I really don’t get why people are attracted to this.
I mean, I get the whole idea that the message of “Earn up to 81% on your money in an hour!” has some serious jingle, but it’s really not all that exciting.
Think about it. I can open up a 5 minute EUR/USD chart and put on a trade (of any position size) with a Stop Loss of 10 pips and a Take Profit of 20 pips. Price moves 20 pips all the time, often within 15 minutes, so if I hit 20 pips I’d win. (I guess it’s like one of those “touch” types of binary options or whatever). But I wouldn’t have just won 81%…I would have won 200%
I guess I could just write an ebook with a bunch of fluff based around that same concept and put a big “Earn 200% On Your Money in 15 Minutes” on the front page. Obviously there would be losers, but you don’t even have to win 50% of the time with such a method to turn a profit.
Furthermore, if instead of using a hard T/P at 20 pips I just used some type of trailing stop, I could possibly see that baby run up to 30 pips…maybe even 35 before being checked out. According to the logic of the people hawking these “earn 81% in an hour” claims… I would then have generated a return of over 300% in less than an hour!!! :o
The whole idea is just ridiculous to me. I really don’t get it. The ONLY benefit I see is that Binary Options forces one to define their risk before taking a positions. You can’t trade without a stop loss or move your stop loss once a trade is in play thus you can’t do things like let a trade move against you and keep going until it blows your account because you’re “just sure” that the price will come back. In this regard, it’s similar to a casino. They force you to commit to a certain risk before placing a bet.
So it would seem that the only advantage that Binary Options could ever possibly have is that they allow those who don’t have the proper self-discipline of a successful trader to have some type of “coping mechanism” that prevents them from engaging in some of their own bad habits. My thought is that if this is the case, their internal environment will eventually see to it that they make other mistakes that the Binary Options environment does not protect them against which will bring about their downfall. I mean, an emotional trader who doesn’t define risk on his own and either trades without a stop loss or moves it may be prevented from doing so because one has to commit a set amount in a win-or-lose scenario with binary options, but the same individual is highly at risk for going on a revenge trading spree because his emotional approach to the market leans that way and it’s a rare broker (binary options, forex, commodities, stocks) that has lock-out systems in place to prevent a trader from going on a revenge trading spree.