Binary Options - What are they and how do they work?

[quicksilver]

With the exception of NADEX, most of the so called 'brokers' in binary options are white labels of spotoption/tradologic and the likes. If you look closely, some of them actually claim that binary options is a great addition to online casinos/poker claiming higher customer retention rates and so on. Also because online gambling is highly restricted now in most parts of the world, binary options makes an alternative entry point into the markets.

They don't offer demo accounts as Pharaoh mentioned and this is tricky, especially for beginners.

I personally don't see binary options as gambling (unless i'm just taking a wild guess). With a good 15M, MT4 chart + indicators it should be possible to take the right position (although I never tried it myself). I used to trade with a binary options broker 3 years ago. I can say that its addictive. Within the hour, I spent like $400 - $500 and few days later went back to blow up another $150.

Bonuses: Most of them offer enticing bonuses, 100% bonus and the like, but the requirements are so high that unless you deposit $1000 with $10 investment/trade it is highly unlikely that you will meet the 'churning requirements' Also hidden in fine print with most of these brokers is that once you get a bonus, if you cancel it, you cannot withdraw your initial deposit until you meet the 'churning' requirements, which is quite a pain.

Lastly, I came across this URL, warning from Austrian FMA regarding some companies behind the binary options brands.

End of the day, I don't think binary options can be viewed as an 'investment' but rather an alternative way to have fun in the so called 'markets'

 

[Siddharth]

Well, that didn’t take long. After the CFTC sued Intrade and Trade Exchange Network for marketing options products to US customers yesterday, Binary Options Exchange Nadex was out today with a note to its clients about the CFTC’s actions. CFTC filed a civil Complaint charging two companies based in Ireland, Intrade and Trade Exchange Network, with offering commodity option contracts to U.S. customers for trading, as well as soliciting, accepting, and confirming the execution of orders from U.S. customers, all in violation of the CFTC’s ban on off-exchange options trading.

 

[quicksilver]

Japan came out with a notice. I think last week or so banning binary options. Problem though is while regulated brokers cannot offer binary options, the unregulated ones continue their game.

 

[Pharaoh]

Everyone in Japan who has an issue needs to complain to the Japanese regulators. if you are in the USA and have an issue with a binary options broker, the SEC and CFTC would be a good place to start.

 

[montagu]

I think binary options are not what you need to spend your valuable time

 

[david92506]

I'm a semi-newbie Forex trader and have spent close to 6-months in a Live Trading Room learning skills and techniques. I recently signed up with a Binary Option broker and have spent considerable time in the demo account. In my opinion, binary options is a crap shoot. There is no way to tell if in 60 seconds or 15 minutes whether or not it will end up above or below, or will touch or not. As a matter of fact, one has better odds playing European Roulette. In European Roulette the house edge is 2.7%, or in other words, for every $100 you wager the house takes $2.70. In Binary Options, the house edge is 15%, in other words, for every $100 you wager the house takes a whooping $15.00. (This is based on the trades where the return is 70%.) I'm trying to withdraw my deposit and it is being declined by the Binary Options broker. By the way, this Binary Options Broker is rated one of the top three in most all reviews. In my opinion, Binary Option brokers smell of online casino operations.

 

[erum]

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Binary Options
What are they and how do they work?​

FPA HQ has gotten this question and I've seen it come up in the forums. An FPA member requested a dedicated thread just for the topic, so here it is.

Please note that this thread in is General Forex Talk. Advertising is NOT permitted here. I chose this folder so that the topic can remain on what Binary Options are instead of discussing specific brokers.

Broker reps may post here, but only to provide information about the general topic of Binary Options.

Please don't post advertisements or affiliate links in this thread. Spam Cat is hungry and is always on the prowl.

I don't know a lot about Binary Options myself. I'd appreciate more information on the topic.

Spam Cat is very disappointed to see someone who has been a member of the FPA since 2008 spamming in General Forex Talk.

Spam Cat is amazed to see that this spammer even quoted where AsstModerator said "Please don't post advertisements or affiliate links in this thread. Spam Cat is hungry and is always on the prowl."

Spam Cat followed the affiliate link in this spam message. Erum's clickbank affiliate ID is erumpk. This has already been reported to Clickbank.

 

[MaxW]

I have so far looked in vain for an honest and comprehensive report or review of Binary Options Trading expounding the virtues and drawbacks of this type of trading and listing reliable brokers. This is quite amazing as not a day passes where I don't find at least one e-mail in my Inbox offering binary options trade programs.

Your submission gives some valuable information but does not come close to what I'm looking for. Can anyone recommend more exhaustive sources on the subject of Binary Options Trading?

 

[informer1]

Another brilliant spammer who thinks that quoting the rules means he's not spamming.

Binary Options
What are they and how do they work?​

FPA HQ has gotten this question and I've seen it come up in the forums. An FPA member requested a dedicated thread just for the topic, so here it is.

Please note that this thread in is General Forex Talk. Advertising is NOT permitted here. I chose this folder so that the topic can remain on what Binary Options are instead of discussing specific brokers.

Broker reps may post here, but only to provide information about the general topic of Binary Options.

Please don't post advertisements or affiliate links in this thread. Spam Cat is hungry and is always on the prowl.

I don't know a lot about Binary Options myself. I'd appreciate more information on the topic.

This moron quoted the rules against spamming here, then tried to hide his link. Spam Cat took the brackets out and put in some spaces so you can see how he thought he could get away with spamming for AnyOption.com.


Trading in binary options has increased substantially in recent years. In an earlier era, binary URL="ht tp://www. anyoption.com" options trading /URL had to be done through a specialized broker who charged high fees for the service. Today, people can visit a binary trade website and process the transaction themselves, making it both simpler and cheaper to trade binary options for fun and profit.

Spam Cat is very disappointed in AnyOption.com. This is the second spamming incident for AnyOption this week.

Keep sending the spammers in and Spam Cat will keep killing them.

 

[Rastafarian]

Binary Options are called Binary for the simple reason that there is only 2 possibilities win or lose Red or Black like in the casino.

You usually can get 70% on the money you gamble.

I specifically called it a gamble and not an "investment".

You hit either the call (up) or the put (down) arrow, depending if you believe the price will go up or down from the place its at right now.

The quotes are with 5 decimal points.

So lets say you click on the up arrow for the EURUSD @ 1.33533 and the price is at 1.33534 or higher the instant the option expires, you just made 70% on your wager.

If on the other hand at the instant of expiration the price is at 1.33532 or lower you lost the entire wager.

If it stays the same you get your wager back.

Very popular are the 60 second options that are advertized as: Make money every 60 seconds clicking a button.

On youtube you can see several affiliate marketers peddle the thing to show you out of the goodness of their heart how to trade binary options.

ITS A SCAM!

I fell for it too.. although I think of myself a halfway intelligent person. I figured well if you do not try you will never know.

Well people want to believe and so I believed to. Although I have been trading Forex for quite some time now, and I believe money management is more important than knowing where the price will go in the next 60 seconds.

Anyway. Shame on me for trying Binary Options in spite off all the warnings. On the other hand great, because now I know that it absolutely does not work!

Here is what the youtube peddlers claim:

You choose 60 second options for EURUSD which are options with an expiry date 60 seconds from the moment you got in.

Then, there are 5 steps you need to follow:

1.) Check Market Sentiment. In other words see how many people are gambling on the price going up, and how many are gambling on the price going down. (it shows how many calls versus puts the company sold... you go in the direction of the imbalance. So if there are 60% calls (up) versus 40% puts (down), you go with the 60% which is up)

2.) Now you chose $5 and click the up arrow (call). And confirm the order. Its like a Market Order and it will show your fill price.

The order line will change color from gray (tie) to green win to red loose.

The clock keeps ticking down from 60 to 0 and the color might change a few times... it feels like playing roulette.

You bet $5 and if it the deal goes your way you get 8.5 back (the original 5 plus 70%)

IF YOU WIN GO BACK TO STEP 1

---------------------------------------

IF you loose go to step

3) Double up and now bet 10$ in the same direction of the losing trade in this case up.

In the previous bet you lost 5$ this bet you are betting 10$ but the payout in case you win is 17$ (the 10 you just bet plus 7). So far you risked 15$ to make 2$. (very intelligent risk management!!! LOL)

If you win you go back to step 1

--------------------------------------

If you lose you go to step

4) Now bet 25$! Your potential winning is (the original 25$ plus 70% = 42,5$) 17,5$

From that you need to subtract the money you lost so far 5 and 10 so now you have made a hot total of 2,5$

If you win you go back to step 1

If you lose now here is step 5!!!! The jackpot!


5) Now you were were wrong 3 times in a row and your potential payout so far was 2,5$. What you have to do now: bet 100$. For a potential winning of (170$ = Original 100$ + 70$) 70$. So far lost are 5 +10 +25 that is 40$ so the potential winning of this bet is 30$.

Now what the peddlers claim:

Now you need to believe. And not for one minute think that this deal could go wrong! Put your money on the 100$ trade hope that this 100$ trade happens because that means your 4th trade for 100$ will come in 100% guaranteed because the odds of you winning are 100%.

Which means you will have made 70$ winning - 40$ previous losses =30$ winnings.

-----------------------------------------------------------------

Now as an intelligent person you read this and you say who could be possibly stupid enough to fall for a scam like this?

There is no money management the risk - reward ratio is idiotic... what is the deal?????

Well I was thinking exactly the same thing and thought it cannot be really that stupid... So I had to try and found out:

Do not touch a hot stove with your bare hand, you will get burned!

Of course I did not believe my parents either and had to try the stove for myself..... guess what I got burned!

Listen: With this Binary Options scam I did not want to even listen to myself and hear my own warnings. I just had to try it out to see if it is true that if the money management is non existent ad the risk reward ratio sucks ... it is impossible to make money in the long run.

So my advice to anybody that wants to try Binary Options:

FORGET BINARY OPTIONS!

GO TO THE CASINO THAT IS MORE FUN! YOU GET FREE DRINKS, SO YOU GET AT LEAST SOMETHING FOR YOUR MONEY!

On the other hand if you want to sponsor the poor people that own this site and are sitting in sunny beautiful Cyprus under the Palm trees overlooking the Mediterranean and you want to contribute to their 5th Porsche:

Disregard what I said and go and gamble on Binary Options!