Binary Options Legal
A lot of people are skeptical of trading binary options because it is done online; people tend to always be more skeptical when it comes to something that deals with money and it’s not done face to face. But everyone can rest assured that not only is a binary options trading very legal, but it is also regulated in most cases.
It is regulated by such exchange commissions as CySEC, CFTC and ASIC. Any site that aspires to be an online broker must also show transparency and usually falls under the regulation of Nadex. Still some people are not convinced of its legality and others have accused it of being like gambling because of the short time frames that binary options are sometimes traded on. The fact is, binary options trading has been in existence since 2008 and there are hundreds of thousands of traders that practice it; with that many people involved with it, you would surely hear more about it if it was an illegal venture.
Even in cases where a website may not fall under any regulation, it will still be watched by such agencies as the US Securities and Exchange Commission and not allowed in their country if they do not condone how a site conducts its trading. So every online broker is regulated, even if it is not always done in a formal way.
Some people also associate any activity that has a chance of someone losing money as a practice that may be illegal; there is risk involved when a person invests in binary options and it’s no different than any other type of investing in that respect. Since binary options are traded online, it makes people more suspicious of them.
Binary option trading has done some good things for potential investors too; it has opened up the option to trade for many investors who saw other forms of market investment as being too hard and too complicated to understand and trade. Binary option trading is certainly much simpler to understand and place trades than other types of market trading.
Online brokers are allowed to operate only in certain countries. They are subject to rules and permissions in different countries and different parts of the world and there is a wide variety of terms they are required to work under. Almost every country has its own distinct opinion of how they need to operate.
More often these days a trader will see regulating agencies pop up in different areas of the world. The most prominent of these is the Cypress based CySEC; it is starting to be recognized as a trustworthy regulating body as far as binary option trading.
As these regulatory agencies start to standardize the guidelines that binary option trading is done under, people will become less skeptical about it and take advantage more of all it has to offer investors.
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References and Further Reading:
1. Dynamic hedging: managing vanilla and exotic options (N Taleb – 1997)
2. Binary options and real assets (T Sebehela – 2011)
3. Method and system for applying a policy to binary data (JE Larsson, KA Glerum, JW Downer – 2002)
4. Forex Revolution: An Insider’s Guide to the Real World of Foreign Exchange Trading (P Rosenstreich – 2005)
5. Financial trading system and method for resolving order conflicts (A Sheldon, J Thakkar – 2011)
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