In our previous post, we looked at 3 benefits of binary options as a potential investment avenue for the profits from your business. We established that this can be a risky yet rewarding investment and a good way of getting financing to reinvest in the growth of your business.
Just as a recap, we defined binary optionsas a financial option in which the payoff is either some fixed monetary amount or nothing at all. It’s commonly referred to as an all or nothing investment. Trading in them is considered to be risky, but the potential rewards are usually really good. This however only applies to risk takers who believe that high risk is equal to high rewards.
Let’s take a look at 3 cons of trading in binary options.
Binary options have limited trading tools available
A number of financial experts are of the opinion that trading in binary options is no different from gambling. In fact, in some countries, trading in them has been banned. One of the reasons binary options are not recommended by financial experts is because in most of the websites that offer their trading do not provide an investor with advanced analytics such as technical analysis as well as charting. These are basic features you will find on a typical forex trading site. These analytic tools are important because they help an investor understand market trends well so that they can make informed decisions. As an entrepreneur looking to invest profits from your business, it will be important to think long and hard before ‘gambling’ with your profits.
Binary options have limited regulation
The biggest disadvantage about binary options is that trading in them is highly unregulated. Most of the brokers who provide this service don’t operate within any legal framework therefore, nothing stops them from taking investor’s money and closing shop. It’s therefore important for you as an entrepreneur looking to invest money from your business to do your due diligence and ensure you don’t risk your revenue in such risky ventures. Sometimes, it’s never worth the risk.
It’s difficult to learn about trading in binary options before hand
The beauty about platforms offered by other forex brokers is that you can get to learn about trading in them through a demo platform before investing your hard earned money. However, when it comes to trading in binary options, you can only access demo trading sites once you have opened a real account and deposited your money in it. This means that you are bound to lose some of your money before you get a grasp of trading. As an entrepreneur, this is not the kind of venture to risk your business profits.
All in all, every investment option usually has its pros and cons therefore it’s upon you the entrepreneur to decide whether the risk-reward associated with binary options is worth it.
We invite you to share with us your experiences and success stories in your business adventure.