Traders are an interesting group of people. Instead of investing in the long run, they find excitement in short term trading. This is why binary options have quickly grown to become a booming industry. The same excitement that drives traders however, can also lead to big mistakes. One of those mistakes is not thinking about the risks when making trades. Recently, we’ve watched as binary options traders have started to look to bitcoin as an asset to trade. Unfortunately, this comes with a bit of added risk. Today, we’ll at Binary Scam Sniffer talk about the added risk associated with trading bitcoin binary options.
Under-regulation Leads To Massive Risks
Because binary options are starting to evolve into a trusted trading vehicle, we’re starting to see regulatory agencies getting involved. However, it’s important to remember that not all binary options traders are regulated. Specifically, when it comes to trading Bitcoin binary options, regulation on these brokers tends to be exceptionally scarce.
When it comes to anything finance, regulation is your friend. You see, if your broker is unregulated, it is held accountable to no one but itself, not even you. Unregulated brokers tend to make the system work for them to ensure that you lose and they gain. So, if you are going to trade Bitcoin binary options, do your research to find one of the few regulated brokers that offers this asset.
Bitcoins Are Disappearing
Another big issue that comes about when trading Bitcoin binary options is the fact that Bitcoins are disappearing. Because of the very nature of Bitcoin, it is incredibly hard to track where the currency goes once it leaves an account. As a result, the asset becomes a big target for fraud and theft.
When trading Bitcoin binary options, you may see an uptrend coming. However, whether or not the uptrend is going to come to fruition will be incredibly hard to predict. After all, one story of disappearing Bitcoins in any news outlet could lead to massive volatility surrounding the asset.
The Nature Of Bit Coin Screams “RISK”
Bitcoin is a virtual currency that is designed as an answer to questions surrounding central banks around the world. However, the currency works very differently than many other currencies. Unfortunately, the fact that it’s incredibly hard to track makes gauging the actual supply and demand associated with the currency nearly impossible. As a result, Bitcoin is an incredibly volatile asset. In fact, there are few assets that move with even half of the volatility of Bitcoin. Because of this heavy volatility, it is incredibly hard to make predictions with regard to the direction it is headed. As a result, when trading Bitcoin binary options, you never know what’s coming next. It becomes quite a bit like gambling. While you can win, the chances are against you.
The Bottom Line
The bottom line is that if you are going to trade, it is best to avoid Bitcoin all together. However, if you must trade the asset, make sure that you have a solid trading plan that includes strong risk management and loss exposure strategies. Any time you trade, there will be risk. It’s always important to pay close attention to the risk. However, when trading bitcoin added attention is necessary as the risk associated with trading becomes exponentially larger.