Unregistered Binary Options
I’m going to expect a couple of brokers to call me up after you read this saying. Timon, you can't write things like this when Binary Options makes up part of our business model.
First of all, I'm not here to make friends. Second, I have my opinion based on experience.
So sure, some brokers may offer legitimate and safe(ish) ways to trade Binary Options and I'm not gunning them down.
I’m warning you about the unregistered Binary Options companies with their sleazy sales pitches that offer a 100% win/rate system.
Stay far away from them as possible...
Before we go into the reasons why, let me first tell you what the heck a Binary Option is.
I want you to think of the term 'binary digit'.
A binary digit contains two numbers, 1 and 0.
Think of 1 as on and 0 as off.
With trading Binary Options, it's very similar.
1' you win everything and make a 100% return on your trade. And '0', you lose everything you put into that trade.
Easy right? Same principle applies. And this makes sense why people get sucked into trading these ghastly instruments. Because their greed factor kicks in where they feel they can WIN all their money.
But when you have been trading for the last couple of weeks, months and years, you'll find that losing trades are inevitable in any unpredictable market.
So going back to what Binary Options are. A binary option is a kind of option where you put down money to make a fixed return if the option expires 'in the money' or lose ALL your money if the option expires 'out the money'.
But here is the crux of why I believe Binary Option trading is the biggest scam of the century.
Here are my three reasons why I think Binary Option trading is one big scam
Reason #1: False advertising and marketing can lead you to blowing your entire account
Do you know why you feel the need to trade Binary Options?
It's because the advertising companies have been pumping their promotions and adverts on the "false dreams" binary options can 'bring' you.
They promise you how you can buy any car with a Binary Options strategy with a 100% win/rate.
And you never have to work a day in your life because you can invest with Binary options starting from 0 to a million.
Watch me debunk the above in two sentences.
With any investment or trading opportunity, it TAKES money to MAKE money. So you can't start off with nothing and end up with a car. And second, no market has any predictive qualities as we can only base our trading decisions on the past and therefore there is no strategy that can offer a 100% win/rate!
So please do the research first, read up on these instruments and don't let the marketing overwhelm you and bring up your expectations from level 1 to a million.
If it was that easy, you know what would happen.
Reason #2: Many Binary Options companies are unregistered
As I mentioned before, I am not trying to attack any well established and credible broker who offers Binary Options.
I'm only talking about Binary Options companies that are unregistered. Being unregistered means, they can do what they want. They can market the proclaimed 100% win/rate strategy and can very easily give you their banking details where you can deposit money.
But do you know what they'll do with your money?
I'm not sure. I don't know what their favourite restaurants and holiday destinations are.
Ye, they can pretty much do as they please with your hard earned money.
Make sure you find FSB approved companies that are regulated service providers. Also make sure they have a strong track record, before you even think about investing with a broker who offers Binary Options.
Reason #3: You can lose 100% of what you put in at a time
The majority of the novice and unregulated Binary Options brokers, don't offer stop losses and expiry times while you're in your Binary Options trade.
So, the fact that you can risk 100% of the money you put in, is a big risk to your portfolio.
I have a strategy where I don't risk more than 2% of my portfolio. And of the amount I put in, I never look to risk more than 30 to 50% of my initial margin.
(Feel free to skip the maths if you've got the point)
Let's say I have a portfolio value of R100,000.
I don't want to risk more than 2% of my portfolio (R2,000).
And let's say the margin (initial deposit) to put into my trade is R4,000. This means if my trade hits the stop loss, I'll lose 50% of what I put in (R2,000).
I wouldn’t want to risk the full R4,000 with Binary Options, as it will blow my account after a few losing trades.
And that’s why I don’t trade them. And with the unregistered Binary Options brokers, you can clearly see why it’s probably the biggest trading scam of the century.
“Wisdom Yields Wealth”
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