Binary options are financial market products that belong to the derivative instruments. Many media, especially less reputable, want to make interested people believe that binary options as an investment and speculation object are a good choice for almost every trader. Successful young traders are shown next to their newly acquired Bentley, or housewives who generate their extra income through trading.While experienced traders smile about such advertising, there are unfortunately people who can not resist the sophisticated marketing concept - who does not dream of it to buy a new car or work from the comfort of your own home? Unfortunately, these are mostly the people who don't have a high income anyway. They often pursue unrealistic dreams of quick money and are therefore particularly susceptible to such advertising.
Who are binary options for?
However, the fact that this extremely exaggerated advertising does not mean that binary options are fundamentally unsuitable as speculative objects. Trading binary options is somewhat like gambling and successful traders are usually not housewives, but experienced traders who always operate according to a certain system. As soon as a trader trades in a system and lets his experience flow into it, it is no longer a game of chance.
Binary options or derivatives in general are therefore less suitable as investment objects, but are more interesting for the experienced speculator. Because which young man or which housewife can show off-the-shelf experience on the markets? Even if the trading interface and trading itself are simple, there should always be some skepticism about such exaggerated communication.
CFDs and Forex have enjoyed great popularity within retail trading in recent years, and who Experience in this area can also try binary options trading.
Why are binary options brokers registered in other countries?
Some derivatives are structured products, which have been developed by companies in the financial sector to enable off-exchange trading. These include, for example, certificates issued by banks or CFDs in which the broker acts as a market maker.
Market maker means that the broker prices and, if need be, the counterpart for the Trader poses. This would be the case, for example, if the markets had little liquidity. Then the broker takes over the part of the trading partner and thus takes a risk - hoping to be able to pass it on a short time later. The fact that the trader has the bank against him is always viewed critically. There would be an incentive for the bank to manipulate prices.
However, a reliable market maker usually secures itself. Example: If a trader wants to sell a CFD on the Adidas stock via the broker, this is also referred to as "going short", provided the broker is backed up by a real short sale of the stock in the background. If he does not do this, he runs the risk of losing money because he is the counterpart for the trader.
However, some products, such as binary options, fall due to their yes-or-no character gambling in some countries. However, this does not mean that there is no structure behind binary options. As a rule, the broker for binary options should hedge itself through real options transactions. For this reason, binary options have to be purchased in most cases. However, the local regulatory authorities see it as problematic and the product is largely unknown to them. However, the trend is that in the near future binary options brokers will also be regulated by competent authorities such as Bafin, provided that they have their headquarters in Germany.
Another reason for the headquarters in other countries is the fact that German regulation is associated with immense costs that accrue annually. These costs often exceed € 100,000. It is clear that a young broker who offers relatively new products for trading wants to save these costs.
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It must be said frankly that binary options are not are suitable as speculative objects for everyone. However, information-savvy and analytically minded people could have good chances in binary options trading.
With the broker StockPair, interested parties can try out their chances as traders. Stock traders also get their money's worth at StockPair. The broker has a limited selection of tradable values and option types, but is just right for the beginner.
Most binary options brokers are based in Cyprus and regulated from there, because Binary options are still unknown to the local supervisory authorities and regulation in Germany is associated with very high costs.