When it comes to binary options, traders and general public alike find themselves prone to a number of binary options stereotypes which, although seemingly harmless, still pose a great challenge for the binary options markets. Needless to say, stereotypes are never a good thing, as even positive binary options stereotypes can cause harm (unintentionally, if nothing else). Binary options stereotypes and people who deal in binary options are numerous, and this article will list a number of them so you can test their validity.
Binary options are a form of gamble
Due to their speculative nature and simplicity, binary options are often compared to gambling, even more so than other forms on financial markets. Some critics have even went so far as to claim that turning profit on binary options can induce a dopamine rush, similar to the one people experience when winning in a gamble. The risk/reward cycle can certainly be present, but this applies on virtually every aspect of our lives.
Binary options trades are unreliable and unregulated
As much as we would all like to say that binary options are all regulated and secure, sadly, we would be mistaken. In fact, many binary options are not regulated and only a handful are, so caution is advised. It might seem prudent to stick to legitimate exchanges and reputable partners, or things could really go south for you. Regulated exchanges are transparent, with accurate and verified data for you to trade on, and any “misunderstandings” are quickly resolved.
Only the rich can afford to trade binary options
There are two basic types of binary options: in the money (ITM) binary options and out of the money (OTM) binary options. The former are considered more likely to come true, so their price is much higher; the latter are less likely to turn a profit, and their price reflects this. Considering that maximum payout is 100 dollars per option, and the investment is usually much lower than that, we can safely rule out this claim, such as it is. However, this does not mean the rich are on equal footing, when it comes to binary options – in fact, their enormous capital is what enables them to truly reap the rewards of binary options by trading big.
Last of the Binary Options Stereotypes: Once a binary option is acquired, there is no way out
Because binary options are always call and never put, people assume there is no way out once they commit. This is because binary options are not financial products in a traditional sense; they concern prices of financial instruments, and not the instruments themselves, so one either buys a call on an ITM or an OTM binary option, based on their own conjectures and assumptions. Contrary to popular belief, it is possible to sell binary options by taking the short position at the trade price – as long as you can find someone to take over from there. Or you can go long and see where it takes you. The choice is yours. These binary options stereotypes are usually fabricated by unscrupulous brokers who try to stimulate craving for material wealth and build their whole business on the promise that they are able to fulfill it. Traders are able to make money on binary options market only if they can obtain consistent, disciplined trading mentality.