Binary options was introduced in 2008 during the subprime mortgage crisis in the US. It was around this time that investors were looking for low-risk investment options and binary trading was the perfect answer to their prayers. Being a fairly new platform, there are a few misconceptions surrounding binary trading. Secured Options aims to set some facts straight:
• Binary Options isn’t illegal:
It is illegal for US citizens to trade in binary options online. The regulations are tough and monitored closely by the US Securities Exchange Commission. A lot of binary options trading platforms registered outside the US accept US traders, though. Choose a regulated broker to ensure that there is a third party to monitor transactions and ensure fairness in disputes.
• Binary Options is gambling:
This is another myth perpetrated by the ignorant few. True, you have to place a wager on an asset to predict if its value is likely to increase or fall. But unlike gambling, you only get a fixed return on investment when you win. Besides, aren’t forex trading, oil trading, and stock trading some form of gambling?
• You only need to invest $100:
There are a few brokers who need only $100 from investors to commence trading. You shouldn’t invest more than 2.5 – 5% of the money during trading, i.e. about $2.5 -$5. With so little money, it is very difficult to make critical investments. You may be tempted to overtrade, and end up investing in trades you wouldn’t ideally take when the risk is high. The lower the initial investment, the higher are your chances of taking uncalculated risks.