You could simulate a binary option in a regulated brokerage account on a regulated options exchange by trading a vertical spread before expiry. Buy a call/put and sell a call at a higher/lower strike or vice. You could then take out profits as it is not a scam.
This might work out well if you live in London, but here in the USA, I stopped trading stocks because of growing fees and commissions (though they seem to have come down again as of late) and especially because of FINRA Rule 4210, which limits how many trades I can make in a given week. From what I understand, this rule applies to options the same way that it applies to stocks.
Sunday / July 12, 2020 / 10:30 AM PST Yesterday, in another thread, I noted a possibility of using the upper and lower bands from one or both of a pair of dynamic adaptive price range envelopes to help pinpoint levels where the statistical odds of price reversing direction would be significantly higher than usual. After further analysis this morning, I see the potential for using such insight (if this is indeed what it was) to buy and sell five-minute binary option contracts which, more often than not, might be in-the-money at expiry. If the green and red levels in the lower panel above are taken to constitute a “Chop Zone,” then the general idea is that when the gray histogram spikes above or below the Chop Zone, price is likely to retreat from that level for maybe five minutes or so (but not necessarily longer than that). On the other hand, if the bold dark horizontal lines are thought of as constituting a “Price Anomaly Channel,” then we have a different situation where, if the blue oscillator crosses above or below the Price Anomaly Channel, the corresponding rate is deemed to have reached a level that cannot be sustained for very long and is likely to reverse direction for even longer than five minutes. There is a major caveat however in that, if the black oscillator has ALSO crossed above or below the Price Anomaly Chanel, it is an indication that the asset is under the influence of a massive amount of momentum and should NOT be expected to reverse direction for any significant length of time. Under such conditions, it would probably be best to execute trades when the histogram spikes into the half of the channel that is OPPOSITE the direction of the trend (even if only a tiny bit) seeing as how a reversal that resumes the previous trajectory is almost guaranteed. Though these might constitute relatively small moves with a traditional Forex broker, trading via a binary option outfit (that is not corrupt) would enable a trader to realize returns as big as s/he likes (up to a point).
It was too hot in Los Angeles to be sitting at home planted in front of a laptop, so I didn't make an initial test trade today until a little before 8:00 PM PST. Things went pretty much as planned, so hopefully this will continue on a consistent basis...
As interpreting price action using the above system becomes more routine to me, I'm upping the amount of capital I'm risking per trade to assess how quickly one might theoretically be able to amass net gains...
I think the spreads are too large at NADEX to make consistent money. Also, you can never sell your option when the market moves in your favor at a good price. The spread will be something like 3 to 20, or something ridiculous. I lost money trying to find tighter spreads and thinking I could be profitable. I think a bull or bear spread (vertical) does pretty much the same thing if you do it on or near expiration day.
I think the spreads are too large at NADEX to make consistent money. I partly agree with this. I found that I can make money, but the wide spreads means that the risk would simply be too great if one is starting out with a small balance like I am (I'm starting out with just $100). Also, you can never sell your option when the market moves in your favor at a good price. Actually, I found that this is one of the best strategies one might implement. Sell as soon as the market moves significantly in your favor (pocketing about $10 to $15 per contract) and do NOT wait until expiry due to the risk of rates turning against you. The spread will be something like 3 to 20, or something ridiculous. I lost money trying to find tighter spreads and thinking I could be profitable. Exactly! And at 3:20, you have to be correct virtually every single time. I can do that now, but I couldn't nine years ago when I had two to five thousand dollars in my live account. And as a break-even trader back then, I eventually had to start withdrawing money for living expenses until I had nothing left to trade. I think a bull or bear spread (vertical) does pretty much the same thing if you do it on or near expiration day. This is the kind of information I hoped would be offered to me when I first came to this website about three years ago. Thanks for the inside scoop.
Recently I discovered that my "bread and butter" was to: (1) trade Nadex when the Forex markets are "dead!" (2) know which direction price is NOT going; and (3) purchase a 2-hour binary option contract with only 45 to 20 minutes left before expiry at a 25:75 to 15:85 reward-to-risk ratio. But again, the above reward-to-risk ratio is terrible, plus, I found that the NADEX platform more often then not functions very poorly nowadays. So, not too long ago I let my live NADEX account expire due to inactivity.