Trading in binary options entails predicting direction of future price movement of an asset over a short period. For individuals wondering whether or not binary options is a legitimate business, the answer is yes. Trading in binaries is legal, and most firms offering traders with a platform to trade binaries are licensed and they are know as binary options brokers. Read on for more on binary options scams.
Experienced binary options traders are aware that trading in binaries is highly speculative and involves substantial risks. . This raises a big question, why are most binary options brokers advertising that making money from trading binaries is easy?
Binary options scammers are the individuals who bait traders with the line “simple and guarantees to make you high profits.” A binary options scammer will press a trader into opening up a trading account with their brokerage firm. These scammers use a high-pressure sales tactic on their unsuspecting targets.
How Do These Scams Work?
1. Other than coming across a scammer on social media and online advertisements, a trader might get an unexpected call. During the phone conversation, a trader is informed of a high-returns, secure investment that awaits him/her
2. The scammers then lead the trader to a professional looking website. The reason the broker guides you to their website is to look legitimate. Usually, the type of website a trader is guided to has both a personalized account details section and a trading platform
3. After an unsuspecting trader invests money in his/her account, they are expected to predict the price movement of the available financial instruments. Typically, the trader is asked whether the price will go up or down at short intervals.
4. If a trader is lucky enough with the prediction they make, a small sum is credited to their account. If they misread the price movement and provide a wrong prediction, they lose the entire amount they placed. And since rouge brokers stack the odds against the player, the amount invested gradually reduces to zero.
5. Additionally, If a trader attempts to withdraw their investment from the platform, they find it impossible, this leads to the entire loss of investment.
6. A rogue binary options broker will ask a trader for personal information to either transfer funds or for anti-money laundering purposes. By providing this information, the trader opens him/her self to identity theft as these traders use this information to access other services or on fraudulent activities.
The best way traders can protect themselves from binary options brokers out to defraud them is ensuring that they only transact with traders that are licensed. The license a binary options broker provides on their website should be verifiable.