Trading Binary Options Online Safely
Binary options are some of the simplest investment vehicles available. An investor in a binary option is making an educated guess on whether a stock price, or other asset will exceed a set value at a defined time in the future. For example, an investor could purchase a Binary option on the value of Apple’s (AAPL) share price exceeding $100 on Wednesday of next week. If Apple is lower than $100 per share on Wednesday, then the investment is lost. However, if the stock price is in excess of $100, then the investor would earn a handsome return on investment. In some binary options, if the agreed price-point is met exactly (in this case $100), the investor receives the principal back without losses or earnings.
Are Binary Options a Form of Gambling?
The short answer is no. In recent years, a large number of offshore Binary Option markets have begun advertising to investors in the US. This has led to the release of a Securities and Exchange Commission report that confirms investment in binary options is legal in the United States; as long as the trade occurs on a platform that complies with all US regulatory requirements. Unfortunately, many of the online trading sites do not comply with these requirements.
Perform due diligence before initiating trades of any type with an online broker. This includes checking the Financial Industry Regulatory Authority’s (FinRA) online broker check.
BitCoin Enters the World of Binary Options Investing
One of the challenges for online trading of Binary Options is the conversion of currencies used by an international customer base. In addition, there are evolving currencies that are quickly entering the marketplace. For example, Binary Uno allows clients to trade binary options online with Bitcoin.
This is especially exciting considering that the options for investing bitcoin currency has traditionally been very limited. The bitcoin currency is created through a process called “mining”. A computer is assigned the task of completing a complex algorithm or other type of shared computing process. As the “work unit” is completed, the computer receives a unique bitcoin code. This code is the actual currency.
The digital bitcoin code can be transferred to other people, or used on sites that accept the currency. A more technically complex explanation of how the process works can be found on BitCoin.org.
Anonymity and Security
For many users, Bitcoin offers a level of anonymity that isn’t possible with traditional currencies that leave an electronic trail. However, in the world of investing, compliant sites do require basic identifying information in order to accept new clients onto their books. For this reason, using Bitcoins for binary option investing takes away the veil of anonymity.
The Patriot Act in the United States has changed how banks and other investment firms interact with new clients. More information is required and disclosures must be signed when opening new accounts. For most investors, this isn’t an issue. But, since we discussed bitcoin, and one of its key aspects is transactional privacy, it’s important to understand how investing with bitcoin can handicap the privacy benefits of the digital currency.
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