Binary options scams come in many forms. The most common one is using fake websites or blacklisting a website that has been identified as an imposter website. This fraud can be difficult to identify as scammers often provide a phone number on the website and ask you to call them should you have any doubts about the authenticity of their site. Binary options are very easy for scammers because they offer some sort of payout that other online trading channels cannot offer, e.g., stock markets are not profitable for scammers because there is no payout in the case that a trader wins a trade. Mainly binary options, a form of online trading that has self-regulatory bodies in various countries, is heaven for scammers and hackers because it lacks a reliable form of fraud protection. Binary Options are popular because they are a form of fast-track trading.
The simplicity of the Binary option makes it easier for traders to make the most out of the options available. However, this lack of fraud protection leaves them vulnerable to hackers and scammers who are eagerly waiting for any opportunity to pounce on their victims. So how do you know if an offer is legit? There are ways that you can determine whether or not an offer is legitimate before you commit to anything. Binary options continue to be a highly-debated subject among retail traders. Even though some might argue that some brokers focusing on these assets have a long track record in providing reliable services, in reality, the whole binary options industry favors the appearance of scammers. Letting aside the fact that trading these instruments comes with a high risk of loss, there are plenty of other reasons that this is a “heaven for scammers,” and in this article, we would like to have more focus on the matter.
Binary Options Favor The “House.”
A binary option is a choice of two outcomes: either a fixed price or nothing. The logic of the binary option is that you bet on the price of an underlying asset to go up or down. In other words, when you put your money into a binary option, you are betting that the asset you chose will not rise above a certain point in time or else it will drop below a certain point in time. Binary options favor the “house” because they are based on odds that are always in favor of the house (the bookmaker). The odds are determined by a fixed payout and return amount. The binary options game appears to be weighed against its players. The fixed payouts and returns for a particular bet make it so that the house has the edge over the player. If we think about how binary options work, the trader is always on the weaker side. Most binary options brokers offer around an 80% payout rate, and that has many implications on the probability of generating returns in the long run.
To be more specific, let’s say to buy a binary option with $10 and assume the price will be above the strike price at the expiration (call option). If you are right, then you will make $8 in profit. However, if you are wrong, you will lose all $10, which puts you in a position to have a high win rate over any given period to be a profitable trader. If we combine this disadvantage with the ability to manipulate prices on the platform (this will be discussed in one of the following sections), traders are faced with guaranteed losses rather than profits when dealing with a binary options scam broker. A lot has changed in terms of regulation for these companies, and because of that, now we have most of them operating offshore. Binary Options are comparatively a newer form of investment in the market. Though Binary options are said to be a form of gambling or a coin toss, it is actually not that simple. Since Binary Options are a relatively new form of investment in the market and don’t have any regulations on them, hence there are certain factors that favor the house.
- The binary option’s payout percentage is between 60-and 70%.
- The first trade in binary options has an edge of around 65%
- The initial bet size favors the investor.
- Investors who trade less than five times and invest less than $5 on each trade have the edge over other investors who make more trades and invest higher amounts.
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Binary Options Brokers Generally Operate Offshore
The operation of a binary options broker and the regulations that govern their operations can vary from country to country. In general, Binary options brokers generally operate offshore to protect themselves from unexpected government restrictions on the industry. Binary options trading is a type of investment that offers two possible outcomes. The broker offers an “up” or a “down” option that the trader can choose from. In a nutshell, the binary options trader has to make the right prediction in order to win the trade. If they guess correctly, they get their investment plus some extra money. If they are wrong, they lose all of their invested funds. The main reason why Binary options brokers generally operate offshore is that this particular type of trading is illegal in some countries like the US and Australia due to its high risk and low chances of winning as well as its lack of regulation.
In 2018, European regulators made a historic decision to reshape the regulation for online retail trading. As a result, there are tighter restrictions for traders with little experience, and at the same time, binary options are prohibited for retail traders. This had been a major hit for brokers, which are now operating offshore. This creates an even bigger problem, considering they can now operate free from any regulatory requirements and even target customers based in areas where binary options trading is no longer allowed. As with any other broker type, operating via an offshore entity should be a major warning flag, signaling a binary options scam or a Bitcoin fraud. There’s a long list of scams related to binary options, and more than 90% of them were operating via offshore companies. As a result, traders that still want to trade these instruments, despite acknowledging the high risk associated, should avoid these entities and instead look for brands that have a long track record in providing reliable services.
It is very important to understand why Binary options brokers generally operate offshore. The reason is that the location of the broker determines how regulated they are, and this is a big factor for most traders when choosing where to trade. The offshore binary options brokers are not subject to any particular regulations, and so it is very difficult for traders to avoid rogue traders. Those located onshore are more likely to abide by the national regulatory framework, which makes them more appealing.
Marketing Exaggerates Returns
Binary Options are a type of speculative trading where the payoff is either an all-or-nothing sum or nothing at all. The value of each trade is fixed before it’s placed, and the trader guesses whether the price it will reach by a specific time. Binary Options are not regulated because they fall under the category of gambling. The research found that 81% of binary options websites have exaggerated marketing claims and deceptive practices with the interests group in mind. A recent report has found that Binary Options websites have been manipulating their customers to invest in false promises and misleading information on “Heaven for Scammers” due to Marketing exaggerated returns. The Monetary Authority of Singapore has issued a warning to the public about the risks of investing in binary options trading. The Authority is concerned that such investments may not be suitable for retail investors who are not familiar with the risks of an investment in financial markets. They say that a typical scammer will offer exaggerated returns to get people to commit money and then disappear.
If you are going to sign up for these types of online trading channels, you should do your research first and always remember: “if it sounds too good to be true, it probably is.” In the past few years, we have seen a radical increase in the marketing of binary options, which has led to scams and fraud. The hype around these products is not warranted by reality. The ease of access for binary options trading has made it much more difficult for investors to get reliable information about risk management, trading strategies, or any other aspect related to this activity. Like most fraudulent companies, a binary options scam will use aggressive social media advertising to reach inexperienced people and promise exaggerated returns. This is a typical practice and works many times because financial strains are pushing some to take drastic measures and embark on avenues that could generate returns fast. Unfortunately, a binary options broker can’t ensure or talk about the level of profitability you’ll be having. That will depend on the market’s performance, your expertise in the world of trading, as well as the effectiveness of your trading strategy. The broker is a simple intermediary that creates a link between you and the market via trading software.
When dealing with a binary options broker promising you will make a lot of money, the best thing to do is walk away as fast as possible. It can be a company operating not on behalf of customers but one that wants to set up a trading or Bitcoin scam.
Is There Accurate Pricing On The Binary Options Platforms?
Another important aspect to consider has to do with how the prices displayed on the platform are calculated. A binary options scam can be easily spotted by simply reading its terms & conditions. These companies are using a method that implies averaging the pricing from multiple liquidity providers. As a result, the prices you see on the platform are not the actual market valuations but averages calculated by the broker.
Considering binary options trading is generally short-term, and even a pip can make the difference between profit and loss, it would be important to have the most accurate pricing. A Bitcoin fraud will hide behind this price adjustment technique that generally results in massive losses for clients in the long run.
Many Binary Options Brokers Turned Out To Be Scams
After taking an in-depth look online, we’ve noticed that there are plenty of blacklists with binary options scams. Only a few companies are still labeled as not scams, which means that most were eventually flagged as “not to be trusted.” For someone looking now for a binary options broker, this fact should be raising doubts, even about those companies that are still out there providing their services.
Keep in mind that most binary options brokers have affiliated programs, and some positive online reviews may be coming from individuals that are affiliates and are generating income based on each new customer they bring in. As a result, even reviews should be taken with a grain of salt. The ultimate goal should be to avoid being trapped in a binary options scam and any Bitcoin fraud. By considering all the relevant data we’ve highlighted today, we think that’s possible.
Get Your Money Back From a Binary Options Scam!
We can conclude that binary options trading comes with high risks, and the whole industry is designed in such a way that scammers can thrive. If you want to trade these instruments, despite all the downsides, it would be important to do in-depth research and find out a company that has been operating for a long time and gets reliable positive feedback from customers. So many binary options scams have been uncovered during the past few years, and this should raise serious questions about the interests of these brands. Finding the best binary options broker is a very complex process and will require you not to make any concessions.
