Binary Options Scams

It’s been several years since binary options trading  and binary options robots became an Internet fad and for a moment, everyone was interested in getting into the venture. It was seen as the new avenue of making it big in the world of financial trading. The opportunities were countless, the possibilities infinite with multiple binary options brokers and automated trading systems. For all of 15 minutes, Wall Street and basically any other business venture was under threat, people were making money from binary options and making no secret of it. Suddenly, everyone was looking into ways of getting into the venture, with high hopes of getting rid of the embarrassing middle class tag and maybe, just maybe, hit the ‘big one’. However, recent occurrences (massive complaints, reports of fraudulent activities etc etc) have changed the collective perception of the populace towards a venture they considered The Common Man’s Wall Street.

I mean, all you needed to get into binary options was an Internet connection and a deposit of (mostly) $250, nothing more. There is basically little to no paperwork involved and certainly no waiting periods, except when withdrawing using wire transfer, unlike in stock trading where the legal and capital requirements are a bit overwhelming.

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Where everyone thought opportunities were endless, they found a sickening number of scams and cons skilled in the art of deception and thereafter, disappearance. Of course, in every aspect of human existence, it has always been survival for the fittest, as good ol’ Darwin put it. There are always some people who use their brains, or in most cases, lack thereof, to take advantage of others. Financial trading is no different and conmen exist even in the inner sanctums of Wall Street. Unfortunately, in binary options, the scams are more than the real ones, making it hard to differentiate between the two. For most people, that is. The reason for this is that human beings, have always been, are, and will always be greedy, especially where money and/or wealth is concerned. The tricksters know that very well and craft strategies to capitalize on people’s greed for money and are almost always successful. That warrants debate on whether binary options is really profitable or a game of luck, and false hopes just like gambling.

Is binary options a viable investment option?

Many people who are involved in binary options trading will tell you that the reason they chose to get involved in the first place was that, compared to gambling, binary options looked more legit and viable in the long run. And that is true to a large extent. But the question of profitability has never really been addressed. As it stands, if you visit any binary options online community, you will be shocked by the large number of complaints (most of which are laced with profanities) from traders who lost money in unclear circumstances. These are often against certain brokers and auto traders, some of which have closed down after overwhelming online outrage.

That aside, binary options is a viable investment option, just like stock trading is. If you look hard enough, you will find quite a number of traders who have achieved great success in trading binary options, a good example being our team here. However, unlike stock trading, and pretty much like gambling, it takes good strategy, consistency and patience to succeed in binary options. And not only that, choosing the right broker and/or auto trader, if auto trading is your thing, has a lot of bearing on your success, or lack thereof.

Be careful for the scams

Be careful for the scams

Causes of losses in binary options

Now, to the issue of traders losing their money, brokers are always the first people to receive the blame, and in more times than not, they are the guilty party. Nonetheless, while we admit that the presence of scams in the market is to blame for most of the (suspicious) losses made by traders, it is imperative to note that there could be a bunch of other things that could lead to one losing their investment. These include:

Lack of experience – Quite frankly, most of the complaints we’ve seen are from new traders. These traders don’t know much about financial markets and probably got into binary options because they read/heard that the profits are huge. When getting into the trade, most people don’t care about doing comprehensive background research on the best brokers and trading strategies to use to ensure not only one-off success, but consistent results. Such traders are so blinded by the huge amounts of money they hope to make, or were ‘guaranteed’ by some deceptive broker that they can’t see anything else. One of them being the need for dire preparation and knowledge about how financial markets behave and why they do so. In addition to that, money management skills are very crucial to ensure the investment per trade is proportional to the possible losses and expected profits.

You don’t want to put in $150 on a trade with a 65% payout while the risk of losing the whole amount is higher. Also, lack of experience affects how effectively one uses the (usually) provided analysis tools like technical graphs, indicators and charts to know which option(s) to buy. Thus, before pointing fingers at the broker or your auto trader for your losses, first ask yourself if your lack of experience is to blame. And five out of ten times, it is to blame.

Poor money management – This is directly connected to the above paragraph but not really the same thing. See, you could be an expert analyst in financial matters and even succeeded as a trader in other instruments but still fail to replicate the same when it comes to binary options. In this case, there is a high chance that your money management skills are poor, which translates to poor money making potential. Binary options, just like gambling, requires a clear and focused mind that can make decisions that are free from emotional responses. For most traders, this is extremely difficult to achieve and they find themselves to have invested a lot in a trade that promised extra high payouts only for it to end up out of the money. Similarly, you may invest a very low amount in a trade that had low payouts that had an In The Money (ITM) finish.

Say you placed the two trades together; the profit you realize from the second trade won’t be enough to make up for the loss you made in the first. Eventually, if the same trend continues, your trading account will contract to levels dangerously close to sub zero, and you might as well be applying for bankruptcy. And of course you will point fingers at your broker, like everyone does.  As a matter of fact, a good trader uses the first deposit (in addition to the bonus) to make money for all his future trades, plus withdrawals. If the only thing you’re doing is making deposits and not withdrawals, we suggest you audit your trading strategies before thinking of blaming, or changing, your broker.

Greed – Admittedly, brokers take part of the blame for this, for “adding wood to the fire” so to speak. See, human beings have an inborn greed for wealth and success that has puzzled scientists up to this day. This greed usually overwhelms logic and common sense which makes it easy for con men to easily get their daily bread, and wine, and pizza. All they have to do is bait their prey by using statements like ‘Sign Up Today to earn $50k per week’ and they are sure to catch some fish. We are not trying to defend the actions of the numerous predators waddling in the binary options pool but rather encouraging you to use your common sense just a little bit more and you’ll never find yourself a victim.

Now that we have established the secondary causes of loss in binary options, it is time to focus on the main culprits – scam sites. These are in both the brokerage and auto trading sector and are pretty advanced in their scheming. As it were, the number of legit brokers can be counted with the fingers in both hands and still leave room to give a stunning middle finger salute to the scams. To better understand the intricacies of these scams, it is important to first understand how they work.

Don't get fooled

Don’t get fooled

The Anatomy of a scam

A lot of people have written to us asking for clues on how to recognize a scam. For us, it is very easy to recognize a scam just by the presentation of their website but unfortunately it is not that easy for majority of the traders. Nonetheless, we will share some of the giveaways that tell you if the site you’re dealing with is a scam. Now, most binary options brokers will advertise themselves as offering low risks, high returns (some even quote unbelievable figures) and most importantly, that you can’t lose more than you should. To an extent, all that is true. The degree to which it is true is very much dependent on the particular broker you are using.

The thing with scam artists is, they aren’t the best creatives we have in the world and all of them read from the same script, with just a few tweaks on the words and figures. This is why it is very unfortunate, to the point of being embarrassing, that there is always a bunch of people falling victim every single time. That binary options remains, for the most part an unregulated venture does not make it any better. If governments all over the world were serious about resolving the issue of their citizens losing money to online fraud, you can be sure there would be no scams. Or at least the number would be minimal. Nonetheless, traders need to have a deep understanding of the financial world in general and binary options as a financial instrument in particular to completely avoid unnecessary losses. If anything else fails, proper education and use of logic always work.

Knowing scams exists helps to avoid those

Knowing scams exists helps to avoid those

How to recognize a scam

Talking about being informed, below are the things that tell you that a particular site is a scam, and will drain your account faster than you can figure out their name:

  1. Identity of owners is ambiguous

If you look closely at the reviews we have compiled over the years, you will note that we always had an issue with the so called site owners having ambiguous, and often fake identities. Some will give stupid names like Allan Trader or Binary Byron in an attempt to hide their real names and effectively eliminate the chances of getting sued. As it stands, most cons who set up fraudulent sites get away with it since tracking them is really hard. For one, you can’t report a nameless person from an undisclosed country. Two, very few countries have laws in place to control online trading which complicates things. Most importantly, many traders don’t know what to do, or where to go when they lose their money in unclear circumstances. Again, the need to have proper education and knowledge on both the economic and legal landscape is very apparent here. Anyways, dealing with a regulated broker will make things a bit easier. Oh, and if the owner’s name sounds funny and/or too unique, run. Just run.

  1. No presence on social media? No thanks

This is pretty obvious, if the broker or auto trader you are thinking of signing up for is not on Facebook or any social platform, do you still need to be told that they’re up to no good? All decent brands are interested in interacting with their customers on social media and if a particular broker is not, it is probably a scam. Bottom line, if they aren’t on Facebook or Twitter, they aren’t for real. End of.

  1. Too good to be true

The wise men weren’t fronting when they said if it sounds too good to be true, best believe that it’s too good to be true. In this case, if the promises that a certain site makes sounds too good, better think twice before clicking on the Sign Up button. Anything along the lines of “100% ITM software giving you $1000 per day” falls perfectly within the too good to be true category. In fact, anyone who gives you a definite figure of how much to expect is too good to be true. In binary options, there are no guarantees, the underlying situations keep changing and a stock that is performing very well today may take a downward spiral in the next two days, due to one reason or another. As such, it is very difficult to predict future earnings and anyone who tries to convince you otherwise is only baiting you. And you will be left crying after they take off with your money.

  1. Unregulated

This one doesn’t need further explanation. When you land at a broker’s site, the first thing you should do is check the bottom of the page for a license. Every licensed broker will display their license number and state the body that licensed them. The Cyprus Securities Exchange Commission, better known as CySEC, is the most credible regulator when it comes to binary options. Any serious broker should have a CySEC license and those who don’t are most likely scams. Never sign up with a broker without a CySEC license no matter how good they look at the surface. This is a condition that you shouldn’t compromise on.

When it comes to auto traders, there are no regulatory authority involved in giving licenses yet. However, the auto trader does have to be regulated since technically, you don’t put up money with the trading system but with the broker. Thus, when looking for an auto trader, be sure to check if the listed brokers are regulated. Generally, an auto trader affiliated with renown and regulated brokers is more likely to be legit than one affiliated with unknown sites.

  1. Bad reviews

We always recommend checking with us before making a decision on which broker to sign up with. This is because it might not be easy for you to read between the lines and tell if what is said in the site is true or not.

Conclusion

Despite everything you might have heard/read, binary options is as legit as the constitution itself. As long as you know how to separate the legit brokers/auto traders from the scams, you will achieve your goals. Above all, do plenty of research and asking around. It actually works.

That said, we would like to deflect your attention from the scams that we’ve been talking about all through to the few legit sites that exist amid the spoilt fish. As far as brokers go, IqOptions and Banc de Binary are arguably the 2 most accomplished and legit brokers in the world. If you search for The Best Binary Options Brokers in the World and you don’t see any, or both of them in the search results, you can be sure that the results are fake. Banc de Binary, for instance, was established in 2010 and has survived every tide to make it to 2016. On auto traders, there are quite a number of legit systems around but we generally recommend Binary Options Robot which has both high accuracy and payouts. Most importantly, all the brokers linked to the robot are regulated by CySEC, which is our standard requirement.

Good luck finding the right broker/auto trader for you.

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Michael Allen

Michael Allen is the main author at www.binaryoptionrobotinfo.com. He holds a PhD in Economics and has worked in investment banking for 24 years.