Are Binary Options Trading Worth the Risk?

The trade of binary options also known as digital options, all-or-nothing options and fixed return options is booming worldwide. Why wouldn’t it, given that that the risk and reward ratio, as compared to the traditional options are more controlled and that they are very simple to trade because binary options only require a sense of the direction the underlying asset’s price is moving towards as opposed to traditional options which require not only the sense of direction but the magnitude of the price movement as well.

Is it gambling or is it taking calculated risks?

However, there are also a lot of proponents of the fact that trading in binary options is a lot like gambling. Many unsuspecting and naïve traders are lured by binary options brokers who promise huge profits without much effort and work, very much in the same way that casinos have done with gullible people in the past.

In fact, Forbes had written an article in 2010 warning against indulging in this practice long before binary options became prevalent. The case wasn’t helped when the United States’ Securities and Exchanges Commission issued a statement on June 6^th, 2013, warning US citizens from trading with binary options brokers from other countries.

This strong action itself was the result of a Cyprus-based company selling binary options illegally to investors from the US. What ones needs to understand here is that binary options trading is different from gambling as the former requires skill and calculations, something you do not require in gambling.

More, it is not illegal for US citizens to trade binary options, but it is illegal for foreign companies to help US citizens to trade. Traders themselves won’t face any legal action for trading binary options but binary options brokers, on the other hand, will.

However the traders aren’t safe, because if the US government takes down a binary options broker then it confiscates all of the broker’s assets without the possibility for traders to recover their deposited money. So, while traders do not have to fear criminal charges of any kind, they might still lose all their money. Therefore, you should only come into the world of binary options trading when you have built on sound basic principles.