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We all hear from time to time how authorities bust Ponzi schemes in which crooks try to rob innocent people. Binary options trading is also advertised as if you can get rich in a matter of few days and that even a child can execute binary trades.

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Feb 27GMT Binary options are one of the most controversial trading instruments — for a reason: On the one hand, they are super easy to trade and therefore perfect for beginners. But on the other hand, there are some binary options brokers out there that are simply a scam. Are binary options legit?

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Smart traders do it every day, executing binaries in everything from oil and gold to stocks and currency pairs. The question is, is it as easy to make money as a lot of websites claim? A casual look at a handful of binary options brokers leaves you with the impression that all you need to do to turn a profit is to create an account.

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By Randall Liss Updated Sep 6, Binary options are contracts where an investor is speculating on one of two outcomes: a payoff or nothing at all. The deciding factor is whether or not the option is in the money at the expiration date. You can trade binaries on events or on investments—such as stocks, futures, foreign currency, and exchange-traded funds ETFs. While the concept is relatively straightforward, there are many misconceptions about binary options, so it is important that traders understand exactly what they are—and are not—in order to use them effectively.