Binary options is the current hot thing in the Forex market, as these trades can be used by intelligent and skilled traders to help blunt some of the volatility that comes with trading the currency markets while rewarding the ability to spot longer term overall trends or counter trends. Binary options don’t necessarily have to be tied to the Forex. They are often used with commodities or other markets, as well, but they seem to be a natural fit for the Forex because of the markets being open 24/7 and the volatility gives plenty of opportunities to profit.
Just What Are Binary Options?
Binary options allow a trader to set a prediction on where a trend is going. This might be predicting the price of a currency pair at a certain time. If the trader is right, they win their bet and profit. If they’re wrong, they lose their entire trade amount. Binary options are all or nothing, with the pay-off depending on likelihood. If the trader is betting on something the market says there is an 85% chance of happening, then they only get 15% profit on top of their placed bet back. If they go for a long shot that has only a 20% chance of happening and succeed, they get their bet back with 80% profit on top of it.
This is often called the gambling of trading because of the all or nothing setup and similarity to sports betting.
Binary Options Software
There are many claims of binary options software programs that automatically trade for you and can result in massive profits. The problem is that at least 95%+ of these are total scams, and they often get recycled again and again because they are so profitable for those doing the scamming. These are automated programs that will place trades and attempt to make income for you, but all the claims of being 95%, 99%, or 100% effective are grossly overblown. Many of these software traders rarely make 50%, and considering you lose your full bet when you’re wrong, that’s not nearly high enough to consistently be possible.
Even worse is the fact that often times all the website information on these programs are created by the scammers or else from affiliates re-churning false spin to get their cut.
So how can you tell when someone claiming to have a great binary options software program is actually running a scam on you? Fortunately there are several red flags that can help you avoid this online trading minefield.
Red Flag #1: Limited Time Offer
This is almost always hype, and when it comes to any trading software that is “”secret,”” “”experimental,”” or anything along those lines then you can bet it’s the same cruddy software with yet another fake story delivered by high pressure sales video. This is a huge red flag.
Red Flag #2: It’s Free
Why would anyone give a multi-million dollar software for free? Often the software is free, but you are required to set up a “”basic”” account of $500 or more and work with “”approved brokers.”” These approved brokers will inevitably be owned by the people peddling this software or they will be affiliates. Either way, they profit from the accounts and from the losses that pile up from people using software that doesn’t hit nearly enough to be profitable over the long term.
Red Flag #3: Check The Website Information
Many of these websites are .co, which does not mean “”company.”” A .co just means the website is registered in Colombia. This is a common trick used by people who are trying to look more legit than they are. Look up the website information on a WhoIs database. If the website was created this year, or even weeks ago, that’s a clear red flag.
Red Flag #4: Google Searches Come Up Empty
In today’s society, you can’t hide. All these people on sales videos claiming to be multi-millionaires and running giant companies producing hundreds of millions in profit, and yet you do some simple Google searches and realize they don’t seem to exist other than reviews of the software that you’re looking at.
If the company in the video is similar in name to another legitimate company, that’s also a red flag. Trying to piggy back off someone else is never a good sign.