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Binary options banned in the EU from 1 on July 2018.

Binary options banned in the EU from 1 on July 2018.

created Paweł MosionekJuly 2 2018

Binary options are prohibited. ESMA regulations imposed a total ban on EU brokers from offering binary options to retail clients from July 1, 2018. More precisely, a broker registered in the European Union cannot offer any clients of this type of instruments, regardless of the country they are from. Is this a change for the better?

Be sure to read: What are binary options

Binary options like gambling

Popular binaries, which experienced their best times a few years ago (2013-2016), were an alternative for traders investing in the market to date Forex / CFD. They have gained a lot of attention from beginners without much experience in trading. All thanks to their very simple structure. In the end, we "lost" a lot of issues that need to be mastered in order to be able to efficiently navigate the FX platform, let alone use it all to your advantage.

The trader did not have to worry about what a lot is, how much is one pip worth, what is the leverage on the account and how much the margin for his transaction will be. Not only that, he was not interested in Stop Lossy, Take Profit, other pending orders, he did not care about price slips, gaps, liquidity and a whole lot of other elements of this puzzle. It was enough to bet on the direction, time and stake. The selected period of time passed and we knew the result. It's as simple as it gets.

Of course, with time this instrument evolved and other forms of binary options appeared, but ultimately it was only an addition to the classic form, which enjoyed the greatest popularity.

In our opinion, any investment can take the form of gambling. It is not only the instrument itself that defines what will be a gamble. It is also determined by our approach to investment. It is true, however, that traders very often used "gambling strategies" with binary options, and due to the fact that they were taken by very inexperienced traders, you do not have to wonder what the effect was for a long time.

Brokers were also a problem

24 option - binary options advertisement

Advertisement of one of the binary brokers.

A real Eldorado. This is how you can describe the phenomenon we dealt with. Of course, an Eldorado for brokers who grew up like mushrooms and took advantage of the inexperience of their target group. It was a tremendous amount of offers that did not even particularly compete in the attractiveness of their offers. This often had a very negative effect on the quality of services, not to mention security. There is no data in this regard, but I doubt that even 10% of companies entering the market would do it legally, having the appropriate licenses and / or permits. There were also typical ones scamy (from angels). They just appeared and disappeared. This caused many problems for clients who were able to stay without access to their account and funds overnight.

Binary brokers advertised this product as a recipe for easy profit. For everyone, without exception, by throwing specific amounts that you can earn. And it worked.

There were also more reliable companies that acted conscientiously and in accordance with the letter of the law. Even Dukascopy Bank, a broker operating on the basis of a Swiss banking license, decided to introduce binaries into its offer. But it was a completely different quality than what we were used to by "companies" from exotic islands. At the moment, we only have a contest on demo accountswhere you can still earn money playing on options :-).

The end of a certain stage

It cannot be said that binary options were bad. What is simple is not bad. The bad was the combination of unregulated companies that offered them + inexperienced "investors" prone to gambling. And it was this combination that led to their undoing.

And you, you will miss the binary options?

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About the Author
Paweł Mosionek
An active trader on the Forex market since 2006. Editor of the Forex Nawigator portal and editor-in-chief and co-creator of the website. Speaker at the "Focus on Forex" conference at the Warsaw School of Economics, "NetVision" at the Gdańsk University of Technology and "Financial Intelligence" at the University of Gdańsk. Twice winner of "Junior Trader" - investment game for students organized by DM XTB. Addicted to travel, motorbikes and parachuting.