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binary options scams?

Are binary options scams?

During one of my regular visits to financial trading chat rooms, I happened to stumble across a statement which was challenging the legality and tenability of binary options. I was taken aback by the ensuing discussion where some participants (who were obviously knew naught about the subject matter) were quick to rubbish binary options trading as a scam. To that effect, we have compiled a detailed article examining the legality of binary options and how you can avoid the purported “scams”.

So, tell me, are binary options scams?

Binary options trading is not a scam, even by a long shot. Traders have a habit of shifting the blame to the entire industry just because they traded and lost their investment. Binary options trading, like any other form of trading, has a learning curve which if ignored can affect your bottom-line. However, there is an iota of truth in the statement; there exists a creek of unethical brokers whose main intention is to steal from unknowing traders.

Legality of binary options

The answer to “are binary options legal?” may vary from one trader to another. Binary options may be legal in one country but illegal in another country. Some countries may allow binary options trading in its whole entirety but some countries may limit how much you can trade and how long a trading position can last. Therefore, it’s always upon the trader to do due diligence as far as legislation on binary options is considered. As a case study, let’s examine the legality of binary options in the US.

Binary options trading is legal (in all aspects) in the USA. There exists no law barring US citizens from trading binary options either physically or online. The binary options trading space is supervised by the U.S Securities and Exchange Commission (SEC) and the   U.S. Commodity Futures Trading Commission. For a binary options broker to offer binary options legally to Americans, they have to fulfill a number of conditions; some of which have proved to be strenuous to offshore brokers. Some are plainly unattainable. The banc de binary court case is a perfect example.The broker was fined $7.1m for offering binary options to U.S. citizenry without the necessary trading license. As things stand today, there is no offshore broker in a capacity to offer binary options trading to a U.S. audience in a legal capacity. However, U.S. traders can trade binary options legal with Nadex (The only licensed broker in U.S.).

It is safe to say that binary options are not scams since there is no way a legitimate government (like the United States) can recognize binary options as legitimate financial securities if they were scams.

However, it does not necessarily translate that the binary options community is clear of scams. As mentioned earlier, there are a number of scam brokers in existence today and signing up with them is tantamount to financial suicide. The scam brokers have evolved their “scamming” tactics and it’s not that easy to identify a scam broker from the first glance. Choosing a broker is not a split-second decision, take your time.

 

Techniques used by binary options scam brokers

  • Binary options bonuses

 

Although bonuses are a common occurrence in the binary options world, they can also have a couple of their downsides; especially if you are using a questionable broker. Scam brokers have a tendency of giving you a bonus (which you didn’t agree to in the first place) right after you submit a withdrawal request. As you well know, bonuses are usually tied to trading volume requirements hence making withdrawals difficult after the “forceful” bonus. In some cases, scam brokers offer bonuses on each win making withdrawals impossible altogether

  • Rigged trading system

Have you ever experienced a trading platform freeze just before a trade expires? Well, if that’s the case, you may have been a scam victim. With a rigged trading platform, you will never see it coming; your winning rate will always be below 10%.Platform freezes are the chief characteristic of a scam broker’s modus operandi. Additionally, some scam brokers have a tendency of giving bad quotes and hence you will find yourself making bad decisions every time. Additionally, a scam broker may modify the algorithm of the trading platform decreasing your chances of making a correct prediction.

  • Credit card fraud

has you ever used your credit card online and suddenly money started disappearing mysteriously? Well, in my case, I have been a victim several times and it was such an inconvenience. Some scam brokers have assimilated credit fraud in their day to day activities. It is not a surprise for a broker to overcharge a deposit or make an unsanctioned deposit altogether. However, if you find some money missing from your account, don’t hesitate to request a chargeback from the bank.

  • Expiry duration manipulation

One second in trading can make a huge difference and in most cases, it can determine if a trade will end in the money or out of the money. Scam brokers have a habit of manipulating expiry durations in a bid to influence the outcome of a trade. For instance, if a trade is going as initially predicted, a scam broker may add a few seconds or minutes and with a volatile market, those few seconds are enough for the tides to change against you. Also, in case the market is moving against your initial prediction, a broker can cut short the trading session by a few seconds to keep the outcome that way.

  • Rogue account managers

in some cases, VIP traders are given preferential treatment including 24/7 access to an account manager. Scam brokers may exploit this feature by assigning a rogue manager to your trading account. The “account manager” can persuade you to place multiple trades in a losing position, double up on a losing trading position or encourage you to use wrong strategies. In my own opinion, I don’t think assistant managers do any good. Furthermore, they are working for the company’s bottom-line. I fail to understand how an employee of a company can help you line your pockets at the expense of his/her employer. It does not make any sense.

  • The bureaucratic withdrawals

Complicating withdrawal process is also a technique used by scam brokers to buy time. Usually, it takes them a week or more to accept a withdrawal request. It does not stop there. At one time, they can ask for documents which are not necessary for the Know Your Customer (KYC) policies. The withdrawal usually fails after some time or even if it goes through successfully, they remit less than the withdrawn amount.

How to avoid binary options scams

  • Know your broker

There’s more to choosing a broker than the size of the welcome bonus. Most traders don’t make an effort of knowing their broker only to regret it later. Considering the weight that the decision carries, it is imperative to take your time and read the terms and conditions, as well as reading online reviews from reputable sources (you can use our broker’s reviews).Also, if it is possible, you can use demo trading to test the trading platform. Unless you choose a good broker from the get-go, there is a huge chance that your trading career will be over before it even starts.

  • Check your credit card statements regularly

Credit card fraud can be tamed but you will need to keep in touch with your banker or better yet, check your transactions online. If you notice a red flag such as an overcharge or unsanctioned withdrawal, request for a chargeback. Also, if you have a feeling that a broker is not transparent enough, it is advisable to avoid using wire transfer as a deposit method since you can’t request a chargeback on wire transfers.

  • Use regulated brokers only

In most cases, scam brokers are not regulated and that’s how they are able to propagate their unethical practices. Therefore, it is important to check the regulation status of a broker before committing financially. However, it is worth noting that some brokers use misleading information on their websites where for instance, they claim to be regulated by a certain body. But in a real sense, they are not regulated but the information is just but a tool to nab more traders. Having said that, you can contact the underlined regulatory body and send an inquiry seeking to confirm that the broker in question is actually regulated. If the regulatory body denies having offered a license to the broker, well, it goes without saying that you can’t use that broker.

  • A big no to assistant managers!

As mentioned above, scam brokers have a habit of assigning you to an account manager. Unknown to you, the account manager is just there to confirm that your trading account is drained dry. Instead of leaving your trading account to an account manager with questionable financial knowledge, you can learn the ropes regardless of the amount of time it will take. So, next time a broker offers you an assistant manager, reply with a big no and tell them to take it to the bank.

  • Avoid unverified trading bots and signals providers

Automated trading has numerous upsides but unfortunately, use of a trading bot can cut into your profit margins. It always boils down to the success rate of a trading system but scam developers scam pad their feedback to paint an illusion that the system has a high success rate. It is advisable to avoid using “untested” trading bots just because the developer says it has a high success rate. Here at binary365.com we always test trading bots in live trading and hence you are assured of an unbiased success rate rating.

Conclusion about binary options scams

Binary options are not scams and you can make a decent living if you trade wisely. However, scam brokers have infested the binary options community and they have adopted crafty techniques to con innocent traders. It is always upon the trader to research about a broker before making the most important decision at the start of a trading career. That’s why we always advise our readers to use our trusted broker’s list (which is coming soon) to avoid registering with scam artists.

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