Myth 1: Binary options are just betting
Many novice traders think that binary options are simply betting on the potential outcome on a given day at a given time. Market practice, however, shows that this is not the case. The easiest way to realize this is by using data that illustrate the results obtained by people with extensive financial knowledge and significant experience in financial markets compared to the results of novices. This comparison clearly shows that effective and profitable binary options trading requires the trader to have skills and education in how derivatives work, as well as the ability to effectively analyze data related to the underlying instrument.
Myth 2: Binary options are illegal
Not true! Trading binary options in the US is completely legal as long as you use a regulated broker. If you stick to this simple rule, you will certainly not face any negative consequences. The problem with binary options in the US is often that exchanges that are not registered with the CFTC often offer their services to US traders, and this makes their activities illegal in the US. If you are a resident of the United States of America, beware of trading on unregistered platforms.
Myth 3: Binary options are not regulated
The wide spectrum of binary options contracts that are traded outside of the United States are not regulated. However, participation in these types of financial transactions is often not illegal, but it does mean that in the absence of regulation, you may not be entitled to any guarantees or safeguards related to unfair market practices undertaken by the broker you have chosen. The world's largest market for trading binary options contracts is the United States. The law in the US regulates binary options trading and the CFTC has licensed a number of trading platforms that are authorized to offer financial products related to this derivative. However, these platforms must comply with US laws in order to legally conduct their business activities.
Myth 4: It is impossible to sell binary options
This is another distortion related to trading these financial instruments. In practice, selling binary options is as easy as buying them. An important financial benefit for traders is that unlike short selling stocks in this case, the trader often does not have to pay a commission. Your maximum risk is known in advance and you will be notified of it at the time of execution of the trade.
Myth 5: Binary options are not transparent enough
At this point, we must again return to the topic of foreign brokers who offer trading services to US clients. In this case, it happens that the activities of such companies may raise doubts. However, considering the platforms that have been licensed by the CFTC to offer binary options contracts in the US, they must all operate in a transparent and meticulous legal system. Consequently, in order to operate legally, brokers must comply with regulations regarding the provision of accurate and transparent prices and offers while trading during a trading session.
Myth 6: Trading binary options requires significant capital
The minimum opening balance on Titanid, the leading binary options exchange in the cryptocurrency sector, is just $50, which is significantly lower than the standard opening balance of a futures account, as well as most available forex accounts.
All commissions charged by Tytanid are available here.
Remember that when trading binary options contracts, your maximum risk is the loss of your invested funds. As for the possible profit you can make, it depends on the parameters of the markets on which you opened the position.