Binary option scams
Binary options has a very poor reputation and it is very common that they are referred to as scams. This reputation is understandable if undeserved. Binary options are not a scam and there are a lot of reliable trustworthy binary options brokers. An example of such a broker is NADEX that is licensed by the US finance inspection and IQ option, the most popular broker in the world.
The problem is that the binary options industry has been plagued by a large number of scam brokers that have more or less stolen their clients money. They have made sure that the investors lost all their deposited money and in some cases even convinced them to deposit more. These practices are not condoned by the binary options industry but they have none the less hurt the entire industry to the point where binary options have been outlawed in a number of different countries. The binary options industry is doing what it can to clean itself up and the number of scam brokers on the market is a lot lower then it used to be. The damage is however already done and it is unclear as to whether the binary options industry can ever repair its reputation. Some brokers are trying to solve this by renaming their products to distance themselves from the stigma of binary options. One such example is IG index that has started calling their binary options Digital 100 options instead.
Lack of knowledge
Dishonest brokers is not the only thing that have hurt the reputation of binary options. Another factor that have hurt the reputation of binary options is that a large number of traders have started trading with binary options without first learning how they work. Without reading the information the broker provides about their products. These traders have started to trade binary options assuming that they work in a similar way to regular options. That they were created by an underwriter and traded on a open market. They failed to understand that the broker is the underwriter and that there is no open market for binary options. They failed to understand that they were trading against the broker.
Once they discovered this they claimed that the options are a scam even through the broker has been very open with exactly how the options work. They chose to feel scammed instead of taking responsibility for their own lack of knowledge and failed trades. This becomes even more prevalent when the traders go online to see that there are other traders that feel scammed just like they do. They get a perfect excuse not to take responsibility for their actions.
Scams to avoid
Binary options might not be a scam but there are still plenty of scams on the binary options market. New scam brokers enter the market or starts offering products similar to binary options. Other scammers creates other services based around binary options in the hope of making easy money. Below we are going to look at some common scams that you should never fall for.
Binary options signals
Binary options signals is a common scam. The scam works like this. A provider offer to sell you binary options signal. A signal is an alert that informs you about a profitable binary options trade. They send out a large amount of these signals each month and often claim a very high success rate for their signals. The high success rate shows that you would be able to make a large amount of money if you traded on those signals. You often have to pay $2-300 a month to subscribe to the signals.
Binary options signals are a scam. You will pay a lot of money to buy signals that will end up losing you money. The signal sites edits their historical data to make it a lot better then it really is. Their real historical success rate is usually a lot lower than the claimed success rate.
Binary options signal do not work. There is no effortless way to make money on binary option. Anyone skilled enough to predict the market successful trades on his signals, he does not sell them for a few hundred a month.
I will trade for you
This is a scam used by scam binary options brokers. It all start with you opening an account with a broker and depositing money. When you have lost that money then your account manager will ask you deposit more money, saying that you were unlucky and that you are bound to make money next time. If you still refuse to deposit more money then the account manager will offer to trade for you if you deposit a certain amount of money. He promises to make back the money you lost for you.
If you believe him and deposit money then the account manager will start trading for you and will quickly lose the money you have deposited. He will then try to get you deposit even more money although very few people do. They will keep lying to get as much money as possible from you.
This scam only works if the victim have not taken his time to understand how the options work. If he understood that he is trading against the broker then he would never trust the account broker to make the money back. He would never be allowed to lose the brokerage money.
Never fall for this scam.
The check is in the mail
Never deposit money to your account by check. This is especially true for brokers located outside the US and Northern Europe. If a broker ask you to send a check then I recommend against it. Some dishonest brokers will cash your check and then claim to never have gotten it. There is also a real risk that the check really will get stolen if you send it to the former eastern block, the near east or central America. Always send money using a traceable digital transfer method.
It used to be common that binary options brokers offer a bonus to new traders similar to the bonus you get when you start playing in a casino. Most regulatory bodies have since banned binary option brokers from offering bonuses.
If you find a broker that are still offering bonuses then that is a red flag. The broker might be honest but the fact that the broker is offering a bonus implies that isn’t regulated by one of the most trusted regulators and it might therefore not be trustworthy.