A binary options scam can be defined as a failure to give back money owed to a trader, for instance when a trader tries to withdraw money or wish to terminate his account and, a lack of transparency in executing and pricing of transactions/assets. It can also be the deliberate targeting of vulnerable or unsuspecting traders.
But that said and done, the good thing is the fact that anyone, armed with the right information, can avoid binary options scams. The reality that there are numerous binary brokers nowadays has actually contributed a big deal to the existence of such scams. That is one of the reasons why you really need to know what to expect and who to trust in the world of binary trading.
So, what are some of the common types of scams?
Most common types of binary options scams
There are some online brokers who are not legit and you have to be very careful when picking a broker to work with. Credible brokers are registered and regulated by relevant bodies. But no need to worry much as this type of scam is getting really rare since the legit brokers have been listed and posted all over the internet. That way, you will certainly tell which broker is legit and which one is not. Taking time to read reviews that are readily available will help you to know the most reputable brokers, how to open accounts with them and how to start trading.
Another type of scam that has been rampant in the binary options trade is when a broker gives profit percentage that is too low as compared to what other brokers are offering. That can be so if the broker in question is facing some financial challenges and they want to fraudulently make money to solve their problems. As a trader, this will be almost impossible to realize if you rarely interact with other traders or if you really don’t read reviews on other brokers.
Another common scam in binary trading is the manipulation of terms and conditions. It is quite difficult to deal with a broker that has all the power to themselves of changing their terms and conditions at any given time, without necessarily consulting their clients or at least letting them know. That is why it is extremely important to check out every clause in the terms and conditions of any broker you are looking forward to working with.
Also, it is essential to be aware that things are not necessarily always what they seem to be at the surface.
For instance, a broker that is out to con unsuspecting traders can use some handsome sign-up bonuses to lure traders only to realize later that you will need to make even up to two times turnover before you are allowed to access the bonus money.
How to avoid being a victim of binary scams
- Avoid working with brokers from countries that are not known to firmly control or regulate binary options trading. The broker has to be carefully regulated just to make sure that your money and all the transactions that you do are all safe.
- Look out for any complaints about the broker you are thinking of working with. If there are too many customers who have complained about a certain broker, do not sign up with them. A broker can have a fault or two, but recurrent complaints about the same thing that they do not correct is a red flag. A legit broker should respond to negative comments immediately and work towards correcting the mistake in order to improve the traders’ experiences.
- Most brokers out there offer a demo account that you will use before you can decide to go for the real account or not. If you find that the demo is okay and that the customer service is great, then the most probable thing is that the real account will be okay too. You have to be very careful of brokers who do not offer demo accounts.
- It is very important that you join binary options traders’ chat rooms. Here, you will get to find out the factors that you should be cautious about, the best brokers in the market and how to avoid being conned. It is in these chat rooms or forums as they are commonly known that you will get an experienced mentor who will guide you through the trade till you are well experienced to stand on your own.
Binary options scams – other details to look out for
- Any broker who does not have an SSL https certification is cannot be trusted. This certificate is meant to ensure that the broker does not maximize profit while minimizing costs illegally. On the same note, the SSL https certification is very expensive and a broker that is not serious will not afford to risk that much.
- The broker should be regulated by a certain body which regulates other brokers. Such bodies include CFTC, ASIC and CySec among others.
- There are some brokers that are known to post fake reviews on their sites. With the right computer software, you can be able to know if a review is fake or real, and if it is fake, do not work with that particular broker.
- There is an average range of bonuses and promotions common in all brokers. As such, be aware of brokers who offer exaggeratedly high bonuses.
- Most scams put up websites which they will use for a short time and then pull them down. If you do some research about the domain name of the site, you might notice some trend where they close the sites after about a year and open another one. Such a broker is, most definitely, a con.
Binary options scams – conclusion
In a nutshell, a good binary options broker should be transparent, handle customer complaints on time and their site should be secure and safe for traders to carry out their transactions. If you keep that in mind, you will undoubtedly avoid binary options scams.