It’s no secret that trading, in general, has taken a hit in popularity over the past decade. During the financial crisis, people were looking to put their money anywhere even remotely safe until the dust settled down. Since then, though, people have gone back to making money through trading. One especially popular version is trading options. However, this type of trading is also the subject of much controversy meaning you may have avoided it based solely on its reputation. Let’s take a closer look to see if this is justified by answering some common questions.
Are Binary Options Legal?
“Are binary options safe?” is a very common question, but a lot of people aren’t even sure if they are legal. The truth is that trading binary options is essentially legal anywhere. Unless you’re in North Korea or China, you should have no problem logging on to a platform from your computer and making trades.
The factor you want to consider is whether or not trading binary options is regulated in your country. If it is, you can probably trust most brokers, though you’ll still want to do your research. If it isn’t, don’t trust brokers there; you can still work with one from overseas.
Also, in some states in the U.S., legislators still don’t seem to understand how binary options work, so they classify it as online gambling. This will affect the way they assess your profits too.
How Do Binary Options Work?
Binary options get their name because they essentially give the investor an option with two choices. For example, a standard contract would say something like, “Acme stock will be worth $100 a share by April 11th.” You then decide if this will happen or not and invest accordingly.
That’s just one example, though. Trading binary options includes countless others. You can even bet on certain events happening like whether or not unemployment will hit a certain number by a certain date.
Are Binary Options Safe?
Once online gambling gets mentioned and the ability to profit from something like whether or not the Fed will up interest rates, a lot of people begin getting nervous and wonder if this sort of thing is safe to do, whether it’s legal or not.
The interesting thing about binary options is that it’s actually been legal for much longer than most people realize. Back in 2008, the SEC made trading binary options something anyone could do, though it would still be years before this opportunity would find momentum in the market.
Long before that time, though, people were trading binary options. It’s just that the SEC would only allow it for people or funds with lots and lots of money. The standard reasoning seemed to be that those with lots of money must know what they’re doing and can thus be afforded more opportunities.
So are binary options safe? Well, for years they were plenty safe for institutional investors and the super wealthy who were allowed to use this method to grow their fortunes further. That’s not to say that trading binary options is easy or a get-rich-quick scheme, though. While you’ve probably heard that a trader can make as much as 80% of their investment back on one deal in just seconds – and that’s true – these types of scenarios only play out for those who treat trading binary options as a job to be taken seriously.
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