Binary options are a type of derivative product that confuses traders: more problems than expected.

What is Binary Options? How Risky Is It?

In the online trading industry, there is one name that often appears in conversations and causes confusion among beginners: (Binary Option).

Binary options are a type of financial product that allows traders to predict the price direction of an underlying asset (such as currency pairs, commodities, indices) whether it will rise or fall within a specified period, which can be as short as 1-15 minutes.

The mechanism is quite straightforward: traders allocate funds for a trade. If their prediction is correct, they receive a monetary return (generally 70-85% of the principal). If they are wrong, they lose the entire principal. There is no gray area.

The simplicity of binary options trading system can be problematic

There are only 2 possible directions:

• Call Option: Expect the price to go up
• Put Option: Expect the price to go down

A clear example: if the GBPUSD pair is currently at 1.3902 and you expect it to go up in 5 minutes, you open a Call by placing $100 the outcome will be one of two:

• Correct: Closing price is higher than 1.3902 → earn $185 (principal + profit of $85$100
• Incorrect: Closing price is lower than 1.3902 → lose all

This “win or lose” system makes it look more like gambling than traditional investing.

Is binary options gambling or investing? The answer depends on your approach

This question divides into two camps:

If you trade randomly: open positions based on feelings, greed, fear, with no money management plan, no risk calculation → then it’s not much different from gambling. The difference between you and slot players is minimal.

If you trade with a plan: analyze, reference market data, have a money management plan, set risk/reward ratios beforehand → it could be considered a short-term high-risk investment.

Most traders end up in the first group of binary options.

Legal status of binary options: banned in most parts of the world

) Thailand: No specific law yet

Thailand has no law banning or regulating binary options trading, which means you are in a gray area. If the broker $100 broker### disappears or market data issues occur, you cannot sue any Thai authority. You must fight against foreign companies on your own, which is often difficult, costly, and often ineffective.

( Global bans: increasing distrust

Australia )ASIC###: Studies show only 20% of retail investors profit; banned since May 3, 2021.

United States (FBI): Investigations reveal most websites are scams; not recommended at all.

Europe (ESMA): Banned advertising and selling to retail investors since March 23, 2018.

Belgium: Banned since August 2016.

Canada: Banned online advertising and selling instruments with less than 30 days maturity.

Israel: Securities Authority considers it gambling, not investment.

Germany (BaFin): Planning to ban advertising and sales to retail investors.

The main issue discussed is: lack of transparency, inability to control, often leading to losses for novice investors.

Binary Options VS Forex: Similar but much different

( Similarities

Both are popular online trading tools, allowing trading with small capital, profiting from both upward and downward trends, and if predictions are correct, the gains can be huge relative to the invested amount.

) Differences

Trading periods:

• Forex: Open 24/5 continuously
• Binary options: Depends on the underlying asset’s market

Instrument lifespan:

• Binary options: Very short, 1-15 minutes, no options ###except some brokers allow early close with fees###
• Forex: No expiration date, can hold as long as desired, only small overnight interest costs.

Risks:

• Binary options: Fixed returns and losses predetermined, volatility does not affect outcomes.
• Forex: Price volatility directly impacts results, higher risk but also higher potential gains.

Profit potential:

• Binary options: About 50-80% of the invested amount, no leverage.
• Forex: Leverage allows higher profit potential (sometimes 200% or more), but losses can be equally large.

Control:

• Binary options: Fixed take profit/stop loss points, no options.
• Forex: Customize take profit and stop loss points, more freedom.

Which should you choose? Advice based on the data

Choose binary options if:

• You want to clearly define your risk from the start.
• Your win rate must consistently be over 80% (because its 50-50 nature).
• You prefer short-term “games.”

Choose Forex if:

• You seek higher profit potential.
• You want to control risk/reward ratios yourself.
• You are willing to accept high risks.
• You have time to practice, study, and analyze the market.

Summary: Binary options are not a good choice

The fact that 80% of developed countries ban binary options is no coincidence. It’s a form of marginal gambling because:

1. The 50-50 risk looks simple but causes many novice investors to lose money.
2. The use of phrases like (return 70-85%) hides the reality.
3. Lack of transparency, often scam websites.
4. No regulation; if problems occur, investors are on their own.

Forex or other tools remain better options if you are inclined toward profit or serious trading.

The way out: if you decide to trade, study thoroughly, manage your funds, and do not trust sweet-talking brokers. Most importantly, do not gamble unless you know what you are doing.