Contributor There are lots of ways to lose your money in this world but here’s one I hadn’t encountered before: binary option Web sites. They have become popular over the past few years with new ones appearing all the time: anyoption.com, bulloption.com, spotoption.com, binaryoption.com, etc. The sites appeal to the same type of people who play poker online.
But they somehow have an aura of being more respectable because they represent themselves as offering a form of investing. Don’t kid yourself. These are gambling sites, pure and simple. It’s probably just a matter of time before regulators move in on them. Until that happens, they seem to be doing great business.
A Google search for binary option Web sites produced 870,000 hits with promotions like “earn up to 75 per cent every hour” and “81 per cent profit in one hour or less, trade all major markets”. You can buy these, which are also known as all-or-nothing options, digital options, or Fixed Return Options (FROs), on stocks, commodities, indexes, foreign exchange, and other derivatives. In fact, you can place a bet (which is what it really amounts to) on just about anything that is publicly traded, depending on which Web site you use (some offer a wider range of choices than others). Some sites provide free guides to binary option trading to get you started. I was alerted to this phenomenon by a reader who sent me this email: “My dad has recently gotten involved with trading binary options online.
The basic premise for the site he uses is at a specific time, say 1:25 p.m., you can put down perhaps $100 that XYZ stock will either increase or decrease in price within five minutes — by 1:30 p.m. If you are wrong, you get $15 back. If you are right, you win about $70. “I’ve proven to him that, mathematically, the site has an edge and you must be right 55% of the time in order for your bet to have a neutral expected value. I am also a professional online poker player by trade so I have an extensive understanding of probability, the online gambling markets, and how these sites work. The problem is he feels he is at a great advantage, citing his ability to read a bunch of charts, follow news, etc. He is a smart man, a former lawyer, and has been following stocks for years, but I feel that he may be overestimating himself here.
I’ve looked into online binary options trading a bit and it seems to me that the consensus is that very few people outside of professional traders can beat the trading sites consistently for good money. My dad is up $2,500 or so betting $100 and $50.
The Option Robot generates trading signals for currencies (forex & crypto). OptionRobot.com is a 100% auto trading software for binary options. For example if both RSI and CCI indicators are selected then both require identical SELL. Online Trading with Binary.com. Trade 24/7, even on. Choose the platforms and accounts you need, based on your personal trading style. View our platforms. BinaryOptionsRobot is probably themost popular binary options auto trading software available. The developers have created a binary options trading software to trade with several regulated Binary options brokers taking opportunities as they unfold in the market.
The best I could do is to warn him about statistical variance affecting his perceived ability and that short-term volatility along with the inherent disadvantage will make consistent winning incredibly hard. “I’m looking for a way to definitively convince him to stop and that his edge isn’t as great as it seems. I tried talking to him multiple times about the subject but I’m not as knowledgeable about the field and ultimately that becomes my shortcoming when trying to convince him why he shouldn’t continue to be involved with this. Any help would certainly be appreciated.” I found this correspondence especially fascinating because the writer is a professional online poker player —a gambler by trade. Yet here he is trying to convince his dad that online gambling is a bad thing. I agree, it is.
But it’s understandable if the father is skeptical about advice from a son who does the same sort of thing, albeit in a different form. But that’s for them to sort out.
What intrigued me was to discover that binary option trading has become a kind of pseudo investing sub-culture. I went to the site our reader says his dad uses and did some research. It describes binary options as “an exciting new type of investment” —note the use of the word “investment”. “When a binary option is purchased on our platform, a contract is created that gives the buyer (known here as the investor) the right to buy an underlying asset at a fixed price, within a specified time frame with us, the seller,” the Web site explains. The option must be held until maturity (even if that is five minutes away); unlike regular options it cannot be sold before then.
These sites promote themselves as offering controlled risk (you can’t lose more than a specified amount), low cost, big gains if you guess right, and ease of use —you can trade from home whenever markets are open and set up an account with a credit card. So what arguments would I use to convince dad to quit? For starters, this sort of thing can quickly become addictive, especially to market junkies. Although the amounts bet may be small, the total can quickly add up if many trades are done in a day.
It wouldn’t take long for things to get out of hand. Second, no one, no matter how knowledgeable, can consistently predict what a stock or commodity will do within a short time frame. Will Apple shares go up or down in the next 10 minutes? Unless there has just been some major announcement from the company, there is no way to even guess at that. Third, the house definitely has an edge. This particular Web site pays $71 for each successful $100 “trade.” If you lose, you get back $15. Let’s say you make 1,000 “trades” and win 545 of them.
Your profit is $38,695. But your 455 losses will cost you $38,675. In other words, you must win 54.5% of the time just to break even. Finally, these Web sites are unregulated. No securities commission is protecting people’s interests. This is a financial Wild West.
If people want to gamble, that’s their choice. But let’s not confuse that with investing. Binary options are a crapshoot, pure and simple.
Benzinga may be compensated if you click on a link leading to the Nadex website and sign up for a service. Who Uses Nadex Review?
For anyone on the lookout for trading binary options, very few regulated options are available, and Nadex is one of the few available for the following individuals:. Binary options traders. Beginners. Seasoned investors Binary Options Traders Those investors who look for a simple way of making money out of the price fluctuations may be taken for a ride by scammer exchanges/brokers in the name of offering a way to trade. The risk element is minimized if one uses Nadex, given that it is a regulated exchange.
Beginners Use Nadex The educational resources available with Nadex makes it, who can gainfully use those to get fairly acquainted with binary options as well as Nadex and its trading platform. Seasoned Investors Also Use Nadex Seasoned will find an able ally in Nadex’s advanced trading tools and charting application, which could help predict the directional moves in the markets. Nadex Commissions and Fees An account can be opened for free online. Opening minimum balance is $250. The firm also offers market data and trading software, including advanced, charting and analysis tools free of cost. The fee charged is $1 per contract side, with a $50 per order cap on entry fees, irrespective of the number of contracts in the order, and for exit another dollar.
However, if the binary option expires at zero, the $1 settlement fee is waived. Nadex Platform and Tools Nadex’s web-based platform runs on any PC with a modern browser and fast internet connection. The firm’s proprietary mobile trading apps are designed for the unique features of touch screens and offer secure, flexible ways to trade on the go. You can trade on Windows, Mac, or Linux. The firm also has a demo-trading platform, which is a full-featured virtual account to test drive the Nadex trading platform. Research Tools for Nadex The firm’s web page has a section dedicated to learning, called Learning Center. The segment has basic educational courses, delving into Nadex, Binary Options, Nadex’s Trading Strategies and Nadex Spreads.
Under the Resources heading, the firm offers webinars, videos, trade examples and e-books. Market-related news and analysis are provided under the head “Market News.” The firm also displays a glossary of terms related to trading. Nadex Customer Support Nadex clients can reach support anytime from 11 a.m.
ET Sunday through 5 p.m. The toll-free meant number for U.S. Clients is 1-877-776-2339, while international clients can contact Nadex using the number +1 312-884-0100.
Customers can also e-mail Nadex at. Meanwhile, prospective U.S. Customers looking to open an account can call a Nadex Accounts Specialist between 7 a.m. ET and 8 pm ET from Monday through Friday and 7 a.m. ET and 4:15 p.m. ET on Fridays using the toll-free number 1-866-296-0167.
The corresponding number for prospective international customers is +1 312-884-0162. Note: Customer service is available only in English at this point in time. Nadex & Its Ease of Use On opening an account online, free of cost, you can fund your account using a debit card. To open an account, you have to fill out an online application, which can be done in five minutes.
Example Of Binary Options Software For Mac
You can fund your account and begin trading once the application is approved. The account types allowed by the firm include:. Individual accounts for U.S.
Residents. Individual accounts for. Business accounts (trust, partnerships, LLCs, corporations). Permanent demo accounts: The firm provides $25,000 in virtual funds to learn the platform and try out different trading strategies.
Nadex Binary Options Software
Nadex is not the buyer or seller but the facilitator of fair and transparent execution. It is regulated by the Commodity Futures Trading Commission or CFTC. The firm ensures the safety of funds of members by holding these in segregated accounts in top U.S.