Binary options is a relatively young financial product, but it already gain the clients. Interest to it does not diminish, on the contrary – we see almost exponential growth of a search engine with the words “binary options”.
In most cases, willing to join the large army of traders seeking information on the internet – forums, on specialized portals, websites of brokers. And often the information about the industry is served in a distorted form, or incorrect and incomplete or does not correspond to the state of affairs. Today, we draw your attention to five of the most common myths about binary options. It is interesting that many myths are not folk art (trader’s creativity), but have spread by the so-called fictional characters – “mega-analysts” and “super-traders” who is involving simpleton’s money into brokers accounts and draining their deposits … So, let’s consider them one after another:
Myth 1: Trading binary options is extremely easy!
Often we can see phrases similar to this: “For binary options trading you do not need any special knowledge. Simply choose a direction – up or down. Start earning your first million today!”
The truth is that anyone can become a financial, and earnings are high enough. Trading is quite simple and based on the correct prediction of the price movement of an asset at a certain time interval. As a result you can count on a decent reward, and your losses are fixed and known in advance. At the same time, only one pip in your favor allows you to have from 70% to 1500% profit. Besides the fact that binary options allow you to get high profit, you can get it very quickly! Many brokers offer you the purchase the so-called Turbo options, where the expiry time is 30, 60 and 120 seconds. Just imagine that you can earn $ 100 in 30 seconds!
However, in order to trade successfully – profitably and consistently, you need to study this industry first. A successful trader will be the one who will devote time to study the basic principles of trading and will develop them in practice. It is impossible to trade profitably and earn without knowledge of the technical and fundamental analysis of the market, without ability to apply this knowledge in real trades. You can’t achieve a stable income without continuous improvement of your trading skills.
Myth 2: Binary options – is a gamble. The same as casino where everything depends on luck!
Comparison with a casino is fundamentally incorrect! As a rule, there is a little depends on player in any casino game. The casino operates with principle “luck – bad luck”. You can rely on good luck only. In financial markets, and binary options market in particular, there are a definite patterns in assets movements. Of course, the analysis of the market situation does not work in 100% of cases! (Here it should be noted that any analysis is only a kind of trader’s conclusions that is always limited by the available data, his /her expertise and competence.) But the objective laws and patterns are present. Strategies are built on their basis and many traders take huge profits timely recognizing and applying them.
Binary Options trading is not a game, it is trading. This is a product of the financial market, “the younger brother” of FOREX and Contracts for Difference (CFD). A trader doesn’t buy a real asset by purchasing a binary option, neither gold, nor shares of Apple or Tesla Motors. The trader makes a specific prediction for the price of an asset using the entire available arsenal – trading strategies, technical analysis, indicators, trading signals. The psychology of the trading and risk management is also necessary elements of a successful trader.
Successful trading = effective strategy + psychology + risk management + … a little of luck
Myth 3: Market of binary options exists! (for example – Chicago Board Options Exchange).
Central Exchange for binary options does not exist, as binary options is an OTC (over the counter) product. We would like to note that all of the binary options brokers, even those who are on the top list of brokers – they don’t have relation to the real market. However, the structure of trading is taken from exchange – purchase / sale of the option contracts based on the asset price. All transactions are made in the internal system of the broker. At the same time, all quotes are taken from the world’s largest suppliers of quotes – such information agencies like Thomson Reuters, Leverate and others. But do not worry that the broker will not find money for a successful trader. Turnovers of leading brokers reach millions of dollars in trading day. And not all traders are very successful.
Myth 4: The broker is interested in my loss!
Such statements we hear from unsuccessful traders. As the “debriefing” shows, the reason for their zero-balance is initially frivolous attitude towards the industry, the absolute lack of understanding of how it works; failure to comply with money management, unwillingness to grow professionally, etc., etc.
Often the loss of money turns into a search for the culprit, not considering themselves. Traders said that the broker incorrectly closes the deal, saying “the transaction was 100% profitable, but at the last second because of the incomprehensible sharp rise closed in unprofitable zone.” Also, it happen that broker’s managers or analysts give to customers a low-quality advice, which leads to a loss of deposit. But no one is forcing you to rely on what they say. You are given advice and a decision depends on you, and only you!
If you are caught the cheating broker – record videos, make screenshots and write to us, we will publish this information here.
Myth 5: Verification is a method of obtaining my personal data in order to take possession of my money.
Verification is a client identity proof procedure. It usually consists of several steps, and begins at the time when the trader decides to derive profit or their own money from his personal trading account. The verification process is not a big deal. And it’s not just a whim of the broker; it is done for preventing fraud and money laundering (the so-called AML and KYC procedures). Broker also should know that the money will be transferred to the person who earned it and no claims will arise later. We want to warn you: If the broker does not remind you about the verification, you should be alerted about such behavior from broker side.
More information about the process of verification you can find here.