What is Binary Options trading and some legalities

A binary option is an exotic financial instrument where the result is either a fixed amount (win) or nothing at all (loss).

That's what makes it exotic in that it is high risk, high reward trading. For example; you could trade with $10, you will either get back your $10 and a set percentage of your investment if your prediction is correct; or you loose the entire $10 investment.

Binary options work on a simple yes or no basis. You choose whether a price of a certain asset will be above or below the price point where you enter a trade. You get a predetermined payout if you are right, and you loose your trade amount if you are wrong.

In online binary options trading, contracts are sold by a broker to a customer or trader using the over-the-counter method. Brokers sell binary options at a fixed price and offer a fixed percentage return is a trader's prediction is correct.

To close off, binary options trading is not illegal in South Africa, but it is a pain to get your profits withdrawn from the brokers that offer them.

P.S. although binary options are regarded as a instrument, in some countries binary options trading is regulated under gambling licenses. As for South Africa, only a handful of brokers that offer binary options are regulated by the FSCA.