Are binary options worth the risk? Well… Is rock climbing worth the risk? To someone who gets a kick out of the adrenaline rush of rock climbing and has disciplined his body and exercised and practiced in order to climb more safely, absolutely. For an amateur who is scared of heights, not so much. The simple fact is that binary options are not for everyone. Only you can decide for yourself whether or not binary options are right for you. I can’t answer that question for you.
Do binary options come with a great risk? Absolutely. They are among some of the riskiest investments currently on the market. Not only because of the risk involved in accurately calling the direction of an equity or commodity within a short time frame, but also because of the limited brokers that provide these kinds of investment opportunities.
Binary options are not regulated by the SEC. Then again, neither are penny stocks that trade on the OTCBB. The difference is that even penny stocks can be purchased from large reputable brokers who are regulated by the SEC. As for binary options, the SEC doesn’t even want to touch them.
The SEC issued an investor warning about binary options (PDF Here) that basically says stay away from them. This document warns, “Much of the binary options market operates through Internet-based trading platforms that are not necessarily complying with applicable U.S. regulatory requirements and may be engaging in illegal activity.” Because investors are forced to look to foreign internet-based companies to purchase binary options, the SEC warns, “you may not have the full benefit of the safeguards of the federal securities and commodities laws that have been put in place to protect investors, as some safeguards and remedies are available only in the context of registered offerings.”
Another important risk factor in doing business with foreign (unregulated) companies is trusting them with personal information. There have been instances where a site posing as a binary options broker was really gathering personal data for the purpose of identity theft. In response to that, the SEC advises in their document, “If a binary options Internet-based trading platform requests photocopies of your credit card, driver’s license, or other personal data, do not provide the information.” Unfortunately, I have yet to find an online binary options broker that does not require this information. So, if you follow the conservative advice of this SEC bulletin, there is no safe way to trade binary options.
In sum, binary options do carry an exuberant amount of risk. I want to be abundantly clear about that. They are not only risky because you very well may lose 100% of your investment, but also because you are forced to make yourself vulnerable to fraud and identity theft. For the average investor, these will be enough reasons to stay away.
If the risk does not scare you off, and you still have interest in trying this investment option, please consider these risk factors very carefully. Do you homework and read reviews before signing on with any broker. Trust your gut and run for the hills if it doesn’t feel right. You may also consider taking precautions to monitor your identity or signing up for identity theft protection services.
Why are binary options even worth considering, then? Can you name any other way that you can potentially make a 70% to 80% gain every 60 seconds? I didn’t think so. The risk is great. But the potential reward is so astronomical that some people won’t be able to resist.
A great risk of loss alone is not enough reason to deter all investors. If that were the case, Las Vegas would be a ghost town. Yet people flock to casinos every day, lose money by the buckets full, and call it “vacation.” Can binary options be viewed as just as risky as casino gambling? Honesty, yes. More so than with any other form of investment, binary options are simply a way of placing a bet on the short-term direction of an underlying equity or commodity. It’s like horse betting on your favorite stock.
Do binary options make more sense than casino gambling? In my opinion, yes. Because unlike in the casino, you can make a much more informed guess. You can’t research that deck of cards in the the dealer’s hand. But you can research the market. Binary options are based on an actual researchable chartable market.
That’s where the BINARY OPTION ROBOT(tm) come into the conversation. Rather than making casino-like guesses about the binary options that we purchase, the Robot can make better informed decisions by looking at real chart events, such as the RSI and MACD.
Binary options are risky. They are not for amateurs. They are for risk tolerant investors who spend time training and preparing themselves mentally and physically for the demands of the climb, so that they can hang on to some capital and potentially reach a new summit.