Thinking of Using A Binary Options Managed Account? Think Again. High Risk Involved!
A few weeks back I met one of my old high-school friends. I haven’t seen him in a long while so I was very pleased with the reunion; we talked about the old times, we laughed, we talked about cars and motorcycles and then he said “Dude, let me ride your bike”… no, no, no that’s simply not possible. Nobody rides my bike but me. “Ok, then let me take your car for a spin”. The thing is that I get a little soft when I see old friends so I figured it wouldn’t do any harm if he would drive it… so I handed him the keys. What happened next and what’s the connection between the car and a managed account? You’ll have to keep reading to find that out.
What is a Binary Options Managed Account?
Often when you open an account with a binary options website, they will assign to you with a representative (=account manager) who will provide you with support, trade your account or offer you trade signals. I believe that letting such a “manager” trade your money is the biggest risk of all because these guys, no matter how much they try to sound like experienced traders, are (in most cases) actually sales men and women. They will give you trading tips and they will teach you how to invest… sort of… but you cannot teach something if you are not good at it, and usually these account managers are not good at trading but they will do everything in their power to sound like true veterans. Another part of the account manager’s job is to offer clients a product that’s supposed to “help” newbies. This product is the Binary Options Managed Account The broker or a dedicated robot will trade your account for you. Brokers advertise 10%-50% returns from daily to monthly, saying that all you need to do is invest and let them do the hard part of trading. It might sound good, but it isn’t because in reality you won’t get that kind of return. Sure, maybe they will give you some in the first weeks or months but in the long run a binary options account is not the way to go. Our opinion on the binary options managed account is: NO WAY! You should not let your broker or the house’s robot to trade for you! Brokers use this as sales tactics to get you invested.
As a side note I should mention there are two types of account managers: the one mentioned above is the first type and the second is a third party agent (not involved with the brokerage). We don’t really see the latter, but who knows what the future will bring. Maybe these 3rd party managers will be the ones to change the face of account managing. Although to be honest, I don’t see this coming. But what I do see coming – and this is already happening – is 3rd party binary options managed accounts. Here’s how it works: a 3rd party (company, signal service provider, etc.) claim they have a close-to-perfect trading robot or a team of experts, pro traders and whatnot. Then they try to convince you to allow their robot to trade your account. That software (or the so called team of experts) will be in control of your account, hence the term “binary options managed account”. Unless you have solid – let me say that again: solid proof of their performance, I would say stay away, especially if they are reluctant to give you clear information about how their robot works or how exactly will their team manage your binary options account.
It is a known fact that brokerages don’t like winning traders because those winnings come out of their pockets, so why would you believe that an account manager given to you by the brokerage will make his employer lose money? Or why would you believe that the brokerage will offer you a binary options managed account that actually makes you money and makes them lose money? Maybe there are brokerages and account managers who really want you to succeed… they can’t all be bad, but make sure you choose wisely. Do you know how experienced they really are? Do you know how careful they will be with your account? People have a tendency to care less when the thing they are handling or “managing” is not theirs so let me get back to my car story which I’ve started earlier:
Nice Rims Man! I Like your Binary Options Account
WWhenever you let some other guy manage your binary options account or drive your car, you take on a risk. Maybe the guy is not trying to do you harm but you are not in control and this is a risk by itself. Ok so let’s finish the car story: we went for a ride around town, not a lot of traffic, sunny day, nice music… all cool and I figured it wasn’t such a mistake letting him drive the car. But I had spoken to soon: when we got to the parking lot, while trying to Parallel Park, he clipped the front rim on the concrete edge of the road. Thankfully it wasn’t that bad, just a scratch, and in about a week I almost forgot it was there… almost. The main problem I have is that now my rim is scratched and I had nothing to do with it. I mean, if I were driving – fine – I bought the car I can scratch it, but someone else doing it… arghhh! To me, choosing a binary options managed account has a lot of similarities: if he will blow it, he’ll shrug his shoulders and say “Sorry” and what can you do… after all, you are the one who said it’s ok for him to manage the account. In fact I would blame myself more than the account manager: why did I think that someone else would take better care of my money than I? Sure, maybe the account manager is an experienced trader, but this doesn’t mean there are no risks.
Binary Options, Blackjack and the 5 of Spades
Often the brokerage is the Casino and the account manager is the dealer, so here’s another metaphor I like to use: let’s assume I’m in a casino, and I’m playing my hands against the house. The dealer represents the house, and he’s acting after you. Now you don’t know how to play jack, so the dealer offers you a deal: I’ll play your hands instead of you, and I guarantee you’ll make 20% of your investments. Well you’re happy, and you’re agreeing without asking questions. The game starts. You get a 9 and a King, you couldn’t be happier. Now the dealer plays your cards, but he decides it’s not enough, and is looking for 21. Oh man, the look on your face when the 5 came out. The house takes it all. Letting the broker to manage your account is a bad idea, and something you should be avoiding. The shadier the broker is, the more money you’ll probably lose with the managed account. Regulated AND Trusted brokers would not offer you managed account, and your account manager will not provide you tips. It’s all about you, and you’ve got the advantage over the house, so take it with both hands, learn to trade and keep in mind a few of the risks of managed binary options accounts:
Even experienced traders lose. That statement is as true as “The sun comes up every morning”. To always win in binary options, Forex, stocks, etc., you’ll have to know the future and if you know the future, you don’t need to manage binary options accounts. Something can go wrong with his strategy or market conditions can change drastically and the account can go south. Maybe he will recover the losses but maybe he won’t or maybe you will decide to stop before he can win your money back.
So far we assumed the guy in charge of your binary options managed account is well intentioned… but what if he wasn’t? I am sure you know how many scammers roam the Internet and the binary options industry. Every day I get junk emails from “millionaires” who want to share their secrets with me for a few bucks or even for free, if I join their “recommended” broker. I’m not saying that all account managers are scammers or that all managed accounts will lose money, but many of them boast their skills and present themselves as true market wizards when in fact they know less about trading than a guy who just finished our Trading Primary School.
The Bottom Line: I’ll Drive My Car, Thank You
I might not be the best driver in the world, but at least I know that when I’m driving I do my very best to protect the people in my car, other traffic participants and my car. I can’t say the same about anyone else who would drive my car and the same goes for my trading account. No one cares more about your money than you and although trading is risky in all of its forms, I’d rather risk my money than letting others do it. We urge you to NOT let your “account manager” trade your account and to NOT invest in a binary options managed account. This is not the solution and, as Michael mentioned in his article Having an Account Manager is a Good Thing. Right? “a good broker will use the manager to help you trade by giving you tools and information or providing some support but they will not give you tips, advice or trade your account for you”. Learn to drive, accept guidance from others but NEVER let them touch the steering wheel and never let them manage your binary options account.