Binary options are a form of assets that give the option to trade an asset based on a set of rules limited by time and / or price.
For example, let’s say a broker offers a binary option of buying the AUDUSD forex pair, and if it reaches 0.68 within the next 30 minutes then you win, if not you lose.
Binary options is in a way, a form of betting. Compared to regular trading, putting additional time limits and pricing restrictions in a win or lose environment seems to make it more challenging rather than giving a trader more opportunity. To look at the pros and cons of binary options, let’s take a deeper look.
Binary Option Benefits
Binary option benefits are that the odds may be able to be increased compared to the move of the asset depending on the broker’s offer.
Binary Options Cons
Binary options cons include the fact that brokers can alter the odds and pitch the market against probabilities of paying out.
Another binary option con is that you are unable to partially exit the position for a profit, even if the market has gone in your favor but has not hit the required options parameters.
Are Binary Options Legit?
Binary options, while legit in terms of if they pay you if you win, are not ideal forms of investment. Binary options in their nature are a form of placing a bet rather than trading a position like a professional.
Binary options add a layer of complexity to trading, and trading is already a challenging space to be profitable in. So rather than binary options, why not just trade a normal CFD or futures account or even go for funding with a prop firm.
Are Binary Options Legal in the US?
Binary options are legal in the US provided they are traded through a regulated US exchange. Many countries have banned binary options. One of the possible reasons for this is that the binary option parameters set by non regulated exchanges may be unfair to traders, making trading harder than it needs to be, in an already tough market.
There is also mention that binary options are prone to fraud in their applications and are determined as a form of gambling.
Is Binary Options Trading Legal in Australia?
Binary options were termed as illegal for sale in Australia since 3rd May 2021. Binary options are also banned in many other countries. The reason for being banned is not to hide a profitable method of making money, but for protecting consumers from shady practices set up to make investors lose money.
If Binary Options Are Bad, What Are Some Other Options
There are plenty of other options when it comes to investing. Binary options are risky and set up against the investor. Other options with more potential include CFD trading, buy and hold shares, property investing, futures trading, buying or trading crypto or even buying a business. There are plenty of ways to invest that are better than binary options.
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