One of the easiest forms of investment for beginners is Binary options, but it is also considered an easy way to lose money. As the name indicates, Binary options can result in only 2 possible outcomes.
The trader has to speculate the price movement of an underlying asset which can be anything like Forex currency pairs, stocks, Global Stock Indices, Commodities like Gold and Silver etc. Since the possibility of winning or losing a trade is very random and depends on market fluctuations, you can end up losing all the money you had invested on that particular trade if your speculation is wrong.
First you should decide the underlying asset which you are going to trade and the Strike Price you expect your asset to reach during the expiry of trade. If your asset does not reach the strike price once the trade expires, you will lose whatever money you had invested in that trade. Hence, the possibility of winning a trade is just 50/50.
Also choosing a regulated broker is very important if you are trading with binary options. There are many fake binary options brokers who manipulate the market news in their favor and fool traders which result in their trading decisions to go wrong ultimately.
They all promote themselves stating some get-rich quick schemes like “you can earn up to 85% profit for every trade in our platform”, “you can earn up to 80% every hour with binary options using our platform” and other tempting captions, which attract the novice traders.
Investing in binary options with such unregulated brokers is like gambling in a casino and you will only lose your money by trading with such brokers. There are no securities commission or any authorized financial institution to protect the interests of investors who are trading with such illegitimate brokers.
If you have been cheated by a scam broker and lost your money with binary options trading, you should be very careful next time. You should choose a good regulated binary options broker for your investment by doing a careful research on all existing brokers.
You should read the online reviews of all brokers and make a wise decision based on the ratings and comments given by fellow traders on different brokers. There are some legitimate resources that provide genuine information about binary options brokers and useful feedback from other traders which can help you in making the right decision. If you don’t choose the right broker, then trading with binary options is one of the dangerous forms of investment that can make you bankrupt.
You should have also a clear look at the negative reviews, bad comments and complaints against scam brokers so that you can avoid opening an account with any of these brokers. Another drawback of binary options is that it’s not a long-term investment method, but focuses on short term profits by doing some quick speculations which is more like gambling. All you have to do is bet on the price movement of a particular asset and wait for the trade to expire. Since the market fluctuations are very random, there is a great probability for you to lose the trade and also the amount you invested in that particular trade.
But if you consider other forms of investment like stocks, commodities or bonds you can expect long-term profits by following the right strategy. Government bonds are always considered as a reliable investment method as it guarantees regular income in form of interest and commodities like Gold and silver are also considered as safe havens of investment. All these forms of investment require good understanding of the market trends and also some knowledge on technical indicators.
The main advantage of binary options is that it does not require any market expertise like other forms of trading and is suitable for beginners. But they should be careful while investing in binary options and choose a legitimate and regulated broker for their trading.