Will Brexit Really Affect Binary Options?

A few months ago, Great Britain made a decision that would send shockwaves to the far corners of the populated world. The people voted in a referendum and decided to leave the European Union. The world’s financial markets were sent reeling from the blow. The move, known fondly as Brexit, wasn’t a unanimous decision. 48% of the population voted to remain in the EU, but the majority wanted out.

A month after the decision was made, the country is now in chaos politically, with no real head of state to take the reins, and the sharpest drop in the value of the GBP in decades. Even worse, it may take up to two more years for Britain to officially stop being a member of the EU.

Forex Trading has Been Hit Too

In fact, one of the biggest types of trades that has been affected by the departure of Britain from the EU is the Forex trading industry. With the value of the GBP falling, and the economic stability of the country being doubtful at present, a lot of traders are wondering whether or not to trade at all.

There are a few things that you have to keep in mind though. While the market right now is volatile, and more so than usual, there is a high chance of it snapping back at some point in the near future. This is almost always the case with sudden changes in the market.

One of the most affected options has been currency pairs, the biggest of which is the GBP. With the falling value of the Sterling Pound, steering clear of any options that are related to the UK Government and their economy might be the best choice for less experienced investors as well as beginners in the game.

What is the Workaround for This?

In the long term, there is a chance that brokers in the UK can find a way to get back into the European market. Right now, with the regulations of most of the European countries applying only to countries that are in the EU, traders may have trouble trading from outside the UK. This is a pretty obvious effect, and it isn’t one that can easily be prevented either.

Brokers in the UK will therefore have to apply to the FCA first. Before Brexit, the one name in the industry that had the biggest weight when it was mentioned was CySEC. This was the Cyprus Securities and Exchange Commission. Any broker that was regulated by this body was automatically deemed legitimate and trusted by the regulatory authorities of other countries including the UK.

With Brexit, the FCA in the UK will now be the most recognized form of regulation in the UK. Brokers with existing licenses in the EU will have to reapply in the UK for another set of regulations. This could take quite a lot of time and money. We may even see some brokers pulling out of the UK altogether in favor of operating in the much bigger EU.

Silver Linings in These Clouds

With all the uncertainty and the negativity, is there any good to come of Brexit when you take it in the context of the binary options industry? Well, it may actually be good for traders who have some experience and a clear head. With the ability to stay calm under pressure and properly think about the trades that are being made, there could be the opportunity to make some real money out of the entire thing. It is a volatile market though, so make sure that you know the risks and the rewards before you try this.

For brokers, the licensing they currently have with CySEC should be enough for now. The proper official departure of the country from the EU can take up to 2 years. In this time, applications to the FCA can be made whilst still operating in the UK using the CySEC licensing, which is still recognized.

Traders have the opportunity to use the value of the pound to increase the value of their own money by making better predictions. However, expect that most of your GBP investments will not have the returns that you are used to.