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18 Minutes Review Binary options have been around for years as private over-the-counter deals. These exotic options were first introduced to the general public in 2008, when the brokers started offering the deals online. Today there are dozens of brokers who specialize in these exotic options. Most of these are located offshore in places like Cyprus and the British Virgin Islands.
Are binary options legal? Like most legal subject areas, the answer is not simple. Most of the binary options brokers operate in locations outside of the jurisdiction of securities regulators. Some of them operate under casino gaming licenses. There is now a CySEC (Cyprus Security and Exchange Commission) which is attempting to regulate the industry for those brokers within that jurisdiction. In the United States there is a relatively new broker called NADEX (North American Derivative Exchange). http://nytransguide.org/18-minutes-review/ This firm is fully regulated by the Commodities and Futures Trading Commission, a US government agency similar to the Securities and Exchange Commission. Binary option investing is so new that it will take some time to see how the regulatory environment actually pans out. Certainly it is fair to say that the legal trend is toward fully regulated firms which offer exotic option investment opportunities to eager clients within any jurisdiction.
Before we look at the upside of binary options let's take a look at the downside. Exotic option investing is not traditional investing. Some say it is very similar to gambling. I like the red/black roulette wheel analogy. When you acquire a binary option contract it will either win or lose at some point in time, depending upon the expiration time of the deal. Many of the option brokers now promote 60 second contracts. A fair assessment would be to call such a contract an investment/gambling hybrid. In fact, it could be argued that any Wall Street investment is really nothing more than an elaborate gambling scheme.
18 Minutes Unlike traditional option deals, where each contract controls a certain number of shares, there is no leverage with binary options. With this type of option you cannot exercise the options. Thus you have no right to the underlying asset. The option is strictly used to generate income for the holder.
There is no liquidity with binary options. There is no marketplace to sell these unexpired contracts. Once you purchase the contract you are in for the duration. Some brokerage firms are starting to experiment with liquidity, offering to either buy back certain of the contracts under certain conditions or find buyers willing to take over unexpired contracts. It will be interesting to see how the industry evolves in terms of such an after-market. http://innertradingcirclereviews.co/18-minutes-review/
Another downside for binary options has to do with the losses. To truly make money in the long run you have to be a skilled investor with high win to loss ratio. Because when you lose with these options, you lose really big, upwards of 90%. Some brokers are now returning 5% to 15% on the losses. This is probably just a marketing ploy to get you to stick with them. But depending upon the size of your account and the size of your trades it could help with another trade.