Binary Options In Decline

The following is a guest blog post:

Binary options trading can look like an exciting alternative to a lot of investors. We’ve gone over the basics before, but just to recap, this is a type of trading in which you’re betting on an outcome, rather than actually buying stock. You invest based on the idea that an asset will or will not reach a given value at a particular time, and you earn a profit if you’re right. There’s a little more to it than that, but that’s the basic outline.

It’s easy to see why this appeals to a lot of people who might be less familiar with the complexities of ordinary stock trading. It’s a method that has been compared to sports betting, and the comparison actually holds up pretty well. In sports betting you aren’t simply guessing whether or not a team will win, or whether some other outcome will occur—at least if you’re doing it wisely. Rather, you’re looking at trends, studying past scenarios similar to the one on which you’re gambling, and educating yourself about whatever contest is at hand. You then make a bet based on your guess of what will happen, but it’s an educated guess.

The same can be said of binary options trading. If you’re doing it responsibly, you aren’t simply guessing whether or not a stock will reach the given value at hand, and you’re not going entirely by “feel.” Rather, you’re taking a close look at the relevant data and circumstances to gain the best possible idea of what the outcome will be, and then placing your bet. Again, it’s an educated guess of sorts.

Unfortunately, it’s become apparent that even an educated guess might not put you in position to collect on your investment. That’s because some of the brokers and firms offering this form of trading have proven to be illegitimate. Even those who generally support the notion that you can make money in binary options acknowledge that not all trading service providers are legal and safe, and that has to give any prospective investor pause. The underlying reason for this sentiment is that some brokers have been found to engage in scam-like activity whereby they manipulate price listings in their own favor. That can mean that even with a careful approach and an accurate prediction, you end up losing money.

But this and other shady practices by binary trading service providers have also begun to lead to a sudden and potentially fatal decline of the practice. The biggest news in this regard came back in January, when it was announced that a major firm called Banc De Binary was shutting down. The firm previously came under fire for violating what was effectively a ban of pursuing U.S. customers, and was ultimately closed due to unstable and unjust practices. This was headline news in binary options circles, but it wasn’t the first instance in which a provider has been closed or heavily regulated. It was more of a continuation of an emerging trend.

Binary options trading is still legal and accessible in certain parts of the world and through certain brokers. There are even some that have better reputations than others for offering fair circumstances. Also, it’s still possible to earn a profit engaging in this kind of trading. But anyone considering trying it out should be well aware of the circumstances that already seem to be causing a decline in the business.

4 thoughts on “Binary Options In Decline

  1. I don’t know, I just can’t seem to get my head around options trading. For one, they go against everything I believe when it comes to long-term investing through fundamentals. Secondly, they can be extremely risky due to their gambling nature. I would just not feel good trading options regardless of how lucrative they may be.
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    • Hi MATM,

      I feel the same way about options trading. For now, I’d rather stick with my long term strategy of investing in dividend growth stocks though I would be open to one day trying selling covered calls or sell puts to enter a position. Either way, a lot more knowledge must be gained on my part. Thank you for sharing your thoughts.

    • Hi ToC,

      I never considered binary options before and from what I could see it does seem like very short term trading or as you put it gambling. For now, I’ll stick with my traditional dividend growth stocks. Thank you for commenting.

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