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Binary options – an introduction and regulated alternatives

The term ‘binary options’ refers to a particular type of financial product that has caused a significant amount of controversy in recent years. An investor who uses a binary options broker will put down a sum of capital as an investment – just as they would for most asset classes. However, forex binary options providers then make the trader choose between one of two outcomes – usually ‘yes’ or ‘no’.

A trader may, for example, be asked whether they believe that the value of a particular stock will rise in a given timeframe. If the trader’s pick is right, their investment pays off. If they are wrong, they lose their capital.

However, forex binary options are not a recommended choice. In fact, binary options have been banned in a number of jurisdictions across the globe. They are, for example, banned by the Financial Conduct Authority in the UK. There have been allegations that binary options providers sometimes commit fraud or are part of a forex binary options scam. The method of trading – which is considered highly risky – has been likened to gambling by some.

ForexTraders has a list of recommended and regulated brokers that can help traders get their portfolios off the ground in legally approved, legitimate ways.


Risk Statement: Trading Foreign Exchange on margin carries a high level of risk and may not be suitable for all investors. The possibility exists that you could lose more than your initial deposit. The high degree of leverage can work against you as well as for you.