Binary Options Trading Risky for Experienced Investors Too

The National Bank of Serbia warned last week of the risks of trading certain shares in world markets, namely, the so-called binary options, which entail high-risk transactions which often involve various forms of fraud.

Stock market analyst Nenad Gujanicic says for RTS that this is a short-term strategy and that it is considered very risky, even for investors with considerable experience.

– In the global financial markets, there are numerous financial instruments, some of which are well known and simple, such as deposits or government bonds. However, there is a much greater number of complex financial options, including binary options, and they are very risky, because one needs to know how the financial instrument on which they are based functions and then also how the options themselves function – Gujanicic says.

He explains that, in trading binary options, one first selects the trade instrument – oil, a currency – the dollar or the euro, or a large company’s stock – then predicts the price trend, the value of the selected instrument (price increase or decrease), as well as the time period of the projection (a minute, 10-15 minutes, 60 minutes…).

– Simply said, binary options are a kind of a gamble, where you are trying to predict whether the financial instruments goes one way or another, primarily in the near future. That is practically impossible to predict, so this is above all a kind of a speculation activity – Gujanicic says.

He explains that, without properly understanding binary options and trading platforms, the initial investment is easily lost very quickly. Earning on binary options entirely depends on the accuracy of the projection of the potential rise or fall beneath a certain level of a certain kind of asset over a certain time period, he adds.

Organizers are the ones who earn

He says that the organizer is the one who wins in most cases.

– By the law of probability, they are certain to earn, whereas, in most cases, you are likely to lose, and in the great majority of cases, you will lose everything – Gujanicic explains.

He says that the citizens of Serbia are on average not too knowledgeable when it comes to economics and finances and warns that they should not get involved in something they are not familiar with.

– You should first learn about the basic kinds of financial instruments. Unfortunately, in the local financial market, our experience is not too good. In fact, there have been several negative experiences, so our citizens have not learned too much about it – the expert warns.

He emphasizes that various trading platforms incite us to gamble by offering the possibility of great earning.

– As soon as you see that someone is offering you to earn a lot, be aware that a high degree of risk is involved. Each investor, that is, citizen, should be familiar with that risk/earnings ratio. There’s no great earning without an enormous risk – Gujanicic warns.

Narodna banka Srbije Beograd

NBS

stock trading

binary options

Nenad Gujaničić

gambling

betting

binary options trading