A binary option is forex scam financial option in which the payoff is either some fixed monetary amount or nothing at all. While binary options may be used in theoretical asset pricing, they are prone to fraud in their applications and hence banned by regulators in many jurisdictions as a form of gambling. Many binary option outlets have been exposed as fraudulent. The use of the names of famous and respectable people such as Richard Branson to encourage people to buy fake «investments» is frequent and increasing.
Binary options «are based on a simple ‘yes’ or ‘no’ proposition: Will an underlying asset be above a certain price at a certain time? Trades place wagers as to whether that will or will not happen. If a customer believes the price of a commodity or currency will be above a certain price at a set time, he buys the binary option. Investopedia described the binary options trading process in the U. This is called being «in the money. This is called being «out of the money.
The bid and offer fluctuate until the option expires. 100 if the bet is correct, 0 if it is not. On non-regulated platforms, client money is not necessarily kept in a trust account, as required by government financial regulation, and transactions are not monitored by third parties in order to ensure fair play. Pape observed that binary options are poor from a gambling standpoint as well because of the excessive «house edge». Let’s say you make 1,000 «trades» and win 545 of them.
In other words, you must win 54. Commodity Futures Trading Commission warns that «some binary options Internet-based trading platforms may overstate the average return on investment by advertising a higher average return on investment than a customer should expect given the payout structure. Many binary option «brokers» have been exposed as fraudulent operations. Manipulation of price data to cause customers to lose is common.