of binary options is that you always know the exact maximum gain or loss in advance. In that, payouts are always preset, and you can only lose the invested funds. Money in a trading account remains unaffected by trading risks. With Forex, even with stop-loss orders, you can’t be 100% sure of what you will lose or gain. Unlike in binary options, the market price changes will dictate what you win or lose. In some cases, your entire trading balance can get wiped out by a sudden hike or drop in the market price of the asset.
In binary options, the broker has the final say as far as options and expiry durations are concerned. For some options, the broker sets the strike prices. In binary options trading, a trader has to wait until a trading contract expires to know the outcome. A Forex broker does not dictate all aspects of a trade. For instance, a Forex trader can close a trading position at any given time. Also, with limit orders, a trader can initiate trades at any time of day.
Forex trading is synonymous with margin trading. Binary options brokers do not offer margin trading. Therefore, in binary options, you will never get a margin call.
In Forex, every transaction that you make has a cost in the form of a spread or a commission. With binary options, there is no cost in any of your transactions.
In general terms, trading binary options is better mainly because you can know in advance the profits that you can earn. This is not the case with Forex trading.
7. Are there any rich binary options traders?
Yes, there are a few of them, but it is necessary to know that you can’t expect to get rich just by trading options. Today, the most successful and rich binary traders are simply retail traders. They manage their own trades and try to make profits with online binary options trading.
You need to understand that you won’t get rich overnight. Binary options traders who have made it in the industry rely on their trading prowess, plus a little bit of luck.
Even if you try their techniques, it is possible that you will never replicate their success. Trading styles are bound to be different.
Just like in any other job life has to offer, you will have to work hard to make major gains. You will have to study the market and come up with viable trading strategies. Most importantly, there is a learning curve and hence you have to dedicate a lot of time to learning