While binary options trading is getting popular among users, unfortunately, there is another thing that is making a place in this field. And this is something that every trader should worry about as they will not want to face the “Binary Options scams.” Rigged robots, dishonest brokers, fake reviews, and more, such scams can come in different forms.
As the number of cases is rising, you should be very careful while doing binary options trading to prevent scams. Well, to help you out with this, we have listed down some tips for you to identify the scams and how to prevent those things from affecting your trading experience. Let’s discuss those things in detail.
What do you mean by a Binary Option?
In simple words, a binary option is a type of trading where the profit or payout will depend on the outcome of the traders’ Yes or No. All you need to do is forecast whether the price of the assets or commodities will go up or not from a specified amount.
Once you lock your decision, you can’t alter it. Different from other types of trading, here, the traders can’t buy or sell assets. When the trade period expires, the trader will receive the profit or nothing.
As the trading process is very simple and popular, some online brokers are now taking advantage of the situation. As a result, they are now dealing with Binary Options trading scams.
Binary options trading activities are operated through different internet-based trading platforms. And the risk factor is that some of them are not complying with the US regulatory requirements. On the other hand, some are involved in illegal activities. It is advisable that the investors should keep themselves away from any fraudulent promotion schemes involving trading platforms and binary options.
A typical example of Binary Options scams
There are some investment scams that people should be wary of if they are planning for binary options trading. While some scams are done online, some happen through the phone. Some people search online, which offers thousands of results. If you type “Binary Options brokers,” you will get a lot of options.
However, you should keep one thing in mind that not all the companies that you see on the SERPs- Search Engine Result Pages are real, and some of them are fake brokers who only claim to be 100 percent real.
Some websites are just set up to appear like legit brokers with customer feedback, social media profiles, graphics, terminology, and more. However, you should not believe all those things as they can be completely fake. What they generally try to do is encourage people to sign-up and make a deposit of a certain amount. If you fall into the trap, then you will lose all your deposited amount.
For scamming people, some even don’t use any trading platform. They will just call you saying they are senior financial advisors and asking you to deposit a certain amount of money. To keep the process long and to scam more, they generally set up multiple names. This is the most common example of Binary Options trading scams.
Some common type of compliant by the investors
The SEC or the US Security and Exchange Commission has received a lot of complaints of scams or fraudulent activities related to the websites that provide a platform for binary options trading. All those complaints are listed in three major categories. These are:
Refusal to reimburse money to the customers
Such cases generally involve customers who have deposited their money to the binary options brokers account and then encouraged by the brokers to make additional deposits into the account to win exciting prizes or deposit bonuses.
But when the investors try to withdraw the money later, the brokers’ platforms refuse to credit the amount. In fact, they also ignore the emails and calls. Such Binary Options trading scams are quite common among investors, and due to these, thousands of investors lose a heavy amount.
Identify theft of the investors
Some investors also have alleged that some online binary options trading platforms have collected their personal information, including detail of driving licenses, credit cards, passports, and more. And they have used those things for illegal tasks. So, if you think the site is not legit, it will be better for you not to provide your personal information.
Using software to show losing traders to the investors
It has also been seen that some online brokers manipulate their trading software in order to change the binary options payouts and prices. For instance, if your trade is winning, the software will automatically extend the expiration countdown until you lose the trade.
Why Binary Options trading scams exist?
Just like other fraud activities and scams, these scams also exist as these are some of the easiest methods for dishonest people to earn money. In fact, since the introduction of this trading type, there have been some brokers setting up multiple fraudulent websites and then conning the investor.
As long as there are people who can spend a part of their money, there will be such brokers who want to take that money from them. As the gain is more, people don’t think much while investing in this, and they invest more without validating the legitimacy of the platform.
If those brokers want to make money faster through scamming, they can use any sort of method to make it possible. And in the field of binary options trading, people are easy to target as all the activities are carried out online, from account opening to getting profit. Besides, such platforms are not regulated. For normal people, it will be very difficult to detect a fake site.
Some scammers even try to lure people by calling them and offering some unbelievable trading deals for making a deposit through bank transfers or credit cards. And once you are done with that, then you will lose all your money. What’s more? They will use your personal information for other tasks.
FBI is taking necessary steps to prevent Binary Options scams?
It has been seen that the FBI- Federal Bureau of Investigation has informed that the Binary Options scams have become a growing issue in the country. The fraud has been in the game since it was first introduced. Well, that doesn’t mean that the entire Binary Options industry is doing fraud.
There is no doubt that Binary Options trading is fine and also legal in some countries. It is a perfect way to study the market and a faster way to make some money. However, for that, you will have to find a reliable online Binary Option trader. And this is the hardest thing for the people.
But it is believed that the FBI and other agencies are now giving their best to resolve the issues of binary options scams. And their efforts and finding would surely help people to know about who is the legal binary options broker, who are allowed to trade, and how to keep the money the same while trading.
Well, the CFTC- Commodity Futures Trading Commission has issued some guidelines for binary options trading. However, the major issue is the online brokers are now hiding themselves using VPN services and high-end technology. In fact, they have managed to make the people believe that they are real and genuine binary option trading brokers.
So, it can be said that the internet has made it easy for them. If people want, they can also create such a platform just by buying a domain and hosting services. Then they need to create a bank account, payment gateway, and an offshore business to attract people for the investment. While the genuine online brokers majorly focus on binary options trading, the scammers only want to earn money by luring people.
That’s why the authorities have introduced different regulations to prevent Binary Options scams. And this is where the new proclamation by the FBI comes to play. What is there in the message?
Well, it says, most of the online binary options brokers who are operating in the United States of America are not legit. Besides, they are not registered with the concerned boards or the authorities. So, this is something that can make people be very careful while doing binary options trading.
The FBI’s approach towards it
Earlier this year, the FBI held an international summit, and participating in this meeting, different agencies and authorities discussed the Binary Options trading scams issue. Some European nations informed that the scams accounted for more than 20 percent of the complaints.
Milan Kosanovich, Special Agent from the FBI, said that the event gave them a chance to discuss their efforts and findings related to Binary Options Scams. Besides, it helped them to understand the major challenges, and now they would be able to successfully address the fraud.
All the agencies and authorities are now focusing on two major things. One is introducing stricter regulations and discovering the third-party binary options trading service provider. Well, if you are looking for a reliable and US CFTC broker, then you can trust NADEX.
Some important points to consider to avoid scams
It may be noted that the FCA- Financial Conduct Authority of the Unites Kingdom regulates the binary options. In fact, the agency has also created a list of many unauthorized firms. Even though the agency doesn’t call them binary options scams, the listing says that those brokers or platforms are breaking the trading or financial law. So, it will be better for the investors to completely avoid such platforms.
The United States of America, along with some other EU countries, has termed binary options as a financial product. Based on the location of the platforms, they will be regulated by some regulatory body. For example, in Cyperus, the regulatory body is CySEC- Cyprus Securities and Exchange Commission, and in the USA, the market is controlled by the CFTC.
The traders who want to avoid scams should check the regulatory status of the platforms. It will prove that the brokers follow all the standards while offering the services.
Consider too good to be true
As per the experts, the trade practice should be straightforward. In fact, the selling point of the brokers is the usability of the platform. Well, if a platform guarantees a profit, then you should not completely trust that platform. Remember that this is the market where you can’t expect profit every time.
Here, the profit will depend on the investors’ ability to study the market conditions, market behavior, and trading strategies. If you see some statements like more than 95 percent of traders are getting profits from the platform, then you should consider them as a false assurance.
What about the terms and conditions?
In such trading, transparency is important. Before creating a trading account with the broker, you should carefully read all the terms and conditions related to the initial deposit. If the platform says you can’t access your deposit until you complete ten trades, you should avoid using that particular platform. And always check for the terms “deposit bonus.” As per some reports, CySEC has banned the platforms offering such bonuses.
In some cases, you may get a random call inviting you to create an account on a particular platform. And sometimes, you will receive a call from a senior advisor saying that you are just a few steps away from enjoying a successful trade. Remember that legit broker don’t call. So, don’t join a platform considering cold calls or emails.
One of the major things to consider is whether the broker offers a free demo account. Using a free demo account will help you to understand whether the broker is legit or fake. Besides, you can also try your trading strategies.
Follow the rules and enjoy a safe trading experience
If you can understand what you are searching for, then it will become very easier for you to detect a scam. If the platform says you will get USD 1000 in just five minutes by depositing just USD 100, then you should stay away from this. As mentioned above, don’t forget to check the credentials. And be careful about the brokers offering binary options trading through management services and signal providers. Always remember that it is possible to avoid Binary Options trading scams.