As someone who sneaks plenty around the internet, one of the unavoidable things that naturally occurs is the Spam Popup. Over and over again we get adverts blasted into our faces as we move throughout the net looking for information and products. Over the last two months or so however I began to notice 2 adverts in particular. Both were your atypical “make $3300 from home per week” things, but they were different. Both pop ups had a very slick video that would auto play, with professional voice over and one even with what seemed to be a syndicated news story. So being one who always loves the idea of a get rich quick scheme, I decided to find out more.
What the Hell is Binary Trading?
Well, My first instinct should have been my last. Binary Trading is nothing more than gambling. Even worse its gambling on stock market in short term intervals which is even crazier.
Binary Options (or Fixed Returns Options – FRO’s) are currently offered on stocks, indexes, foreign exchange, commodities, and other derivatives. Many sites which provide Binary Trading options such as RedwoodOptions.com, 24option.com and 247binary.com even go as far as to use bonus offers very similar to the current online poker customer attraction methods. This should be red flag, but still people seem to be investing their money trying to hit the magic up or down trend.
So how does it work?
Essentially a trader picks a commodities or indices they wish to invest in (Bet on) and place a trade. Trades are incredibly short, often only a few hours and the trader is paid a fixed amount if they manage to correctly pick the movement of the investment. So if a trader takes a short position on a currency and it moves downward in value by the end of the trade period, they win. It make no different the value of the rise or fall of the investment only that it went in the right direction. Given market volatility across a small periods of time naturally this is an idea fraught with risk.
A typical site will offer returns of around $70 for each successful $100 “trade/bet” while if you lose, you get back $15. So your risk is only ever $85, but naturally the house has an advantage. One example I found in a great article at Forbes provided the example below.
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.
Naturally these sites offer their own training programs along with systems to maximize your results, but they are all just essentially minute by minute style candlestick graph schemes that are high on catch phrases and low on effectiveness.
The reality ladies and gents is that if you are looking to invest, even if you are like me and have a good appetite for risk, there is nothing hear for you. This is simply a quick way to go broke.