If you are interested in investing but you don’t like the long wait that
traditional investments require, binary options trading might be a good option
for you. So, what do you need to know about binary options and what are the
regulations?
What
Are Binary Options?
Binary options is an interesting type of investment because there is no
fixed buyer and seller, and no traded assets. This is different than every
other type of investment. So, you make contracts based on your foresight about
whether certain assets will move up in value or down. You then get a payout
based on whether your prediction was right or not. Brokers make money from both
sets of traders making the contracts.
What
Are the Regulations?
Binary options is still a relatively new idea, so there are no regulations
yet. That leads to a lot of confusion because binary options fall under
different categories, depending on which country you ask. For instance, the UK
says binary options are part of the gaming industry because it is essentially
fixed rate betting. Other countries view binary options as a short-term
investment. That’s why regulations are probably on the way—to define binary
options and create rules to protect people and investors.
Some people say there will never be regulations while others say it is
inevitable. The most probably cause that regulations are on the way is that
NADEX (North America Derivatives Exchange) and CBOE (Chicago Board of Exchange)
recently added binary options to their offerings. Additionally, regulations
would allow countries to tax binary options and make money off of it, which has
obvious benefits for them.
So, when regulations on binary options finally do come around, it will
probably be a slow process. If you remember back to when FOREX trading was a
new trend, the regulations were slow to come in. But just because there are no
regulations, does that mean you shouldn’t participate?—no.
Should
You Invest in Binary Options?
Just because there are no regulations doesn’t mean you shouldn’t participate
in binary options. As a matter of fact, it makes it one of the best times to
get involved because the government is not interfering with your options or
taking taxes—that gives you a lot of power.
Future regulations, however, probably will be a good thing because it will
ensure brokers are licensed and not able to take more than their fair share.
It’s probably going to be a long road to regulations, though, so get prepared
for lots of changes.
Binary options aren’t for everyone, but if you know how to do good research
on stocks, you will probably be good at binary options, too. It isn’t
rocket science, and there is a bit of luck involved, but the risks are
calculated and many people have already been pretty successful.
Have you experimented with binary options yet? What has your experience
been?
In conjunction with Affiliate Media, Inc., Michaela McNamara established BinaryReview.com in 2012 with the intention of providing new options traders with the tools, reviews and information they need to profit from binary options trading.
Michaela joined Affiliate Media Inc. in 2011 as the company’s digital content editor. In addition to spearheading BinaryReview.com, she manages the content direction for the company's websites with the goal of creating and providing trusted, engaging and interactive content. Email her atmichaela@affiliatemedia.com
