There’s no doubt that if you have been surfing the web you’ve seen advertisements or popups promising you some “Get Rich Quick” scheme that will make you millions overnight. One big culprit is companies pushing trading binary options. But just how legitimate are they? And what is a Binary Trading Option anyways? We wanted to find out, so we dove right in to investigate these claims firsthand with our own money, to see just how legitimate their claims are.
Binary options trading is becoming more and more popular, drawing participants from every sector of the investment community. Beginners and seasoned veterans alike are drawn to this new genre, indicating that the appeal is rather widespread. Binary options, in finance, are a type of option with a dichotomy of outcomes. In the first outcome, the trader gets a very high return on his or her investment, and in the second one, the trader walks away with nothing.
While this approach may sounds risky there is some compelling evidence that this method of trading can lead to some impressive financial gains. If you are methodical and patient with your trading, there is some great potential to be tapped in binary options trading. That being said, it’s important to understand that there is also potential to lose all of your investment. Since you can trade a dozen of times a day, things can quickly spiral out of control. For this reason, amongst a magnitude of others, you should first educate yourself – at least on the basics – of binary trading.
Investment Upsides: What Are The Potential Pros?
There are a number of Pros in binary options trading, but first and foremost is the potential for a quick payoff. Where else can you get an 85% return on your capital in under a minute? Next, is the simplicity of binary options trading. There are very little factors to consider, and the decision tree is fairly straightforward (we’ll touch on this in a bit). There are no time frames to consider, no correlations to find, and in many cases you don’t even have to read a single chart.
Another big ‘pro’ of binary options trading is the lack of fees or commissions. The entire system is executed in a way where all of the costs are covered by the spread contained within the payoff/rebate structure.
Finally, risk management is not a problem when trading binary options. You will never get a margin call as you can only wager what’s in your account. Additionally, you set your own risk tolerance by setting the exact amount you want to place on a certain trade.
The above pros may make binary trading seem like gravy – so to speak, but keep in mind that brokers are in this arena for the money. Which brings us to the cons of binary trading.
Investment Downsides: What Are The Potential Cons?
To contrast with one of the biggest pros of binary trading – high payoffs also mean that there is high risk. Since you’re betting on very short timeframes, there is not as much time to effectively analyze the market to make a more informed prediction. In the case of uber quick trades – a minute or less – the trade can feel like a gamble.
Another thing to consider when trading binary options is the fact that the odds are highly biased in favor of the brokers. While the competition between binary options brokers is improving the odds of traders. The trader still must win at least (an average of) 55% of the time to break even, let alone record a gain. The whole idea of Binary Options Trading creates a problem of ethics among brokers, so it is very important that you carefully consider which broker you decide to trade with.
These warnings aside, exploring binary options can be a low-cost way to trade and learn a new market. You don’t have to invest too much to dip your toe into the waters of trading, and binary options may provide you with a great opportunity of honing your trading skills. It especially strengthens the understanding of the fundamental idea behind trading, and it could help you successfully trade in the future.
Trading binary options can be compared to the stock market – there is a whole lot of money to be made – but you need to know what you’re doing. Making uneducated predictions on your trade is virtually gambling away your earnings. If you want to stand a fair chance, and potentially make some decent money, then it’s absolutely vital that you proceed with caution and do some prior research.
Final Verdict: Invest But Start With A Demo Account
If you finally decide to jump in and start trading, then your next question is probably – Where can I start?
Before you make any trades at all, you will want to familiarize yourself with how online trading works by using a “Demo” account. Demo accounts allow you to make Binary Options using fake money. And, although you won’t actually be seeing a return of any real money when you make a successful trade, it will allow you to understand the system without losing any real money, either, should your trade not work. This whole concept is similar to online poker games where you play for free to hone your skills, so that hopefully with the experience you gain you will be able to make some really valuable trades, with real returns.
As one of those people who doesn’t believe in reading instruction manuals before we get started, we didn’t bother to use a Demo account, either. Unfortunately this resulted in some losses that would otherwise have been avoided if we had a few Demo trades under our belts first, to give us an overall idea of how things work. I can’t stress enough how important it is to play around with fake money first, before using the real stuff. It’s only money, but the goal is to make more.
Fraud Prevention: Which Traders Can You Trust?
It is important to remember to always be on your toes. There are literally hundreds of Binary Trading brokers out there, and it can be confusing to actually validate if a broker is legitimate or not before making a deposit. As I stated in the beginning, there are plenty of brokers, and it is an industry that is rampant with poor business ethics. To save yourself from your own very high risk trial and error experiments, we have chosen to select only two of the most highly regarded award winning brokers, whom we were able to test and verify successfully.
It is not unusual for most Binary Option brokers to demand a high initial deposit, along with a “resume” of sorts describing your prior trading experiences. Both of these options don’t seem very user friendly, and certainly aren’t right for beginners. So we went right ahead and eliminated any brokerage that requires either of those things. With both V8Options, and IQ Option, absolutely anyone can trade. There is no need for a high initial deposit, or to prove that you have prior experience. As we touched on before, creating a Demo account will help get you that experience anyways, without risking your cash.
Both trading interfaces on the sites are designed to make it very easy for beginners, and inexperienced traders to start. We came to appreciate the impressive library of training guides, tutorials, and video instructions. Combine these with your Demo account, and you will be good to go.
Another major drawback of many firms we found was that they make it next to impossible to withdraw your earnings. They hope that by keeping your money in the system, you will continue to invest more and more with them. With V8Options we liked that there is no minimum withdrawal amount, and with IQ Option the amount is a very small $10. We found the withdrawal process with both to be very easy, with no hassle. Why should they get to hold on to our money, anyways?
Our Advice: Who Should You Choose V8Options or IQ Options?
Which of these two brokers do we think you should choose? Both seem to be good choices, we personally preferred IQ Options interface but its important to figure out which one is right for you so our recommendation is that you signup for a free demo account at both traders and do a few free trades on both before deciding which one is a better fit for you.
IQ Option Company Video:
Ready to try out IQ Option? Click Here to sign-up for a free account.
V8 Options Company Video:
Ready to try out V8Options? Click Here to sign-up for a free account.
In the end, it’s important that you make sure you are confident in what you are doing before jumping into the deep end of the Binary Options Trading pool. The potential to earn a significant amount of money is certainly not overstated by their bold claims, and it’s a market that is ripe for tapping in to. However, the opposite holds true as well. Like any investment, there is risk involved, so it is important to be smart with your money and proceed with caution like you would with anything else.
We’d like to point out that for the above brokers we are linking you with an affiliate link, so if you do start trading with real funds we will receive a referral fee. With that said, absolutely every broker offers referral commissions and the shadier ones certainly offer much higher compensation. With our reputation on the line, we have been careful to only select brokers that we ourselves are comfortable in using. Brokers we were both able to deposit funds into and withdraw funds out of without any hassle. It’s always wise to do your own due diligence on any investment or financial advice you find both here, or anywhere else on the web. Once again we implore you to start your Binary Option Trading with a free Demo account so you too can see what it’s all about!
“RISK WARNING: PLEASE NOTE THAT BINARY OPTION TRADING ENTAILS SUBSTANTIAL RISK OF LOSS, AND MAY NOT BE SUITABLE TO EVERYONE. TRADING COULD LEAD TO LOSS OF YOUR INVESTED CAPITAL”.