Binary options are trending since 2012. Everybody saw it as simple and effective way to get started with trading online. Sure, there were CFDs and Forex but when you really want to convince a total noob on how to trade you need to make it as simple as possible. And binary options are just that. They were never seen as a trading tool professionals might use. Maybe peer to peer based platforms like Nadex where you can buy and sell options to other traders and can enjoy returns of 99% where conventional brokers offer you a tiny 85% and claim to be the industry leader.
Seriously, you should consider binary options as what they are, a very simplified financial contract that offers pre-defined payouts. And these are not good in regards to risk and reward. When you are gambling with binary options (and this is very easy to do) the payout is worse than at any casino game. Look at it. When playing Blackjack or Roulette you get paid out with 98-99% depending on your strategy (for Blackjack). That’s not bad. At Roulette you can even multiply your bet 35 times. So your return ranges from 100% to 3500%. Compare that with binary options trading where you simply click put or call depending on your mood just like you do at a Roulette table. At binary options you don’t get a 100% or 3500% payout. You only get like 75-90%. So where’s the rest? The rest is for the broker that allows you to make this bet.
The difference between a casino and a binary options broker is the following:
A casino knows exactly what their expected value is and the probability of an event. Binary options brokers can’t know that. Let one federal bank change the exchange rates (like Switzerland did some time ago). Now it’s like betting on red at Roulette and you know for sure that red will come. Bad for the casino broker. And there are other circumstances at the market. This makes it tough for brokers and that’s why they need to keep their margin quite high.
What does that mean for you? You may have better chances sometimes when trading. While when you’re playing in a casino the chances never change. This is what you have to do when trading. You need to be able to spot these times and positions where the chances turn to your favor.
When you’re serious about trading you need to invest a lot in your skillset and also be aware of the fact that you won’t earn profits right away. Most of the time when starting out the payout does not really matter, meaning that traders are also losing even with 99% payouts as they just make the wrong decisions. If you’re not serious I highly recommend just going to the next online casino like 888 or LeoVegas (both are pretty good) and give Roulette or Blackjack a shot. The payout is better and so are your winning chances.