Should You Fear the Binary Option Trading Regulations?

”

Companies ofering Binary Options Trading services (websites with trading platforms) will need to document, in writing, their intention to submit an application for a CIF license.

These regulations will be put in place to monitor and control companies in the industry to help avoid investment fraud, among other things. If you are familiar with stock trading you may recall that the Forex went through a similar regulatory process.

The growth of binary options trading has been explosive and with such growth comes responsiblity. This new regulation should be welcomed with open arms. It will bring more traders to the industry and let binary options trading be viewed with less scrutiny.

Binary options are a type of stock option in which the payout is designed to be either a fixed or pre-approved amount of compensation. Binary options are different from plain vanilla options. You will often hear bianry options referred to as “all-or-nothing options” or ”digital options”.

The ability to bid on whether a commodity, stock, certain indices, or other assets will rise or fall before the end of the day puts trading in the reach of ‘regular people’. If you put a fixed dollar amount down and buy a call option you are predicting a certain asset will rise. If you predict a certain asset will fall, you can buy a put option. You are placing an ‘all’ or ‘nothing’ bid. This is why it is referred to as “binary”.

Placing money in binary options is quickly catching on because you can make money trading online without the usual risk to your portfolio. Binary options trading is exciting because new investors, without knowledge of various financial markets, can reasonably predict the direction of a stock or instrument. When you can do this in a specific measure of time (minutes, hours, days, or weeks) you have the ability to make a lot of money investing online in a short amount of time. (Remember, any investment carries risks. Seek the proper advice before investing money).