Ever since the beginning of the digital and electronic world, mankind has experienced many technological advancements and innovative developments in every phase of life. Binary option trading is one such development the world of finance encountered in the modern digital world as a development of stock exchange and stock market that not only revolutionized the world of finance but also laid down the basis for developments for all times to come. Although binary option trading has been growing to be one of the best stock trading businesses around the world but it comes as a result of many risks involved in the trading too that makes the trading quite vulnerable to fraudulent trades and unregulated stock trades that are prone to frauds and being robbed.
What is Binary Option?
In the world of finance, binary option is a type of an option trading in which the payoff can take only two types of possible outcomes after the trade has been made. Either some fixed amount of money or absolutely nothing at all. The two main types of binary option involves the cash or nothing type option and the asset or nothing type option.
When a stock is purchased, there is a maturity date set for the traded stock to be expired, if at that date the stock has increased its value, the payoff will be more as set in the first place. If the value decreased then there will be nothing at all. If the value remains the same, the original cost of the traded stock is returned. Binary Options are also referred to as digital options, all or nothing options and fixed return options (FROs) in the American Stock Exchange.
Although Binary trade options form the beginning of the digital world in finance, these trade options come with a lot of risks involved leading to much vulnerability in the market. Even though binary options sometimes trade over regulated exchanges but is mostly done over unregulated exchanges which are quite prone to fraud and false stock purchases leading to losses for stock traders and marketers especially small scale traders with no prior knowledge to stock trading trying to enter finance.
Many critiques have argued these binary option websites as new online places for gambling who just represent themselves as some sort of investing whereas in reality it is only gambling over anything that can be publicly traded. There has also been much discussion over binary options as a trader requiring to be 55% correct to expect a neutral incoming value. Many people have acquired the use of binary option trading but only a handful of traders are making profit out of this stock business whereas the rest of the traders are losing quite a lot of monetary over this trade option.
No gambling on binary options
Binary option trading as many critiques say is the new form of playing online poker to gamble and make money. When you win, you get everything, if you lose, you get nothing at all. What is fascinating over the websites is that it has become kind of a pseudo-investing subculture. These sites promote themselves as making some kind of investment and the right to buy a specified asset within a time frame on the platform and held until maturity unlike regular trades further adding that binary options provide controlled risks meaning traders won’t lose more than specified amount. This trading might get addictive causing a trader to make numerous small trades in one day leading to a very large sum of amount being lost. No one can consistently guess what a stock would do in a specified time frame.