Last update 2020.11.16
Most people confuse binary options with options and forex trading 💹. It turns out that binary options differ significantly from conventional options and forex. In this article, we will help you understand binary options, what brokers offer binary trading, and whether it is worth investing.
🎯 Our mission is to help you understand how to invest efficiently and improve your outcomes. Get extra trading insights from leading finance experts on the trading Academy and on our free forex Telegram channel.
Warning: Binary options are a highly risky investment and can cause a loss of capital. Before you start trading binary options, you should consider whether it is suitable for you.
📚 Our articles are written by real finance experts with hands-on investment experience to make financial education available to everyone.
What you will learn ahead 🎓
- What are binary options trading?
- Binary Options Brokers and Trading Platforms
- Is Binary Options trading worth it?
- Forex an alternative to binary options trading
- How to invest with AI from anywhere
- How much do I need to trade forex with AI?
- What is the best forex broker to invest with AI?
📌 We also covered how to make money part-time through this other article.
What are binary options trading? 🧐
Basically, a binary option is a type of options contract in which the payout will depend entirely on the outcome of a yes/no proposition.
The yes/no proposition typically relates to whether the price of a particular asset that underlies the binary option will rise above or fall below a specified amount. For example, the yes/no connected to the binary option might be something as straightforward as whether the stock price of TESLA (TSLA) company will be above $400.51 per share at 3:40 pm on a particular day, or whether the price of gold will be above $1,886 per ounce at 12:35 am on a particular day, or a forex pair price of EUR/USD 🇪🇺 🇺🇸 above $1.14589. Once the option holder acquires a binary option, there is no further decision for the holder to make as to whether or not to exercise the binary option because binary options exercise automatically.
Unlike other types of options, a binary option does not give the holder the right to purchase or sell the underlying asset. When the binary option expires, the option holder will receive either a pre-determined amount of cash or nothing at all. Given the all-or-nothing payout structure, binary options are sometimes referred to as “all-or-nothing options” or “fixed-return options.”
Binary Options Brokers and Trading Platforms 🔍
Some binary options are listed on registered exchanges or traded on a designated contract market that is subject to oversight by regulators such as the CFTC (USA 🇺🇸), SEC (USA 🇺🇸), FCA (UK 🇬🇧), ASIC (Australia 🇦🇺), respectively depending on the country, but this is only a portion of the binary options market.
These are some of the most popular binary options brokers:
Much of the binary options market operates through Internet-based trading platforms (binary brokers) that are not necessarily complying with applicable regulatory requirements. The number of online brokers trading platforms that offer the opportunity to purchase and trade binary options has surged in recent years.
Typically, a binary options broker will ask a customer to deposit a sum of money to buy a binary option call or put contract. For example, a customer may be asked to pay $50 for a binary option contract that promises a 50% return if the stock price of Apple Company 🍏 (AAPL) is above $200 per share when the option expires.
If the outcome of the yes/no proposition (in this case, that the share price of Apple Company (AAPL) will be above $200 per share at the specified time) is satisfied and the customer is entitled to receive the promised return, the binary option is said to expire “in the money.” If, however, the outcome of the yes/no proposition is not satisfied, the binary option is said to expire “out of the money,” and the customer may lose the entire deposited sum.
There are variations of binary options contracts in which a binary option that expires out of the money may entitle the customer to receive a refund of some small portion of the deposit—for example, 5%—but that is not typically the case.
In fact, some binary options brokers may overstate the average return on investment by advertising a higher average return on investment than a customer should expect given the payout structure. For instance, in the example above, assuming a 50/50 chance of winning, the payout structure has been designed in such a way that the expected return on investment is actually negative, resulting in a net loss to the investor.
This is because the consequence if the option expires out of the money (around a 100% loss) significantly outweighs the payout if the option expires in the money (approximately a 50% gain). In other words, in the example above, an investor could expect, on average, to lose money.
Is Binary Options trading worth it? 📈📉
Binary options trading has attracted tons of traders around the world, in the hope to make money quickly. However, like any investment, binary options pose a risk of capital loss and are not suitable for everyone. So, are binary options worth it? Is binary trading a scam?
In the United States, the regulators CFTC and SEC have received numerous complaints of fraud associated with websites that offer an opportunity to buy or trade binary options through brokers. The complaints fall into at least three categories:
- Refusal to credit customer accounts or reimburse funds to customers.
- Identity theft
- Manipulation of software to generate losing trades.
The first category of alleged fraud involves the refusal of certain binary options trading platforms to credit customer accounts or reimburse funds after accepting investor money 💰. These complaints typically involve customers who have deposited money into their binary options trading account and who are then encouraged by “brokers” over the telephone to deposit additional funds into the customer account.
When customers later attempt to withdraw their original deposit or the return they have been promised, the trading platforms allegedly cancel customers’ withdrawal requests, refuse to credit their accounts, or ignore their telephone calls and emails.
The second category of alleged fraud involves identity theft. For example, some complaints allege that certain binary options brokers may be collecting customer information such as credit card and driver’s license data for unspecified uses. If a binary options trading platform requests photocopies of your credit card, driver’s license, or other personal data, do not provide the information.
The third category of alleged fraud involves the manipulation of the binary options trading software to generate losing trades. These complaints allege that the binary options brokers manipulate the trading software to distort binary options prices and payouts. For example, when a customer’s trade is “winning,” the countdown to expiration is extended arbitrarily until the trade becomes a loss.
In addition to ongoing fraudulent activity, many binary options trading platforms may be operating in violation of other applicable laws and regulations, including certain registration and regulatory requirements of the regulators.
Before investing, use FINRA’s BrokerCheck and the National Futures Association’s Background Affiliation Status Information Center (BASIC) to check the registration status and background of any firm or financial professional that you are considering. If you cannot verify that they are registered, don’t trade with them, don’t give them any money, and don’t share your personal information with them.
Forex, an alternative to binary options trading
An essential point to figure out when planning to become a trader is to decide where to invest. Investors around the world are finding it difficult to diversify their portfolios in this unstable global environment. There are several financial instruments to consider, such as Stocks, Forex, Bonds, Treasury bills, Savings account, real state, and so on.
Forex is the short way of saying “Foreign Exchange“. This means the global market for trading international currencies, also known as the FX market through a forex broker. These are the key features of forex:
- Forex sessions are 24/5 from Sunday at 5:00 pm Eastern (ET) through Friday 5:00 pm.
- With an average daily volume of $6 trillion, forex is the largest and most liquid financial market in the world.
- Due to the large volume, forex offers great opportunities to invest.
- Due to a wide variety of existing Forex brokers, Forex has become increasingly affordable.
- You can start trading forex from just $1 or with a risk-free practice account with a lot of forex brokers.
- It’s possible to invest automatically in forex with AI trading.
- Portfolio diversification. Forex is used as a hedging instrument by large hedge funds. This means that you can also consider forex trading as a protection for your investment portfolio.
So, are you thinking about investing? Think of forex as part of your capital allocation. With Wiseinvest’s AI trading, you can invest automatically in forex from just $1.
Learn more about the forex market dynamics and how to make money from home in forex in this article.
Investing in forex with AI trading
Why you should consider investing in forex with Wiseinvest’s AI trading
- Portfolio diversification in forex.
- 3 times the average returns of S&P500*.
- You can try our AI for free and with practice accounts.
- It is efficient and totally hands-free.
- Invest from anywhere in the world, from just $1.
- Very simple and quick setup.
- It is safe and affordable.
- Integrated with the best brokers.
- There are no management and performance fees.
- There is a team of specialists to support you.
- Learn finance with real leading experts.
The average annual return of Wiseinvest’s automated AI trading over the past 10 years (2011 – 2020) was +43%. You can check our real-time track record by clicking here.
How to invest with AI from home
You can invest with AI in forex while performing your personal activities at home or wherever you are and save time. It is simple, safe, and free.
Check out the 3 steps to trade automated with Wiseinvest’s automated AI trading system.
By trading forex automated with AI, you will save time and improve your performance without monitoring the market and managing trading platforms.
With Automated AI trading you do not need MT4 / MT5 and other trading platforms to invest in forex. All forex trades are automatically placed into your broker account every time that our AI system identifies a new worthy trading opportunity. You can monitor the AI trading performance in real-time directly on our dashboard.
Benefits of Automated AI trading
- Try for free.
- Setup in 3 minutes.
- Totally hands-free, from anywhere.
- Invest from just $1.
- APY of 43% over the past 10 years*.
- Capital protected under the brokers
- Lightning-fast execution & no slippage.
- No commissions, no management fees.
- Portfolio with 40 different automatic strategies.
- No MT4/MT5 or other platforms required.
- Test with a risk-free practice account.
- Trading results directly on our dashboard.
Don’t you have a broker account yet? Our AI is integrated to trade automated with the brokers Oanda and FXCM. Click here to open an account with FXCM or here to open with Oanda. Those are some of the best forex brokers in the world.
What does happen after linking a broker account with AI trading?
- The AI will automatically invest on average every 12 hours in your account.
- There will be up to 60 trades per month (Monday – Friday).
- You can enable and disable AI whenever you want.
- Check your trades on our dashboard or the brokerage.
- You can link more than one broker at the same time.
- You don’t need MT4 / MT5. It’s all on our dashboard.
- Your capital is protected under the broker.
- Your personal data is protected by us.
Would you like to try our automated AI trading for free in a risk-free demo account? Get started free here.
How much do I need to trade forex with AI?
You can start in forex trading with free AI forex signals or AI trading from just $1 through some of the best forex brokers. It is moreover possible to test using a risk-free demo account with our AI trading structure. Regardless, to do a capable peril, the board in authentic records, we suggest you start from at least $100.
What is the best forex broker to use AI trading?
- Where are you from? For example, Oanda accepts US accounts, but FXCM does not. On the other hand, FXCM accepts accounts from some countries where Oanda does not.
- How much do you have? With Oanda, you can start at $1, and FXCM is ideal if you start from at least $300.
- FXCM sometimes provides higher liquidity volume and lower spreads than Oanda, which are vital aspects of the success in forex trading. But it can also vary.
Why trust Wiseinvest instead of other trading platforms
These are the main reasons why forex traders at all levels trust us, rather than other trading solutions.
- Our automated AI trading is efficient, simple, safe, and affordable. You do not need MT4 or other complicated platforms to trade forex.
- We are a legitimate and reliable company with extensive experience in finance. We combine 19 years of trading experience and extensive academic research in the financial markets.
- Our AI outperformed the investment market with an average annual return of 43% over the past 10 years (2011-2020).
- The automated AI trading works with some of the best forex brokers.
- When using our AI solutions, all your money is protected by brokerage firms.
- We do not have access to withdrawals from our customers’ accounts.
- All of your data is encrypted and will never be shared.
- Binary options market operates through Internet-based trading platforms that are not necessarily complying with applicable regulatory requirements and may be engaging in illegal activity.
- Before investing in binary options, you should check if the binary options broker has registered the offer and sale of the product with the local regulators.
- Today, AI is overtaking industries and our day-to-day tasks. Fortunately, the implementation of AI has been beneficial, as in the use of investing from home or while working to make money.
- Artificial Intelligence has gained traction among traders and it is now the new generation of systems to trade forex.
- Due to its ability to evaluate scenarios, learn quickly, adapt and make the right decisions or give accurate suggestions for decision making, AI can be a very powerful predictive tool in forex trading, if implemented correctly.
- Wiseinvest provides helpful AI trading solutions to invest in forex. You can trade automated through the best forex brokers with AI trading or manually with AI forex signals in the forex broker of your choice.
- You can get started with free AI forex signals and use a risk-free practice account.
Disclaimer: Forex and Contracts for Difference (CFDs) are complex instruments and come with a high risk of losing money due to leverage. Forex trading is not suitable for everyone. You should consider whether you understand how forex and CFDs work and whether you can afford to take the high risk of losing your money.
The forex brokerages displayed shall disclaim the overall performance of traders in their platforms. Oanda warns that 76.8% of retail forex traders lose money trading CFDs. XTB warns that 80% of retail forex traders lose money trading CFDs. FXCM warns that 74.74% of retail forex traders lose money trading CFDs.
The performances aforementioned are not related to Wiseinvest AI forex trading and AI forex signals system. You can check the performance of our AI forex system on our dashboard.
Wiseinvest does not recommend binary options trading and any of the binary brokers described in this article.