Busting the Top Myths About Binary Options Trading

The following post was written and/or published as a collaboration between Benzinga’s in-house sponsored content team and a financial partner of Benzinga.

In today’s tech-centric world, it’s amazing how easily false information can make the rounds. This is especially the case on the internet, where anyone can post anything at any time. It’s an issue that prevents you from finding the truth and making informed decisions that could benefit you in the long term.

For example, searching for the term “binary options” likely will lead you down a rabbit hole of fraud claims and misconceptions. This false information might even stop you from trading this fascinating and potentially lucrative financial instrument as a result.

That’s why we’ve decided to bust some of the top myths about binary options trading to set the record straight. Let’s take a deeper look below.

The Truth About Binary Options

Myth No. 1: Binary Options Trading is Illegal

One of the biggest misconceptions about binary options trading is that it is illegal. This myth likely has been spread because of numerous unregulated binary options trading platforms operating outside of the United States that have taken advantage of traders in the past.

The truth is that binary options trading is legal in the United States as long as you are using a regulated exchange. Trading on a regulated exchange means that the Commodity Futures Trading Commission (CFTC), the government agency that regulates futures exchanges, is ensuring that US regulated binary option exchanges follow strict guidelines and regulatory oversight. Trading binary options is more secure when using a CFTC-regulated binary options exchange versus offshore binary options providers.

Myth No. 2: Trading Binary Options is Expensive

Another common myth about binary options is that it requires a lot of capital to get started. This couldn’t be further from the truth — certain binary options exchanges like North American Derivatives Exchange (Nadex) allow you to get started with a live account for a low minimum deposit of $250.

It’s easy to understand why this myth has gained ground because trading other financial instruments like futures and forex tend to require thousands of dollars to get started. The good news is that this is not the case for binary options, which is another reason trading them is so attractive.

Myth No. 3: Binary Options Trading is Gambling

Because binary options trading involves choosing whether or not a certain market will be above a strike price at the expiration time, some people think it is simply a betting game. This is another myth that has caused countless people to miss out on the opportunity to earn solid returns with binary options trading.

Binary options trading is not that different from trading other financial instruments like futures and stocks. Case in point: You can exit the trade before the expiration time, which means you essentially have the same flexibility as you do with trading other securities. Additionally, binary options can be both bought or sold. You also need to have a solid strategy and game plan for successfully trading binary options, which is why trading a demo account with Nadex is a great way to get started.

Don’t let common myths and misconceptions spread around the internet keep you from exploring binary options, especially because there are so many potential benefits associated with trading them. They are fun to trade, easy to understand and provide an opportunity for you to profit from price fluctuations in multiple global markets. Plus, you can trade in a defined-risk environment where you can never lose more than you initially put into a trade.  

Interested in more information?  Learn more about the advantages of binary options trading with Nadex.

Disclaimer: Trading on Nadex involves risk and may not be appropriate for all. Members risk losing their cost to enter any transaction, including fees. You should carefully consider whether trading on Nadex is appropriate for you in light of your investment experience and financial resources.  Any trading decisions you make are solely your responsibility and at your own risk.  Past performance is not necessarily indicative of future results. Nadex is subject to U.S. regulatory oversight by the CFTC.

The preceding post was written and/or published as a collaboration between Benzinga’s in-house sponsored content team and a financial partner of Benzinga. Although the piece is not and should not be construed as editorial content, the sponsored content team works to ensure that any and all information contained within is true and accurate to the best of their knowledge and research. This content is for informational purposes only and not intended to be investing advice.