Binary Options

Binary options trading is not hugely popular right now but it definitely has its place in the market. Like any other trade, there are people who will cheat and scam others when money is involved. This involves making a bet on whether a stock price will move up (yes) or down (no). This is essentially a 50/50 bet with less than 2:1 payout. It sounds like something from Vegas, doesn’t it? Then your thinking is on the right track.

Here is how it works:

The binary options companies are usually bucket shops, meaning you don’t trade against the market, you trade against the company. So it’s in company’s interest that you lose money. Some (if not all) of the trading platforms have backdoors where they can manipulate prices if they see you win too often.

You often find out about binary options by stumbling onto YouTube reviews of signal apps that promise successful signals. They are all fake reviews that are carefully disguised and convincing. Once you subscribe, you are requested to deposit a minimum amount. After you try the signals app and lose your money, the broker will tell you that apps are not successful and you should trade with a professional trader instead. Of course, you will have to deposit more money, only to find out he is not a real trader, and your money is gone.

At ‘Aemilius Cupero’ we take a strong stance against binary options as we believe that Binary Options is BAD for all traders. If you do a quick Google search of binary options, you will find, literally, hundreds of results of online brokers offering free demo accounts and promising a fast and easy way for you to trade and profit. The problem, however, is that many unsuspecting investors, especially those new to trading options, end up on the short end of the bet and lose.

Let’s establish one thing: binary options are not the same as standardized equity options. Standardized options are regulated by the Securities and Exchange Commission (SEC) and states and trade on recognized exchanges; They are standardized as to size, pricing, expiration dates and are liquid, meaning there always exists a buyer for every seller. The same is definitely not true of binary options.

There are regulatory red flags that have been raised in the U.S. and elsewhere regarding the nature of this scheme. The FBI, SEC, and CFTC are engaged in investigations of offshore binary options traders. The State of Israel, in cooperation with U.S. regulators, are cracking down on binary options houses in the country that are preying on unsuspecting people in the U.S. and elsewhere. Widespread fraud and abuse caused by unscrupulous binary options traders, operating outside the law and regulator community, has sparked complaints and even the death of the 61-year-old retiree who lost his $330,000 life savings.

‘Caveat emptor’ or let the buyer beware should be the approach taken when viewing an advertisement from a binary options scheme operator. Better yet, avoid all together putting one dime into these contracts unless you’re looking for some entertainment similar to online poker. Instead, learn how exchange-listed equity options can provide you with a better opportunity to engage the market with better safeguards and regulatory protections.

If you perform a web search of ‘binary trading’ or ‘binary options,’ you will come up with an overwhelming number of search results.

Many of these results promise to set you up with free ‘demo’ accounts or even seed you with $10, $50, $1000’s of house money to get started. It is appropriate to make the analogy that trading in binary options is like pure gambling because, as the saying in Las Vegas goes, the house always wins!

So be warned and use common sense – if something sounds too good to be true, it probably is.

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