Whenever a new way of trading or a financial instrument arrives, many businesses get involved with it. But are all these businesses fair? There is no doubt that many of the product providers are honest and, with their hard work, trying to achieve the milestone. They are trustworthy.
However, some are thieves. Now consider the Binary option (definition). It is a popular and accessible method to trade markets. When you choose a binary option, you risk losing money because the broker has complete control over the binary options data. Therefore, you can get played very easily.
But are Binary Options a real scam or not? In the following article, read how to defend yourself against these scams and spot one.
How dangerous is binary options trading really?
During the current difficult economic period, many people have been searching for new ways to generate additional income. Many have been enticed towards the world of binary options primarily because of their straightforwardness, which delineates this type of trading as simpler to use than other widespread investment vehicles. Newbies erroneously believe that they have great chances of acquiring substantial returns in no time at all.
However, many of them miss the point that they will still need to master quite a hefty learning curve in order to capture consistent profits. After this fact eventually dawns on them, many beginners then search for simpler options instead of sticking to their original task. Unfortunately, individuals that select this course of action often become victims of scammers.
There is still a high risk of losing all of your money even if you are not scammed by a broker. Binary Options, as such, are a high-risk investment derivative. They are all-or-nothing options. In every trade, there is the chance to lose the whole investment amount but also the chance to get a high return.
In conclusion, it can be very dangerous for a beginner to trade with real money on Binary Options. But it is the same case with other financial products. Therefore, we recommend using a free demo account first!
Why is Binary Options regulation important?
Firstly, markets are adequately eligible to process with an apparent set of rules and regulations. Developed by professionals, these may not be lawfully constraining, but they are crucial to assure physical rights, underpin agreements, and ensure fair competition.
Secondly, they provide safety and security for companies and their clients likewise. Third, the regulations ensure those involved and mitigate wider market losses in the vastly competitive and active industries. Finally, on the part of the customer, they shield them from insult and abuse, cheating, and fraudulent activity.
The need for regulations
Binary options trading has to serve prominence increasingly worldwide and is presently one of the largest online trading activities. Traders appreciate this reasonable way of earning money by simply indicating the movements of underlying asset prices.
Unfortunately, dishonest brokers attempt to entrap with the industry expansion at a comparable rate and rob those less skilled trades of their hard-earned money.
Many governments agreed to execute numerous restrictions to ensure all traders have a proportional chance to trade safely and are not concerned about frauds and dangerous brokers to fight this problematic inclination.
Almost all countries have their regulatory bodies to regulate and publish authorizations to binary options brokers. However, other nations give restrictions to most of the nations, like the European Union member states. For example, CySEC (The Cyprus Securities and Exchange Commission), located in Cyprus, is the most important and powerful regulatory body. But unfortunately, some dishonest brokers might falsely insist that they have a license issued in some specific country.
But the thing is that a dealer often should check two times and make it apparent that the broker they have decided to trade has a legal license. Hence, it has enacted all the relevant processes and substantiated to be a trustworthy person.
The binary options trading industry can convince less skilled traders who want to make plenty of money quickly without putting in many struggles. The justification for this might be the tricky clearness of binary options trading.
As you all know, it is advisable to be aware of the changes in the market and several dangers in succeeding in binary options trading, which would be very beneficial for you to be a profitable trader.
Hence, it is very important to regulate the industry and enable traders to find out the best broker they would believe. Furthermore, it is essential to safeguard investors’ reserves from a plain theft, which some fraudulent brokers simply are.
Why do Binary scams exist?
Like any cheating or criminal action, they prevail because they are a technique for disingenuous individuals to earn susceptible wealth. Since the beginning of binary trading, individuals have been lifting deceitful websites and tricking or fooling people out of their cash.
As long as people are ready to compete with their wealth, they constantly expect to snatch it from you because the profits could be enormous with online trading. So, individuals are ready to put up with an elevated hazard.
If the unfair rare desire to earn cash shortly without any morals when it arrives at yanking people off, they would be using every stunt to give rise to it to occur. This specific business is a susceptible target because all trading brings spots online, is not constantly governed, and always people do not know how to catch the actual thing from the fraud.
Binary options vendors even run so distantly as to jingle people up, providing them indestructible contracts if they bring security utilizing a credit card or any bank transfer.
Tips to avoid Binary Options trading scams
The scam is not a simple behavior. It covers a whole lot of categories. For example, scammers can provide you with misleading information and even give you dishonest trading advice. You need to know that even sometimes, the broker’s intention is not to scam, but the services provided by them are no less than a Binary Options scammer.
For instance, they can give you continuous advice because you are losing the option every time. But, unfortunately, this can also lead to huge monetary losses. Thus, stay away from these types of brokers. The following are a few tips to avoid binary options trading scams.
#1 Trust only regulated brokers
It is critical to understand what is reliable and what is not in a market brimming with possibilities. Individuals with a license to function as trade brokers from a competent financial organization are regulated binary options brokers.
However, it is critical to understand that while most brokers have a business license, this is not the same as obtaining a regulatory license from a competent financial body.
You must recognize the authorities who are regarded as the regulators.
- Cyprus Securities and Exchange Commission (CySEC)
- Isle of Man Gambling Supervision Commission (GSC)
- Malta Gaming Authority (MGA), US Securities and Exchange Commission (SEC)
- US Commodity Futures Trading Commission (CFTC)
are the most prevalent financial authorities.
#2 Extra perfect marketing
When you see perfect reviews, you must reconsider them. Even though Binary options are easier than other trading options, any broker cannot guarantee that your win is confirmed.
Profitable trading needs knowledge of market behavior, the ability to read market conditions, and a grasp of strategy. If the dangers are minimized – or blatantly incorrect declarations are made, then you must get at one go that these are scams. It indicates that the broker may be less than conscientious in other areas and that the platform should be avoided at all costs.
#3 Read the terms and conditions thoroughly
While you finalize a deal with your broker, everything must be transparent. It is your responsibility to read every small print of the brochure provided by the broker. Question them about the withdrawal fees and procedure. Know the minimum deposit required and other details before investing with the broker.
#4 Cold calling
Let’s divide this into two categories. The broker will get your details from the internet and call you to sign up for them in the first category. In the second category, the company will call you even after your registration with the broker. They will point you to a particular trade and ask you to buy options.
Both these cases indicate a scam. Treat these with the utmost attention and report if you find any discrepancies. Cold calling also includes emails or any other means of cold communication. So, you must stay alert to these frauds.
#5 Third-Party interference
Be clear about your broker. For example, you sometimes click a website to sign up, but you are redirected to another broker site. Or in other instances, it happens that a particular trading service asks you to sign up with the brokers recommended by them only. Be careful in these situations.
Sometimes, a third party plays scam you by using the name of a reputed broker. Remember that a good broker will always be straightforward about them without any involvement of a third party.
#6 Managed accounts
It is necessary for a broker to provide you with tools that can help you analyze the risk factors. However, it sometimes happens that the broker wants access to your account to make your best interests for you.
Always remember that your best interest for you can be made by the trader only; that is you. So, do not ever give your broker complete authority over your trade and trading opinion.
#6 Manipulation of price
The broker’s prices must be determined against a reasonable and transparent benchmark. You must follow the news trend to know what the market prices of the Binary options are. If the broker reserves the authority to determine its rates, you should expect those statistics to be stacked against you.
What to do if you are a Binary Options scam victim?
If you feel like you have been played or the broker you have signed with is a fraud, do not sit back and lose hope. If you feel underconfident and leave the trade sector, you are making the wrong decision. Do not let a scammer screw your career. Instead, try to fight back.
You can consult a professional agent who is a firm specializing in helping victims of Binary Options Fraud. Or, instead of basics, you can follow the below tips.
#1 Maintain the documents
Keep records of everything possible, including the terms and conditions of the broker, copies of any cold calling instances, confirmation of your deposit, trading history, etc. These can act as evidence of their scam and can help you to fight back against them.
#2 Try to withdraw
Try to withdraw your money. There is a chance that your broker won’t let you withdraw. The reason might be you have not fulfilled all the terms and conditions or maybe because of any document ID proof.
How to make a Binary Options withdrawal? Check the information the broker offers on its website. If the broker is legitimate, they will help you to solve these issues and to withdraw. But the fraud one will keep hanging you up with various excuses.
#3 Give feedbacks
Make your voice heard. If you are registering a complaint or issue that is not being resolved after long hours, you can go to the feedback option and register a complaint against the broker. If there is no option, raise your voice among the trading community through social media.
#4 Contact the regulators
If you see that nothing is helping, you can contact the regulators directly. For example, if the broker is regulated, contact the agency that controls financial regulation in your nation; if they are not regulated, contact the agency that supervises financial regulation in your country.
The regulated brokers are answerable to the regulators and are bound to address your complaint. If they are not regulated, you can be guaranteed and at least the others of your country will be saved. However, at best, cooperation among authorities might result in the broker being shut down for fraud.
How Binary Options brokers can steal your money:
The binary options market majorly operates through digital trading platforms. However, many such trading companies do not comply with the country’s regulatory requirements.
Such types of companies cannot be ruled out of indulging in illegal activities. These Internet-based binary options trading platforms often come out with fraudulent promotional schemes. The Investor should be thoroughly aware of the brokering company that they are in investing in.
Some complaints from various investors are as follows:
#1 Refusing credit/reimbursement of funds to the customers
These situations are common, and arise when the customers have already deposited money in binary options trading account. Employing telephonic calls or emails, the brokers coerce the customers to deposit extra funds in their accounts.
Later on, when the customer tries to withdraw their original deposit/returns, the trading platform cancels the withdrawal request. They will block your calls, and emails and refuse to credit the amount to the respective account.
#2 Identity theft
There are other types of complaints received by regulatory bodies. The binary trading platforms on the Internet can collect customer information like credit card details, passport details, and driver’s license details.
This are valuable information that, at any cost, should not be given out. The trading platforms can use this data for illegal purposes. Hence it is advised not to divulge any personal data.
These binary options scammers can also falsely claim that they need photocopies of your utility bills and other personal data. One should not oblige to these requirements unless they are sure of the company.
#3 Software manipulation
The binary options trading platforms can manipulate software to show losing trades. This type of fraud leads to distorting the binary options prices and payouts.
When they see that the customer has a 100% chance of winning, the software extends the expiry time so that the trade results in a loss. So again, it is a loss to the customer but again to the trading platform.
#4 Inflated investment returns for Binary Options
The internet platforms dealing with binary options can inflate the investment’s average return. They will advertise a higher investment return on the customer’s investment and the laid-out payout structure.
They will cheat you by designing the payout structure so that the expected return goes negative. This results in a net loss to the customer.
#5 Background check of the firm or broker
The first basic rule for an investor is to check for the trading firm or brokerage company they are investing in. This includes license and registration status.
If you find that they are not in registration with the country’s regulatory body, you should not invest your money with that broker. They might give you a good return for the first time, and it will entice you to invest more the second time and get conned.
One more important thing is not to share your personal information or invest money on the first go. The moment you see that they are not registered or licensed, you should not trade with them.
#6 Sales pitches
The employees of binary options websites often use fake names assigned to them. They can even be from a different country and put on an accent. In addition, they will give out fake qualifications, titles, and even experience.
They will entice you to invest your money in their platform by stating that the company you are currently investing in is fraudulent. Such scammers try every bit to gain your trust and coax you to deposit your money in their company.
#7 Gratuitous offers
The fraudsters often deploy offers that seem unreal. For example, they state that the investment returns will be high, but this is far from being true. This is a red flag that indicates that this investment scheme is fraudulent.
#8 Threats and high-pressure sales tactics
The representatives of the binary options website you are dealing with or are planning are highly trained. Therefore, they will gain your trust and can state that they have to reach their target and make you invest more.
There have been instances wherein they threaten various legalities, like filing a lien against your property, etc. all these are a part of a bigger plan to swindle you off your money.
#9 Turnover of the assigned broker
At one time, you will be in touch with ABC, and in a short span, you will hear from XYZ. When you ask the reason, the staple answer you can get is that the former broker has been relieved of his services.
10# Withdrawal issues
The most common way of cheating you from earning your returns is delay tactics deployed by the company. They hold up your withdrawal request and delay it to the point that you will not be able to even dispute the charges with your credit card company.
There is also a scheme called “Premium Account.” The broker will convince you to pay more money by offering very few restrictions on withdrawals.
#11 Fraudulent activities on your credit Card
When you use a credit card to fund your binary options account, you should always check your credit card statements. The company can cheat you with unauthorized charges on the account.
Never even sign a form that requires you to waive any rights regarding disputing any credit card charges. Read the form carefully and never authorize such a right. One should always report unauthorized charges to the credit card company immediately.
#12 Government impersonators
At times the brokers even claim to be associated with the Regulatory body and ask you for money to recover your returns. The Regulatory bodies and Governments are aware of such frauds, and they set up dedicated hotlines and websites wherein you can report any wrongdo
Examples of binary options fraud in Social Media
There are ample examples of fraud available online. These case studies are essential to know the tricks of scammers and how you can avoid them. In the following sections, we will give case studies of scams in Social Media.
Scammers may be much more devious and persuasive on social media, making it an “ideal” venue for them. They will extract everything they can from you, and when you are of no use, they will simply unfriend you. The simple trick to recognize them is by their foolish advertisements. All they want is your money, so they will upload silly posters mentioning the profits and opportunities you will get if you sign up with them.
Videos like those used with “The Green Room” and “FB Wealth Group” will claim to be traders, but they are really simply out to acquire your money through signups or even having you pay them directly.
Secondly, if you see any social media account mentions anything related to Multi-level marketing, then be assured that they are trained scammers and never trust them. Therefore, we will recommend you block these pages. After all, a legitimate broker will never come to social media asking for your assistance.
These multi-level marketers can do whatever it takes to drag you to their website to signup. They can also do fake interviews for hours to make you believe that they are legitimate. Do not ever fall into those traps.
Some legit Binary Options brokers:
Quotex provides numerous terrific emphasizes to modern and prevailing dealers. When you check out the several account kinds, you will see that they function with dealers of any grade, beginner, skilled, champion, etc.
This outlet is too susceptible to utilize. While Cyprus Securities and Exchange Commission (CySEC) does not permit them, they have nice acknowledgment online and thump all the boxes of a trusted vendor. You would love the comfort of practice.
It is a unique digital options vendor with a susceptible to utilizing web-based outlet that provides signals assistance. The brokerage has a low minimum deposit, zero withdrawal fees, and a desirable 30% log-in premium. The asset extent and clearness would convince several dealers to be enthusiastic about the digital options of the interface.
(Risk warning: Your capital can be at risk)
#2 Pocket Option
Pocket Option is the nicest binary options vendor of 2022. This ingenious trading outlet has low minimum deposits, effective payment techniques, excellent revenue, and a wide diversity of technological examination devices.
Pocket Option enables the traders to trade over 100 assets, comprising stocks, cryptocurrencies, merchandise, and commodities. You would also be able to build a demo account with the help of virtual money.
Entirely in all, Pocket Option is a comfortable, helpful binary options vendor with a worldwide customer base. So, if you are glancing for the nicest binary options outlet to put your faith in, Pocket Option would be your decent chance.
(Risk warning: You capital can be at risk)
#3 Olymp Trade
Olymp Trade has a great upside and has reduced the danger of investing in the market that anyone glancing for a strong outlet needs to glance any further. Opening an account puts up just several minutes, deposits and withdrawals are quick, and the devices for profitable trading are at your fingertips.
(Risk warning: You capital can be at risk)
Conclusion: Binary Options are not a scam but you need to learn how to identify scams
The existence of Binary Scams is due to the high risks associated with trading. It is simply not easy to determine which broker is legitimate. Binary Options, for this reason, have even been banned in various countries like the US, England, California, etc. These states have defined Binary options as gambling. But we can say, that this financial product is not a scam, it is just used by many scammers!
This is not very far from the truth. But, unfortunately, due to increased scams in this trading option, it is considered mainly a scam. But still, some regulators are working hard to wipe away all the scammers. And now, it is your responsibility as well to invest in the right place to avoid scams.
Getting rid of scams is not 100% possible. But by the tips mentioned in this article, you can get shady signals before the frauds try to play games. Even if you have been scammed, you can follow the tips suggest above to get out of it. Just because of the scams, you must not leave the trading business. This can give outstanding results if used smartly.
Most asked questions about Binary Options scams:
Is Binary.com safe?
In general, Binary.com is safe. It is in business since 1999. But yet, no site can guarantee you that you won’t lose money. You will have to bear with the risk if you are buying options from Binary trading options. However, if you use proper trading strategies, the risk may reduce.
How to spot a Binary Options scam?
Scams have all things in common: Unrealistic winning rates, free money, aggressive advertisement, unregulated platforms, and spam calls. Be aware of these scams. Another important thing is to check the binary options brokers‘ websites. Is there a real and known company behind it or not?
Why are Binary Options banned in some countries?
Reports show that a lot of retail traders are losing money when trading Binary Options. In addition, there are a lot of shady brokerages and scammers who are using this financial product to steal customer’s money. In the end, there were too many claims and reports of retail investors who lost a lot of money. So some countries banned this financial product to defend their citizens against scammers.
Can you lose money in Binary Options?
Binary options are straightforward, but they all depend on the company/website you are investing in. Many of the investors lose money either through cheating by the broker or other factors. It is nothing but gambling.
There are reports where on some platforms, customers have lost up to 80% of their investment. However, it can be profitable if the investment is made by performing a thorough background check and license/registration.
What is wrong with Binary Options?
The regulatory bodies keep receiving numerous complaints of fraud with Binary trading websites. These Internet-based trading platforms offer various opportunities to buy or trade binary options, which are all fraudulent.
The most common complaints that are received fall into the category of refusal to reimburse funds to customers and refusal to credit customer accounts.