Why Binary Options Suck: 12 Things that Make it Difficult to Place Winning Binary Options Trades
Binary options trading has become all the rage over the last few years. There were eight trading websites when binary options first began in 2008, now there is well over 200 online binary options brokers throughout the world. They are widely popular because binary options trading is easy to understand and traders get results quicker than they would with other types of market trading. With that being said, binary options trading is not without its pitfalls. Here are 12 good reasons not to participate in binary options trading:
1. Short time frames
Because of the short time frames involved until trade expiration (as little as 5 minutes for some types of binary options trades), many consider binary options trading a form of gambling. The issue is a hot topic among the many regulatory exchange agencies that exist in different countries around the world.
2. The Human Factor
As with any type of market trading, the human factor can greatly effect the market and this is true when it comes to binary options trading. The human factor makes it very difficult to predict the way price will trend, and that is what binary options trading is all about. If every statistical analysis prediction chart in the world says an asset’s price will keep going down, none of that will matter if some billionaire wakes up with a hunch and drops 40 million on a particular asset.
3. Unpredictable Economic Events
It does not matter how many useful analyses tools a website has to scan the market. Just like playing poker perfectly, if there is an economic event that suddenly changes the market your binary options trade might go south regardless of the fundamentals you took into consideration. Markets can and do change in a matter of seconds from time to time because of such things as a war breaking out in an oil producing country or a freeze that damages a large percentage of a crop.
4. Impersonal
Since binary options trading is all done online, it will be a totally impersonal experience that does not take important things into consideration such as an individual traders knowledge, their current financial status or their ability to trade long enough to have their trades even out. Also, when a trader needs customer service help, it is largely done through e-mail or Internet chat.
5. High Withdrawal Costs
Withdrawals can be very deceptive practices on a lot of binary options trading sites. They will say that they will let an investor make withdrawals for an amount as small as $20, but what they don’t make clear is that in many instances there are transactions fees which can go as high as $35 per transaction.
6. Everything is Done Online
There is no single person a trader can sit down and talk with or call up on the phone to get advice about whether binary options trading is right for that individual. All they get is the advertising hype.
7. It’s Largely Unregulated
Most of the binary options trading sites are either totally unregulated or regulated by agencies that emanate from such countries as Cyprus; last time anybody checked there was not a lot of big stock market activity on the tiny island.
8. They Make it too Easy for Beginners to Trade
All any trader has to do to make a binary options trade on a website is to simply point and click on a few choices. This makes it far too easy for inexperienced traders to keep making bad decisions and placing numerous losing trades.
9. False Bonus’s Sucker in Traders
They claim to offer lucrative sign up bonuses to new members that are as high as 100% of their initial deposit. What they fail to tell these new investors is that the money is not theirs to withdraw until they have spent thirty times or more of that initial investment on trading on the website.
10. Demo Accounts are not Representative of Regular Accounts
It is very hard for a new user of an online brokerage site to properly learn its trading platform without risk if that demo account does not perfectly mimic the way real trading is done on the website. This is the case with many binary option brokers demo accounts.
11. A Trader can Burn through Their Investment Income in a Hurry
With the short time frames that binary options are traded on, an investor stands to lose a large portion of their investment income in a hurry. It’s not like regular stock trading where an investor can pull their money out of an asset to minimize losses.
12. Trading Environment is too Controlled and Limited
Traders do not have the luxury of trading all the assets, markets, indices and commodities as there is available on other types of markets. These are tightly controlled by the individual web brokers themselves.
Can you make money trading binary options? The answer is absolutely yes, but as with any type of trading there are a lot more losers than winners. So a trader needs to be aware of the pitfalls of binary options trading that were mentioned above and if they still want to go ahead and trade them after knowing all that, then good luck to them.
