This is a question a lot of people ask when researching binary options or trading for the first time. Unfortunately there has been some bad press around options trading over the last 2 years as the binary industry has grown.
Most of the horror stories or scam warnings have come from 2 places:
- Someone experienced a binary broker scam and told people
- Other traders who don’t believe in binary as an instrument
These are very different circumstances and the industry will have to be deal with both to sustain the rapid growth and ultimately achieve real mainstream trading recognition.
It is important to remember that binary options trading is a legitimate instrument recognized and regulated by many world bodies including the CFTC in the United States. Whether or not they are the best instrument for you or how they compare to Forex and stock trading is a different question. In our opinion binary options themselves are legit.
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Types of Binary Options Scams
These scams or in some cases blatant fraud generally fall into one of 3 categories, depending on who tried to con who and what was promised. When talking about a “scam”, it’s important to realize that different people may mean completely opposite things. Some people are looking to take advantage f binary platforms and other people have been conned or cheated by brokers themselves.
The three types of scams we see are:
- Brokers taking advantage of traders
- Systems or bots that claim to “beat binary options”
- People looking for a way to cheat at tradingFind out which brokers you can really trust. See the brokers that passed our certification.
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Popular Binary Broker Scams
Unfortunately there have been cases of brokers lying to traders or even blatant fraud. Although most brokers don’t do this, in such a new industry these trading nightmares have really turned some people off binary as an instrument.
Guaranteed to win
The most common scam we hear about is brokers “guaranteeing” a trader will win. Often traders are told that the broker makes money when the trader wins or as a percentage for facilitating the trade. Firstly, no signal, system or particular trade is every guaranteed to win. Not on the stock market, currencies or anything else we’ve traded over the years. Increasing your chances and mitigating risk are things traders do every day but in trading there is no “sure thing”. Secondly, binary options brokers make money when traders lose – simple. You should never take a guaranteed win from someone who is betting the opposite way to you (risk free trades or money back offers are something else entirely).
As with any industry there have been brokers that simply don’t let you withdraw. They happily took traders money but when it came time to process a withdrawal on a winning trade there were endless stories and hoops to jump through. Thankfully with regulation and more platforms trying to go mainstream, this has mostly disappeared (always do your research on a broker before you trade or choose brokers from safe recommendations or sites).
Person not here
One of the worst scam stories I’ve heard (and verified) was done regularly by an old broker when the industry was even younger. Traders who were hesitant to deposit were given a guarantee that if they lost their deposit would be returned. In other words, keep the profits on a win and money back on a loss. They were told this had been approved by management and if they lost to call back and speak to Mike for the refund. When people lost and called back they were told that Mike had just been fired for giving refunds. Shocking.
Binary Trading Scams
Another type of scam is websites selling systems that are guaranteed to win. People are sold a system or tool that supposedly can’t lose, often based on some secret loophole discovered by some MIT genius. They pay for the system and are the funneled to brokers to make deposits. Obviously once they start trading with the system, they are shocked when it doesn’t deliver. I do believe in the value of tools and there are some great trading tools out there but anything that promises to beat brokers every time won’t get my time or money.
Binary Options Cheat
Lastly we have people actively looking for a way to cheat the markets. You can see it in searches, on forums and we even get questions about it all the time. This is nothing really new and there will always be people expecting to find a quick method for making money that everyone else has missed.
There are websites offering binary options cheat sheets for download and this is something else. Usually this is a checklist or tip sheet for things to check or remember when trading. The idea here is to keep you disciplined and increase profits while mitigating risk. Isn’t that the name of the game?
Binary options are definitely not a scam and are here to stay but there are a lot of con artists out there. So before you trade make sure to do your research about options and find a reputable broker for a safe and hopefully profitable trading career.
What was the worst experience you had with Binary options scams?
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