The Binary Options Trade and Why Italy was Wrong to Ban It

Best Binary Options Brokers 2020:
  • Binarium
    Binarium

    1st Place! Best Binary Broker 2020!
    Best Choice for Beginners — Free Education + Free Demo Acc!
    Sign-up and Get Big Bonus:

  • Binomo
    Binomo

    2nd place! Good choice!

The Binary Options Trade and Why Italy was Wrong to Ban It

Binary options are a revolutionary form of trading that can be used by novice traders as a sort of stepping stone, which makes Italy’s move to ban it from their country very disappointing for fledgling traders.

The Public Prosecutor of Rome ordered the blocking of numerous binary options broker sites in Italy. The reason for the ban was the country’s financial regulator Consob’s belief that the trade resembled gambling instead of actual trading. However, binary options trading couldn’t be further from gambling.

It’s nowhere near similar to a Las Vegas table game, and we wrote an article last year about a court ruling which declared that binary options are legitimate.

Binary options trading only requires a small amount of money from investors for them to start trading. To make a profit, investors need to make a correct inference on a certain commodity’s price shift. The example below will show you how binary options work.

Binary options Vs. futures trading

For this example, let’s use oil as the trading commodity. Investing in binary options are ideal forms of trading for people who are new to the oil trade. This is because, compared to other markets, binary options don’t require investors to have a minimum amount of assets to trade. When trading oil in the futures market, investors are required to own numerous barrels of oil before a contract can be given. A barrel of oil costs approximately $50, which means that in order for an investor to trade on the futures market, he or she needs to pay hundreds of dollars. This is not the case, however, with binary options trading. With as little as $20, an investor can be given a contract to trade.

Why are binary Options not a form of gambling?

There’s a huge difference between gambling and making an inference. In gambling, a person is relying purely on luck to gain a return. However, in order to make a profit with binary options, an investor needs to have a good knowledge of technical and fundamental analysis. Without these skills, an investor will struggle to gain returns.

Undertaking technical analysis for oil trading, investors need to look at charts from time to time. Conversely, they also need to keep themselves in the loop with the latest news and trends in the oil industry so that they can make informed decisions.

For the most part, gambling doesn’t require its players to have broad skill sets. If binary options were banned because making an inference to the price shifts is associated with this form of trade, then all types of investments, in theory, could be under threat in Italy as well. After all, investors need to make a prediction across several markets, especially when it comes to Forex trading.

Before you can make money in Forex, you need to be familiar with the price shifts that happen on a regular occurrence. So what makes Forex a non-gambling activity? According to an article by FXCM entitled ‘What is Forex?’, it’s leverage is what stands it apart from other forms of investment. If not for leverage, traders wouldn’t be able to see any significant returns on their investments when they trade. Gambling doesn’t have a leverage factor, and therefore it isn’t right to associate Forex, binary options, or any other forms of trading with casino games.

Best Binary Options Brokers 2020:
  • Binarium
    Binarium

    1st Place! Best Binary Broker 2020!
    Best Choice for Beginners — Free Education + Free Demo Acc!
    Sign-up and Get Big Bonus:

  • Binomo
    Binomo

    2nd place! Good choice!

The global market can be a rough place. However, being blind to its challenges will never help investors find a solution to their problems. With Italy’s economy still recovering, the country needs all the help it can get from investors and removing binary options trading isn’t helping.

Author

More about the author Step

I’ve wanted to build a business of some kind and earn money since I was in middle school. I wasn’t very successful though until my senior year in highschool, when I finally started to think about doing online business. Nowadays I profitably trade binary options full-time and thus gladly share my experiences with you. More posts by this author

Binary Options Italy Discussion

Binary Options Italy Discussion

When it comes to make binary trades, the very first thing you need to ask yourself is where you are and whether this place does allow binary trading. In many countries, binary options trading is either criticized, or not allowed at all. Often, the reason is not a license that is not valid, but the national laws. Many countries have signed binary options trading as a gambling activity and this makes it harsh for the local citizens to trade as easily and conveniently as they could do it in places like UK and Cyprus, for instance, where financial trading remains to be a very popular activity. Such a country with quite bad luck as to financial binary trading is Italy. Join our binary options Italy discussion now and learn more about it.

What Is Binary Trading According to Italian Law?

According to the local law, binary options trading is a form of gambling. This means that you can trade with binaries, but many obstacles are going to be found. Moreover – you will be treated as a gambler and you will pay the gambling taxes depending on the national law quotes, but that`s not even all. Binary options Italy brokers are quite demotivated to operate on their national market. They are completely impossible to make some profits from the local clients. Even though they have such hopes, getting some permission to operate as a broker is impossible and being a gambling website is both – expensive and very risky. In short, binary options trading in Italy is in hard times right now, so the only hope is to wait for new laws that will end binary options trading history as a form of gambling.

Regulator of Binary Options Italy Pages

Still, no matter how hard it is to be a broker in Italy, there are such websites. All of them are provided with licenses for binary brokers, which means financial providers with gambling essence. However, the provider of these licenses is the national Italian regulator, which currently is the team behind CONSOB – Commissione Nazionale per le Società e la Borsa. This organization is tasked with the supervision of all financial service providers in the country. Meanwhile, all websites that accept customers from Italy – whether they are companies in Italy, or not – without the CONSOB approval essentially break the law and could potentially face criminal charges. This regulator is fully responsible for checking out if brokers follow their packs of measures and safety rules. Security approaches are mostly dedicated to each individual customer`s personal data. The guarantee of financial transaction transparency is also a part of the job CONSOB does. Meanwhile, EU has transferred its ideas for anti money laundering to the agency. Eventually, binary options brokers in Italy are indeed quite safe, finely organized and interestingly managed. Though, they cannot be as friendly as top-rated brokers with binary services.

Some Specifications About Binary Options Italy Brokers

We are not going to discuss some specific binary options brokers based in Italy individually. Instead, it is better to name you some features that are in general common for all brokers in Italy. Here are some of them:

  • Payment processing is usually quite fast and always secured. This is a pro behind the strict measures and rules as to Italian binary options platforms.
  • The trading environment, even though described by the law as gambling, is really intriguing and convenient. Maybe, this is the reason why so many traders decide to join an Italian binary platform regardless the rest of its limits.
  • Really high payouts. Besides, the assets are always picked by finely without making even a beginner to doubt if he`s going to win or no. Meanwhile, this might be the reason why Italian law puts binary trading in gambling sphere.
  • Since the first binary options broker that was licensed was 24Option, it means that most of the rest websites are quite similar. Having in mind that this broker is one of the best one in the industry, we can expect that most brokers with licenses in Italy are also very popular.

Whether you want to diversify your binary options trading activity, or you are up to some Italian exotic air, making binary options trades in such a platform is after all a good idea. Do not hesitate to try such, as well!

A Guide to Trading Binary Options in the U.S.

Binary options are financial options that come with one of two payoff options: a fixed amount or nothing at all. That’s why they’re called binary options—because there is no other settlement possible. The premise behind a binary option is a simple yes or no proposition: Will an underlying asset be above a certain price at a certain time?

Traders place trades based on whether they believe the answer is yes or no, making it one of the simplest financial assets to trade. This simplicity has resulted in broad appeal among traders and newcomers to the financial markets. As simple as it may seem, traders should fully understand how binary options work, what markets and time frames they can trade with binary options, advantages, and disadvantages of these products, and which companies are legally authorized to provide binary options to U.S. residents.

Binary options traded outside the U.S. are typically structured differently than binaries available on U.S. exchanges. When considering speculating or hedging, binary options are an alternative—but only if the trader fully understands the two potential outcomes of these exotic options.

Now that you know some of the basics, read on to find out more about binary options, how they operate, and how you can trade them in the United States.

U.S. Binary Options Explained

Binary options provide a way to trade markets with capped risk and capped profit potential, based on a yes or no proposition.

Let’s take the following question as an example: Will the price of gold be above $1,250 at 1:30 p.m. today?

If you believe it will be, you buy the binary option. If you think gold will be below $1,250 at 1:30 p.m., then you sell this binary option. The price of a binary option is always between $0 and $100, and just like other financial markets, there is a bid and ask price.

The above binary may be trading at $42.50 (bid) and $44.50 (offer) at 1 p.m. If you buy the binary option right then, you will pay $44.50. If you decide to sell right then, you’ll sell at $42.50.

Let’s assume you decide to buy at $44.50. If at 1:30 p.m. the price of gold is above $1,250, your option expires and it becomes worth $100. You make a profit of $100—$44.50 = $55.50 (minus fees). This is called being in the money. But if the price of gold is below $1,250 at 1:30 p.m., the option expires at $0. Therefore you lose the $44.50 invested. This called out of the money.

The bid and offer fluctuate until the option expires. You can close your position at any time before expiry to lock in a profit or a reduce a loss, compared to letting it expire out of the money.

A Zero-Sum Game

Eventually, every option settles at $100 or $0—$100 if the binary option proposition is true and $0 if it turns out to be false. Thus, each binary option has a total value potential of $100, and it is a zero-sum game—what you make, someone else loses, and what you lose, someone else makes.

Each trader must put up the capital for their side of the trade. In the examples above, you purchased an option at $44.50, and someone sold you that option. Your maximum risk is $44.50 if the option settles at $0, and so the trade costs you $44.50. The person who sold to you has a maximum risk of $55.50 if the option settles at $100—$100 – $44.50 = $55.50.

A trader may purchase multiple contracts if desired. Here’s another example:

  • NASDAQ US Tech 100 index > $3,784 (11 a.m.).

The current bid and offer are $74.00 and $80.00, respectively. If you think the index will be above $3,784 at 11 a.m., you buy the binary option at $80, or place a bid at a lower price and hope someone sells to you at that price. If you think the index will be below $3,784 at that time, you sell at $74.00, or place an offer above that price and hope someone buys it from you.

You decide to sell at $74.00, believing the index is going to fall below $3,784 (called the strike price) by 11 a.m. And if you really like the trade, you can sell (or buy) multiple contracts.

Figure 1 shows a trade to sell five contracts (size) at $74.00. The Nadex platform automatically calculates your maximum loss and gain when you create an order, called a ticket.

Nadex Trade Ticket with Max Profit and Max Loss (Figure 1)

Best Binary Options Brokers 2020:
  • Binarium
    Binarium

    1st Place! Best Binary Broker 2020!
    Best Choice for Beginners — Free Education + Free Demo Acc!
    Sign-up and Get Big Bonus:

  • Binomo
    Binomo

    2nd place! Good choice!

Like this post? Please share to your friends:
Binary Options Trading Wiki
Leave a Reply

;-) :| :x :twisted: :smile: :shock: :sad: :roll: :razz: :oops: :o :mrgreen: :lol: :idea: :grin: :evil: :cry: :cool: :arrow: :???: :?: :!: