The subject of online binary options trading has for much of recent history been clouded in confusion and misunderstanding. Which isn’t particularly surprising, given the fact that it is technically one of the newest financial trading activities in the world.
It was only as of relatively recently that the internet revolution made it possible for pretty much anyone wishing to do so to get into trading at any level. Things have progressed and evolved enormously over recent years, but there is still a great deal of misinformation and misguided speculation with regard to what binary trading is all about.
So in order to clarify just a few of the most important and long-standing misconceptions, what follows is an overview of 10 common binary options myths and their respective truths:
Myth no. 1: Binary Options Are Gambling
First and foremost, while there is always an element of chance and risk involved in binary options trading, to consider the concept the same as gambling is wrong. Gambling represents an activity where you cannot accurately predict the outcome and therefore place yourself at the mercy of fate. When it comes to binary options, many traders dedicate their entire lives to the kind of research, analysis and hard work it takes to enable them to make educated and accurate projections. This cannot be categorised alongside traditional casino gambling, where all the research in the world will have no impact whatsoever on how the cards are dealt or how the dice lands. Binary trading is the perfect example of a venture where the more you are willing to put in, the more you can expect to get out in return.
Myth no. 2: Binary Options Are Only for Rich People Only
Traditionally, trading has been associated only with those who already had pretty extensive finances at their disposal. These days however, things could not be more different. While it’s true to say that many traders worldwide are spectacularly rich and successful, the beauty of binary options trading is that it is open to literally anyone. Given the fact that it is possible to sign up and get started with certain brokers for as little as $10, pretty much anyone with any disposable income whatsoever could try their hand at trading. They may not end the day’s trading with a spectacular windfall, but they still have every opportunity to get stuck in and perhaps make a profit.
Myth no. 3: Demo Accounts Are Unnecessary
Quite to the contrary – demo accounts can be of critical importance. The reason being that when you make the decision to work with an online binary options broker, you owe it to yourself to find out exactly what’s on offer before getting started. After all, you don’t want to find yourself neck-deep in a bunch of important trades, only to then discover that the platform and the broker behind it are both massively unreliable. Demo accounts are really the only means by which you can test what’s on offer, before trading with real money. Just be sure to take into account whether or not any demo account facility made available is in fact free of charge – the vast majority require cash deposits to get up and running which are generally non-refundable.
Myth no. 4: Binary Options Are Scams
The simple fact of the matter is that as it is the trader that makes every decision with regard to their chosen investments and options, it is impossible for brokers to manipulate outcomes and scam their clients. Make no mistake about it – there are plenty of brokers in business today with reputations for making it deliberately difficult or even impossible for customers to get hold of their money. All of which is precisely why it is critically important to do your homework, before choosing a broker to work with. Nevertheless, accusations that binary options are in their own right a scam are unfounded and unfair as the outcome will only ever be determined by the decisions made by the investor.
Myth no. 5: Most Brokers Are Dodgy
Quite to the contrary, most binary options brokers are actually doing a very good job. Nevertheless, it is crucially important to be aware of the fact that most brokers excel in certain areas, though perhaps don’t quite measure up in others. It all comes down to your own preferences and priorities – customer service, fast withdrawal times, high payouts, extensive asset lists and so on. In addition, it can also be advisable to show preference to licenced and regulated brokers, as opposed to those who operate with no regulation whatsoever.
Myth no. 6: Binary Options Generate Quick Cash
They can, but in the vast majority of instances, the truth is that they don’t. The thing is, if you can afford to put $600,000 on the line with a trade that’s as good as flipping a coin, then yes…you could make a fortune in minutes. However, given the fact that you probably don’t have this kind of cash to put on the line with such heavy risks involved, it isn’t going to happen. What’s more, where binary options brokers claim to be able to make you rich in no time at all, they are lying to you and probably looking to scam you. Binary options trading is something of an on-going pursuit, which can certainly lead to healthy gains, though certainly not overnight.
Myth no.7: Bonus Offers Are Free Money
Never under any circumstances fall into the trap of believing that bonus offers constitute free money. They don’t – they never have, they never will. Any bonus you come across that appears to indicate free cash will be governed by such strong terms and conditions it will make life very difficult for you. In almost every instance, any additional money placed into your account by way of a bonus offer will require you to trade a certain amount in your own money, before you are allowed to gain access to it or any subsequent profits. Depending on the broker you work with and the size of the bonus you accept, this could be anything from 2X the bonus amount to 50X the bonus plus the deposit. In the case of the latter, the likelihood of you ever seeing a penny of this money is borderline zero. Read all the terms and conditions before going ahead and never, ever fall victim to the apparent promise of free money.
Myth no. 8: Binary Options Are for Experts Only
This is something of a half-truth, given the way in which it only tends to be experts that make the biggest successes of their trading activities. But at the same time, nobody was born an expert and we all have to start somewhere. The difference with binary options being that absolutely anyone with zero knowledge or experience of trading now has the perfect platform to get started and begin building their knowledge. Nobody gets into trading in the first place as an instant expert – it’s a status you have to work long and hard for.
Myth no. 9: Traders Cannot Predict the Outcome
As already touched upon, risk will always be an element to consider in all areas of trading, but this doesn’t mean that experienced traders cannot accurately predict outcomes with impressive regularity. Now, there will never be any instance where any prediction can be 100% accurate. The reason being that we never know what is going to happen even seconds from now – natural disasters, war, terrorist attacks and so on. Nevertheless, traders at an advanced level can certainly pick out the most likely eventuality, which in accordance with the specifics of the trade may amount to a near-certain result. Also as already touched upon, this is precisely where dedication pays off and why binary options trading is nothing like conventional gambling.
Myth no.10: Binary Options Trading Is Dangerously Addictive
Last but not least, this particular myth stems from the fact that as with many things, it is technically possible to become addicted to binary options trading. But only to the certain extent that it is possible to become addicted to anything else. These days, professional trading platforms and the providers behind them comprehensively advise and warn traders at all times of the potential risks and dangers attached to all trading activities. Most also advocate responsible trading and may even step into limiting activities, should it become apparent that a trader is losing control. Nevertheless, the safety or otherwise of binary options trading will always come down to both the decisions made by the trader and their own personality. Nevertheless, it is unfair to label binary options as a practice dangerously addictive. As is the case with similar activities, the rule of thumb states that just as soon as the enjoyment stops, it’s time for you to stop.