How to Spot and Avoid Scam in Binary Options?
Although binary options industry exists for few years now, there are still questions whether is this type of online trading legal or not. Answer to that question is yes, binary options trading is completely legal and no scam.
We will provide you answer to that question below in this article. Due to the fact how binary options trading became very popular in the past several years, it is no wonder that scam brokers appeared. This is a new type of online investment and unfortunately, scam does exist in this industry.
This is why it is important to know few facts and then, you will be able to recognize potential scam brokers in order to avoid scam in binary options.
In this article you can understand little bit more on what binary options are and are binary options a scam. You will be provided with information about this type of trading and on what do you have to watch out.
By being careful, a trader can avoid possible scam in binary options and that should be the main goal of each binary options trader in the industry.
Thanks to the popularity of binary options trading, number of binary options broker is increasing. Sometimes it can be pretty challenging to spot a scam broker among so many trustworthy ones.
In binary options trading, you as a trader, are trying to predict the price movement of the chosen asset during the expiration date. Basically, you are guessing whether the price go above or below the certain entry price. If you guess correctly, you win and if you are wrong, you lose. It is simple as that.
Since there are only two possible outcomes, trader can either be right in his predictions and receive a certain return amount or trader can predict wrong and then he will lose money. Even if he loses, he doesn’t lose everything on his account, just the invested amount. And this amount is known in advance, even before the trade is done. This way, trader is aware of possible winnings or loss.
Most people when they encounter themselves with something new, they automatically became suspicious because they have none or little knowledge about it. Like in everything else in life, you have to be careful. That is also the case with binary options trading.
That is why we advise our readers to read carefully brokers reviews and trade only with the trusted brokers.
Brokers who promise extra large bonuses and returns without any information about it or provided conditions, are most probably scam. On our website, we only have legit brokers who are proven to be trusted.
In order to start trading and earning money with binary options, each trader should first gather information about trading process and brokers; how to choose among many of them, which platform to use etc.
And when traders start to trade, they have to be aware of a risk level, especially if they are not experienced traders. It this case it is recommended to choose a broker who has demo accounts where traders can trade and exercise with virtual money.
But there are traders who aren’t cautious and who start trading without strategy or having any trading information. When they lose money, they blame broker or entire industry to being a scam. Those are angry traders who are just searching someone to blame. So to avoid these situations, it is recommended to carefully read all the necessary information and reviews and then make a decision about binary options trading.
This is why we advise our readers to wisely choose preferred binary broker in order to have a successful binary options experience with high winning ratio. For new traders in binary options industry, it is especially important to spot possible scam brokers and to avoid such possible outcome, company CySec was established.
CySec (Cyprus Security and Exchange Commission) is a financial regulatory company that offers a minimum set of standards for binary brokers to follow. Nowadays, we can divide brokers, whether they are regulated and have CySec licence or are they unregulated. CySec licence isn’t 100% guarantee that a particular broker is trustworthy but it does mean that most likely it is, because such brokers to have to follow and apply certain rules that are in accordance with EU laws.
In industry where financial speculation is present, short term trading can be riskier than in long term. Sometimes, traders beginners make a beginner’s mistake and invest larger amounts of money without any strategy and then, unfortunately do not reach desired binary option results.
We believe that this article may be of great help in order to improve transparency in binary options trading. It is only necessary for traders to be more informed about trends in financial market and to choose a reliable binary options broker and avoid scam in binary options. Afterwards, with time, traders can be more more experienced and with wisely chosen strategy and trading instruments, will maximize their profit.
As mentioned above in the article, regulation of particular broker can be significant while trader is still in process of choosing the right broker for himself. There is as large number of unregulated brokers, who are reliable and offer a secure trading platform with a wide range of tools and service for a successful trading process.
But here, in this article, we will emphasize more on some cases where scam brokers take advantage and cheat their traders.
Here is the list of several tips that might be very useful for traders to avoid scam in binary options industry.
Downplaying Risk Level in Binary Options
As mentioned above, some binary brokers deceive their traders by telling them there is absolutely no risk in binary options trading. Since this is an online type of investment, it is based on the assessment will the price of the chosen asset rise or will it fall.
Reliable brokers wouldn’t downplay the potential risk since it is clear how it is possible to lose money. This practice is mostly used by scam brokers who try to deceive uninformed traders. It is always a good practice never hide risk level.
Another false information is when scam brokers try to convince the traders about false money return, such as 100%. Some brokers do offer such high payouts, but traders have to read terms & conditions in order to see if they have a trustworthy broker or a scam one.
In general, trading binary options isn’t difficult, but traders should probably invest their time in better understanding of the financial market and to improve their trading skills.
For this reason, it is advised to read as much possible broker’s reviews and gather more relevant information in order to see if a particular broker offers unrealistic promises in binary options trading and to be well prepared in order to avoid possible scam in binary options.
Violation of Privacy – Scam in Binary Options
Some traders have bad experiences in doing business with scam brokers.
One of the reasons may be the fact that such brokers do not maintain the confidentiality of their registered traders. These type of scams can happen through telephone or email.
This behaviour can reflect badly on binary options industry because majority of brokers are reliable and are do not cheat their traders by stealing their personal data.
When traders register with a particular broker, they expect that their personal info will be protected and not pass on further to the third party.
Let’s say, someone contact you and you don’t know where they got your phone number or email-. This is considered to be very dangerous and a violation of privacy, especially if your data are not public information. There can also be a similar possibility of privacy breach. Some scam brokers tend to buy stolen database and afterwards, they contact traders worldwide.
Refusal of Proceeding Payment
This type of fraud is considered to be the worst fraud in binary options trading. Sometimes, traders don’t understand entire trading procedure but it all clarifies after several documentation are verified. ID verification is important element of secure binary options trading because it shows they are subject to the significant regulations in this type of online industry.
So this in only misunderstanding, but the real problem is when scam brokers refuse to proceed with withdrawal. In such cases, these brokers do not respond to the calls or they don’t even return emails. This is a typical example of scam in binary options trading.
Even worse scenario is when they answer trader by asking him to deposit more money, without the initial payment. To be able to avoid such fraud, it is advised to read reviews of different binary options brokers in the market, but also on forums, different experiences of other traders to have a more clearer picture. This way, it will be easier to determine how to choose a binary options broker and to have a positive and profitable binary options experience.
Bonus Scam in Binary Options trading
Majority binary brokers offer their traders a possibility to earn more money in safe binary trading. This means that on their trading platform they offer a wide range of different trading tools and services, and that also includes a variety of bonuses.
Bonuses can vary from welcome bonus (for new traders who register on the platform) all the way to the unlimited bonuses. Those bonuses can be very attractive to traders worldwide so this is why it is wise to read thoroughly terms & conditions for the bonus policy.
By doing that, traders will minimize potential risk of being a victim of a scam broker.
Since 2008, when binary options trading appeared on the financial market. more people worldwide became interested in this new type of online investment. Due to its increasing popularity, there is a large number of binary options brokers and some of them are scam.
For this reason, we decided to write an article to clarify more how to distinguish reliable brokers from scam ones. Above mentioned 4 reasons are the main categories by which traders can see if a broker might be scam.
We recommend you, our readers, to gather as much possible information regarding topics that interest you the most (from how to choose a reliable broker, choose the right strategy or how to make money with binary options) to have a whole picture. We hope that these guidelines will assist you while trading binary options.
We make it our mission to not recommend anything but the best – which, according to industry experts, is IQ Option, the top regulated broker for your country with a minimum deposit of ONLY $10!
Between 74-89 % of retail investor accounts lose money when trading CFDs