There are many who consider online sites that offer binary options trading as gaming platforms. Their view is that because of their negative cumulative payout (they have an edge over the investor) and because they require little or no knowledge of the stock market to trade in it is gambling.

Most platforms have their investors sign a “Terms and Conditions” document before trading that warns the investors about the risk involved in dealing with binary options. However, in light of the high risk involved, it would be expected that the risk of trading in binary options will appear in this document in bold letters as well as on the platform itself. In addition, advertisements for binary option trading platforms tend to highlight only the high profit but not the high risk involved.

Despite all of the excitement surrounding binary options trading it does have perceived disadvantages. The following are some factors to consider before investing in binary options.

They are the most expensive financial instruments in the market for retail investors. There are cases where the bid versus ask price spread can be as high as 40% for some underlying assets. This means that you will have to ‘be in the money’ most of the time to offset this spread.

Some investors feel that it is too short term. But to traders this is one of the powerful attractions of binary options trading. Some critics site the precarious movements in the market in the short term makes this activity too hard to predict.

Binary options markets are much more volatile due to additional political, economic and currency considerations, so there is a chance for large profit through options trading, but at the same time  there is risk for large losses.

But many new investors will continue to be drawn to binary options trading because of its simplicity. It would be wised for all new traders to spend a significant time educating themselves about the market in general and the risks of binary options trading.

To be sure options trading is a risky venture and binary option trading is no less risky. (Remember, any investment carries risks. Seek the proper advice before investing  money).