Have you ever wondered if Binary Option is a scam or reputable – Binary options are legit or not? Is it widely accepted in many countries? In this article, How To Trade Blog will answer all the questions about the binary options financial investment form.
And if you do not know, or do not understand binary options, please read this article carefully: What is Binary Option?
Why are binary options considered to be a scam?
Binary Option (BO) is also known by many other names. They are Digital Options, Dual Options, or Fixed Time Trade (recently appeared).
Many people assume that the binary option is the child between gambling and finance. Because in binary options, we use the prices of financial assets for betting in the short term. Or, Binary Option is a disguised multi-level, enticing to get money from traders.
Therefore, the binary option is labeled as a scam. And trading is really just a betting type.
So: Binary option trading is a scam, isn’t it? No, it’s actually not. In this article, I will give detailed arguments to explain that.
Binary Options have many similar things to gambling
In essence, binary option is a form of financial contract. You agree upon rewards and risks before opening this contract. You can actively customize an expiration time for this contract. And you will know whether you win or lose when the contract ends.
Although it is not gambling, binary options have a lot of factors that make it look like gambling. Because:
First factor: The expiration time
Short-term trades (short expiration time) which are in seconds have a tremendous amount of attraction in Binary Options. Everyone wants to make money and get rich quickly in just 30 seconds. This is what makes binary options trading a gambling game.
No trading strategy can help you predict the direction of the price within 30 seconds or even 1 minute. Therefore, trading with an extremely short expiration time is a game of chance.
Remember: All binary options brokers don’t force you to trade with short expiration time frames. You have the right to choose time frames of minutes, hours, or even days.
Second factor: Form of transaction
Trading binary options is very simple. You just need to predict if the price will increase or decrease in a certain period of time. This is similar to gambling. In gambling, you also bet with the probability of 50/50 and wait for the luck.
In fact, analysis and prediction of price trends is a science subject. And to make money with binary options, you need to have a specific strategy. It includes: How to open orders at entry points with high winning rates. A capital management system and a solid trading mentality.
Therefore, the binary option is still a financial tool. And you can join to make money from platforms licensed for binary options trading.
Third factor: Your own greed and fear
Most decisions that come from emotions in financial markets are wrong. And the binary options are no exception. This is a very human characteristic, which has converted binary options traders into gamblers.
Now you have the answer to the below question: Is binary option a disguised form of gambling? Gambling or not is up to you.
If you trade and make money fast in 30 seconds, you open orders randomly, and let your emotions make decisions, then binary options trading is gambling.
On the contrary, if you fully equip yourself with the knowledge of price analysis and prediction, as well as appropriate capital management strategies and control your emotions, then the binary option is a financial tool, which is one of the most profitable channels to join and make money.
Binary option is Multi-level marketing?
There are advertisements for making money and getting rich quickly. These ads are to attract new traders to deposit and trade. This is also one of the reasons why many people think that the binary option is a financial Ponzi scheme or multi-level marketing.
Multi-level marketing is a scheme in which you get a commission for introducing a new person to get involved in financial trading. The more people you attract, the higher the commission you receive. And the Ponzi scheme is taking money from one person to pay for another.
This is not true to binary options. To make money, you need to deposit, win orders, make a profit, and withdraw money. This is no scheme of a multi-level commission based on the referral of traders.
So is binary option legal?
To answer the questions “Is binary option legal?”, we will take a look at the countries with binary options trading platforms.
Binary options in North America
In North America, binary options trading is not forbidden. Binary options platforms are under the control of the Commodity Commission and the Securities Commission. However, the US FBI is investigating the scams of all binary options platforms around the world.
In Canada, any company providing financial trading products must obtain permission from regional regulatory authorities. However, none of them licenses binary options.
Binary options in South America
In South America, no country bans binary options trading. It has even become a popular financial tool.
There are some popular platforms such as Olymp Trade, IQ Option in Brazil, Colombia, etc.
Binary options in Europe
In most European countries, binary options trading is not considered a form of investment. Instead, it deems to be one of the forms of gambling. Therefore, there is no oversight and control over trading activities in these countries.
In particular, Europe does not prohibit binary options. However, they ban all binary options brokers from advertising their platforms.
In the UK alone, the Financial Conduct Authority controls binary options trading.
The most popular and developed platform in Europe is IQ Option.
Binary options in the Middle East
Israel is the only country in the Middle East to ban binary options.
In contrast, Sip is the country that provides the clearest legal framework for binary options platforms.
Binary options deem to be one of the most developed financial instruments in Middle Eastern countries. Some of the well-developed platforms here are IQ Option, Olymp Trade, and Binomo.
Binary Option in Asia and Australia
Most countries in Asia do not issue laws for binary options. And they do not prohibit binary options platforms from operating.
In Australia, the supervisory function is under the Australian Securities and Investments Commission.
There are lots of reputable platforms in Asia. For example, Binomo, Olymp Trade, Expert Option, High Low Option, IQ Option, etc.
Obviously, binary options are not banned worldwide. And there are no allegations that binary options trading is a fraudulent investment.
So, you can be assured of binary options trading. But, choosing a reputable binary options broker which is not a scam is another story.
Binary option trading is not a scam. But a binary options trading platform can be a scam. Please read this article: How to identify a binary options broker fraudulent or reputable?.
If you have any arguments or evidence that binary options trading is fraudulent, leave your comments below. We will discuss this with you.