Before we analyze whether binary options is a scam or not I would like to take a look at day trading, an area which I have much experience, and see if day trading would qualify as a scam.
As a day trader many people looked upon what I did with skepticism. Many thought that day trading was just a another form of gambling. Many trading companies would try to lure people with the potential to earn a living with electronic day trading with very little investment. The truth is, for the overwhelming majority of people, day trading was a losing effort. Few traders were successful; most lost money. The firms made a lot of money collecting commissions and profit share from the good traders. After my first year of day trading I was convinced that it was impossible, or nearly impossible to make money. I began back in 2002, after the bubble burst and volatility was at a virtual standstill. Few traders were making money with any of the traditional trading formulas that worked a few years earlier. I was fortunate enough to come upon someone who had a “system”. The trading system provided an “edge” in the market. When traders diligently followed the system they consistently made money. When I began trading with the system I made money on a consistent basis. I opened trading floors to teach others to trade within this system, but most did not made money. Trading within this system required extreme discipline both to enter a position and to leave a position when the rules required. Those who followed the rules diligently made money. Like most professions, one needs education or skills to make a living. The same is true with day trading. Along with these skills a person must have the proper discipline in order to succeed. Its a business that is clearly not for everyone.
The same can be said for Binary Options. The companies that set up binary option platforms and binary option brokers are in this business to make money. The firm collects 80- 100% of a losing trade and pays out 60-80% on winning trades. Someone who wins on 50% of their binary option trades will lose money. Unless someone has a system that has a winning track record and the person adheres to that system consistently he will over the long term win on 50% on his trades and lose money.
Of course it is possible that some of the binary option brokers in the market are making promises that they cannot or will not fulfill. If a broker makes false assertions or won’t refund deposits or payout profits to a customer then that broker may be considered a scam. The binary options trading industry itself is not a scam. It may be difficult to actually profit trading binary options, but the risk and rewards are clearly displayed for the investor. Whether one makes money or not is up to the actual trader. We have completed a series of comprehensive reviews of binary brokers. In our reviews we determine, to the best of our ability, if the brokers are providing the services that they claim to offer. Once you have the confidence that a binary option broker is providing a legitimate service you will then be able to implement a trading style that most effectively yields profitable trading results. All of the brokers we have tested so far have proved to be providing a legitimate service. Some of our reviews include older more established brokers such as 24option as well as newer brokers such as Bee Options and Redwood Options.