Binary options trading can still be considered one of the newer forms of trading. As such there is a great amount of misunderstanding and distrust with this new way of trading. This, in turn, has given rise to several misconceptions about binary options.
Unfortunately, this has evolved into many individuals believing this falsehoods to be mistaken for facts. If you are interested in this particular avenue, you may be helped by understanding what the myths about binary options trading are. These are the most common fallacies:
Binary Options is On Par with Gambling
This is something that you will hear time and time again. It is quite possible that this particular myth about binary options will never actually dissipate. One of the reasons for this is that the actual process of a binary options trade has a great deal in common with gambling.
This is because you are ‘betting’ that a value of an asset will increase or decrease within a period of time. Many see this as something similar to betting on a sports game. However, with binary options, you are not making a decision that is based on bias or guesswork.
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Instead, you are looking at past situations, denoting charts, and applying trading strategies. In this sense, it is very different from gambling.
Discrepancies Regarding Capital
This is a misconception that changes depending on who is telling the story. Some individuals will tell you that you need a large amount of capital to get started. Conversely, others will tell you that ten dollars is enough to make you a millionaire.
So, who are right? Well, actually neither of them are right. Having a large amount of capital is not a reliable factor for how much profit you make. After all, you could just as easily lose it all. At the same time, however, having only a minimum capital will limit the profits that you can make.
Therefore, you will need to find an adequate amount of capital that will provide you with the returns you may be expecting.
All Binary Options Brokers are Scams
This is another popular perpetuated rumor. This persists, unfortunately, because there are a large number of frauds and scams on the internet. This has led to binary options gaining a rather unsavory reputation. The truth of the matter, however, is that there are just as many good and legitimate brokers.
With just a little bit of research, it is easy to discern which ones these are. Furthermore, there are plenty of licensed and regulated brokers. These are particularly trustworthy as they are controlled by important, authority agencies.
As long as you carefully vet the brokers that you wish to enroll with, you should not experience any issues.
You Will Lose All of Your Money
This is a misconception due to the all or nothing nature of the binary options trade. For instance, if you are make the incorrect assumption about a trade, you will lose all of your money. There are now more and more brokers, however, who are offering alternatives to this.
Some will help you to back out of a trade early while others will give you a small portion of your initial investment back to you.
Now that you are aware of what the myths about binary options trading are, you can finally make a decision based on fact.