- What is Binary Option and how to trade them?
- How to avoid falling into a trap?
- What to do in case you got scammed?
- Conclusions on Binary Option Scams
We are here to address the common inquiries traders may have regarding binary options scams, as surge in fraudulent activities that entice individuals with promises of extraordinary profits through elaborate schemes and Binary Options in particular. These scams have become increasingly prevalent and target a wide range of people by presenting seemingly advanced solutions.
- To protect yourself from binary options scams, it's important to be aware of the likelihood of falling victim to these deceptive tactics. By staying informed and learning how to spot fake offerings, you can safeguard your funds and personal information.
Introduction to Binary Trading
Binary options are financial instruments that involve trading with a fixed amount of money and a specified timeframe. In fact, Binary Options are Banned completely by most regulators worldwide and are not available via Regulated Brokers.
So how Binary Option work? The Investors can purchase a stock or other investment, or make a bet on the price of an underlying asset reaching a certain level by a specific expiration date. {Read our review article about Binary Options Trading Brokers)
- The potential loss or gain is limited to the difference between the market price and the option price. In binary options, the timeframe is much shorter, and it essentially becomes a short-term bet on the direction of the asset. If the trader's prediction is correct, they receive a predetermined amount of money from the counterparty. However, if their prediction is incorrect, they lose the entire investment.
Yet, due to the appeal of binary options as a financial investment opportunity, the industry has faced scrutiny regarding its reliability and legitimacy. Its popularity is driven by the accessibility it offers to anyone seeking investment opportunities and the promise of high returns in a short period of time. However, it is important to closely examine the nature of this opportunity.
How do Binary Options scams work?
The binary brokers as a typical mean locate their offices primarily in offshore zones and other jurisdictions that did not imply the strictest regulation to financial investment firms, since worldwide regulation Ban this trading instrument due to high risks and lack of transparency. Therefore, the Binary company will enable its operation with a very low requirement and capital while as a general rule will claim its presence in prestigious jurisdictions alike the UK, Hong Kong, the US, or another European country. The phone number may appear to be a local line, but eventually to have the end user in the options trading hub somewhere in the world.
Therefore, binary scams are geared towards investors and promote fake binary trading software through easy for unscrupulous providers to take the advance.
Here are typical scenarios How Binary Option Fraud operates and target traders:
- Most often binary frauds use heavy advertising tactics through social media, websites and emails with a redirection to a very-well developed websites with an allegedly professional offering and a very attractive opportunity for gains available to everyone.
- Majority of binary options scams lure traders with a very small initial deposit and “free bonuses”, and most often it is enough to get interested. Further on an options broker will ask for credit card information and eventually, that’s where the positive side finishes. Then, the trader puts his life savings into “potential investment and gains”, but faces the loss of everything. The attempts to get money back turn out to be unsuccessful with further stress from understanding what happened.
- The main trap in binary options trading is that firms may easily manipulate software and distort prices which will lead to a sudden loss of the trading account and balance.
- Furthermore, scam brokers may use credit information to withdraw funds from the cards, therefore you should be extremely cautious about giving the credit details. (Read about Forex Trading Scams)
- As the nature of Binary Options trading allows company providers to operate the “business” easily as well as to enjoy high incomes in their pockets, the industry shows its growing tendency constantly.
- However, the situation has now changed due to better regulations and observances that keep track of scams so is always good to refer to Top-Tier regulatory websites like FCA. Securities and markets regulators across international jurisdictions received thousands of complaints as the binary options providers target investors aggressively, yet, the truth of victims is far beyond the received number of complaints.
- While Binary Option is often categorized as a sort of gambling by the authorities the binary options broker may be a registered firm in a particular or offshore place, yet the firm is not allowed to sell its offering to residents of other jurisdictions. (Read Why to Avoid Brokers from Belize)
- The authorities and international trading industry regulators regularly check on the trends and actions performed or offered by various brokers with the purpose to protect clients and maintain a trustable or smooth market operation. In regards to binary options trading sites, the most trusted regulators issued an Investor Alert, with advice not to involve in binary trading at all, and even banned binary options to retail traders. The agencies mention that numerous complaints received and relatively easy ways to manipulate software or to generate losing trades during the binary options trading delivery involve a significant risk to be involved in fraudulent activity. The authorities then identified thefts through a fixed-odds betting nature of the binary options trading and try to educate the population and warn about fraudulent promotional schemes.
Check on the UK FCA warning against Binary Options Scams: https://www.fca.org.uk/scamsmart/binary-options-scams
How to protect yourself?
Even though world authorities restrict Regulated Brokers from offering Binary Options, yet, the regulators are not able to power each and every offering or specific jurisdiction where most of the scammers are based. In many instances, you should protect yourself and be aware of an interaction, that takes place with the purpose to take your money.
- There is no guarantee on a statement made on the broker's website, thus do not believe in every statement, specifically about its registration status, but carefully check through official regulatory sources. Scams often present themselves as a reputable firm with professional data, allured attractive possibilities of high gains, and fast outcomes. Yet, often it's all faked, always remember because information looks official, it does not mean it is.
- Be cautious of unsolicited phone calls, emails, or messages from individuals or companies promoting binary options trading. Legitimate brokers typically do not engage in aggressive marketing tactics.
- Seek advice from independent financial professionals or trusted individuals who have experience in trading and investments. They can provide objective insights and help you navigate the complexities of binary options trading.
- Always verify the broker’s registers before dealing with them and check on the reputation, as well as read Forex Brokers reviews. Probably, if the firm is not authorized it is a high risk to be a scam. You can always check Warning lists issued by the industry authorities and of course, you should consider strongly any issues, as well as review the List of Brokers to Avoid.
If you got scammed by Binary Broker
In case you fall victim to Binary Option scams, at first you should immediately recall the credit card and try to withdraw funds from an account. Because scams are likely located overseas, there is almost no way to get any money back or to receive any sort of support.
The typical traders' complaints included refusal to credit accounts or return funds and in fact, are not able to be supported further, as simply the company is not regulated or compensated by anyone. However, you should report a scam to specified authorities and better to access a specialist to advise on your following steps. The Regulators like UK’s FCA, Australian ASIC, Cyprus CySEC, and others provide an open and well-guided complaint procedure, therefore you should contact authorities immediately in case there are any concerns.
- Australian Broker to ASIC: www.asic.gov.au/about-asic/contact-us/complaints-about-companies-organisations-or-people/
- Cyprus Broker to CySEC: www.cysec.gov.cy/en-GB/complaints/how-to-complain/
- UK Broker to FCA: help.financial-ombudsman.org.uk
However, If you invested with a non-regulated entity there is no investment protection applied, as well as there, is no established compensation, unlike the Regulated Forex Brokers status provides.
Conclusion on Binary Options Trading Scams
The sad truth is that scams in the binary options trading market are something that dominates among the offering. While the broker may provide robotic software or act as a broker, the trader should always keep caution against scams.
Overall, it is a very high risk, noting facts and issues happened to thousands of investors around the world, to engage in Binary Options trading.
We can not recommend trading with binary options brokers due to the revealed facts and numerous warnings issued by trusted authorities around the world. We value a transparent operation and investment service, therefore both reliable and trusted brokers will be always regulated and authorities in terms of their offering and performance. On the contrary, we offer to check out a list of Regulated Brokers and a description of their investment proposal, which is available by the link.
