Are you the kind to gamble on the flip of a coin? It’s a very simple bet: Yes or no; a binary choice. And, actually, flipping coins isn’t the only way to make such a simple investment. Even when dealing with stocks or gold, one can invest in binary options. For a lot of beginners, this is a popular route, since it is fairly easy to understand and manage; but, unfortunately, like a lot of investment schemes, there are tons of scams out there that you must watch out for.
A huge downside to binary options that makes it so fertile for scams is that it is a zero-sum game. You bet on whether a certain condition will be true (say, the price of gold will be above $1000 at 3:00 PM on Monday), and you buy that option. If it becomes true, you receive returns on your investment, if it isn’t, then you lose your whole investment. It is all-or-nothing, and if you make money, this necessarily means someone who bought the opposite of your particular option will lose money. In a lot of ways, it is closer to informed gambling than actual investing.
If you do indeed decide to invest in binary options, take heed. Look at these ten aspects of binary options scams and make an informed decision before you gamble:
1) Your biggest liability is your inexperience.
Sure, you can get into trading binary options as a complete beginner, but remember that unlike other kinds of investing, you are basically pitting yourself against opponents. Being so uninformed, as you will be in the beginning, can you really outsmart professional investors who have been working in finance for years?
-Side note: I have invested $350 in binary options and lost it in less than an hour. When you first enter your personal information and press SEND, you immediately get a call. The person on the other end is very well trained. He/she tells you that they will personally train you and help you make money. This isn’t true and please, don’t fall for it. Someone called me a few months after I had lost my money. I believe that the only reason why they called me was because they noticed that I wasn’t spending anymore.
2) Good luck beating (or predicting) the market.
Trying to predict the direction of a (more or less) free market is a fool’s errand, essentially, at least when you’re dealing with the tiny day-to-day fluctuations, which is what most binary options rely on.
Side note: I looked all over the internet to see if there was a “system” that was put in place that could teach me how to predict the market. I found something but guess what? This person was trying to get more clients to join their “business”. Of course, if I signed up, he would make a “cut” of what I would spend.
3) The house always wins.
You know who probably makes consistently the most money in binary options? The sites that manage to recruit newbies into joining and blowing their money on a gamble. You can bet that the odds are stacked against the user and skewed in favor of the site; for example, their rules may enable the site to receive more money when they “win” than when their user does—they make the rules, after all.
4) The illusion of control.
While having a good day or a good week, it can be easy to underestimate how little control you actually have over how much money you make. Probability, rather than skill, rules the day. It’s like going to the casino, probably even worst.
5) I win, you lose.
You can tell the difference between investing and gambling because investments are usually the result of creating value, or fixing an inefficiency in the market—for example, when one lends money to a producer who then will pay back with interest, or when one buys a house, improves it, then sells it for a higher price; in these sorts of cases, all parties involved “win” and receive benefit. Gambling, on the other hand, doesn’t create any value, but merely shifts money around from one person to another based on random chance. Guess which one of these categories binary options falls into?
Good investments are rarely, if ever, a zero-sum game where one entity wins and the other loses.
6) Jackpot addiction.
Just like any other form of gambling, binary options can be addicting, and the scammy sites that sell them are counting on that. Don’t put yourself into that vulnerable position unless you have money to burn.
7) Unregulated trades.
This may not be a concern for you, but you should at least be aware that most of these binary options sites are unregulated, so they can often do as they please and get away with it. Many times you have no recourse if you get scammed.
8) Too good to be true.
Not all binary options sites are complete scams (in that they promise something other than a gamble), but it’s very easy for “investment” sites to swindle people out of their money. If the site is offering any kinds of guarantees of easy money, you can be practically sure it’s a scam.
9) Range of the moment.
Unlike a true long-term investment, you make money only once, and it is purely active income.
It may seem like a minor point, but like all windfalls, even if you make a lot of money, you didn’t learn much from it. The more that you involve luck in some money-making scheme, the less skill that you have the privilege of acquiring during the process. Good investments are more than just monetary, they teach you something important, and so they are also an investment in yourself. Wouldn’t you rather spend your time on something more enriching than gambling?
No matter how you slice it, barring unusual luck, you’re probably not going to make money—rather, in all likelihood, you will lose it—if you trade in binary options, especially if you are inexperienced. If you’re looking to make money, it’s probably best to focus on creating value; that’s nearly guaranteed to pay.
Take a look at these 20 people who ARE making money online.