Are Binary Options really a scam? Michael looks into these claims, and attempts to introduce some perspective on this topic. Michael has made over 40 videos on the topic of binary options, he trades from his own accounts, yet he gets questions from new traders who wonder whether binary options are a scam or not. Let’s understand who is claiming that binary options are a scam.
First, you have the marketers, who promote their product. The ones who are trying to sell signals, or trying to promote different platforms, and what they do is tag their videos with the word “scam.” What they’re doing is trying to capture your attention. So, you click on their video, and then they’re going to try to sell you their product. Overall, they’re giving the industry a bad name, turning people away, and you end up wondering at the end of the video whether this or that vendor or broker is a scam or not, and why didn’t they address the issue indicated by the title of the video? Michael thinks this is a really bad marketing tactic; it’s just harming the industry.
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Next, why are the binary options companies not regulated in the U.S.? Except for Nadex, they’re not physically located in the U.S. Since Nadex is located in the U.S., they in fact are regulated. So, the fact the majority of binary options companies are located overseas, explains why they are regulated by overseas authorities in the EU, Cyprus, Asia, etc. This raises the question, what does it mean to be a regulated binary options company? As anyone can determine, scams happen frequently in the U.S., despite heavy regulation. One example of this is the moving industry in the U.S., over half of which are legal scams. So, just because a company is not regulated in the U.S.does not mean it is a scam.
Another misconception is that the binary options market makers are manipulating the expiry pricing. The expiry price is in fact 100% in-sync with Reuters prices. Most of the brokerage companies work with Reuters. Possibly, pre-expiry pricing is slightly skewed, however there is no manipulation of the price at expiration.
Obviously, binary options is a high risk investment, and the broker is not your friend. If a broker offers you a bonus, for example, don’t take it! It is a bad business practice, however not a true scam.
Is binary options investing just gambling? Gambling is relying on pure luck and intuition. With binary options, you have the entire market in front of you. With binary options, it’s up to you to create your own strategy! You can focus on one or two assets, you can set the time frame of expiry, and you can set the expiration prices based on your own preferences. Regarding expiration time frames, you can set it for one hour, one month, or even one minute. It’s up to you. But, you should know a trend is easier to spot on a longer time frame.
You decide the time frame, and the asset you want to focus on. Binary options doesn’t limit you to just trading in currencies. It’s not some get rich quick, overnight type of system. At times, it is risky. In fact, if you are not using a strategy, and you aren’t familiar with a market, then you are just gambling, and you have a better chance of actually losing money.
Bottom line, if you have a well-defined strategy, you can do well at binary options. Properly researching the binary options broker in advance is the best way to avoid potential scams