Binary options are becoming increasingly popular for private investors trading from their PC or mobile device. This has also led to quite a few forms of online scams in the binary options industry, and here are the main ones you should avoid:
Common Binary Options Scams
Auto Trading Software
Automated binary options trading is being widely exploited by scammers in the binary options industry. You will see brokers, individuals and companies selling so-called holy-grail kind of auto-trading robots for binary options trading.
Sometimes they are backed by testimonials, trading history and other such things in order to lure maximum buyers. But sadly, if you do a little research then you will find that in most of the cases such testimonials and trading history statements are fake.
There is no such thing called Holy Grail in binary options trading. Yes, you can minimize your risk and maximize your return by adopting effective strategies but even then your risk exposure is very high.
In case of auto-trading, it can be lucrative when done by legit software, which can reduce the risks associated with trading errors and the lack of expert financial knowledge.
Signal Providers
Just like the forex trading industry, there is an abundance of signal providers in the binary options industry too.
If you already trade binary options then I’m sure you have been receiving tons of spam emails from binary options signal providers already.
The signal providers usually claim high accuracy of their signals and present statistics and trading history to back their claims.
But again, the reality is that many do not live up to their promises. If you’ve gotten a recommendation about a particular signals service, your best bet would be to register and try them for a few weeks, with the lowest possible risk settings.
This way you will know if they provide profitable signals, without risking too much money.
Dishonest Brokers
Based on years of experience as a binary options trader, sadly I am inclined to write that dishonesty and unethical behavior is a common trait of most binary options brokers. Brokers use a number of things which I believe are unethical:
- A good number of binary options brokers do not offer transparent price feed – if you monitor closely, you will find out shady spikes and manipulation in price. It goes without notice by a majority of binary options traders because it’s hard to detect.
- When you are making deposit, you usually get super VIP protocol – fast approval of deposits, a welcome phone call from the sales or support rep of the company, tons of colorful bonuses and things like that.
But sadly, when you request a withdrawal then your request is either kept pending for days or you get an unpleasant phone call from sales rep, asking lots of questions about withdrawal – in fact begging you to cancel your withdrawal and if you decline to cancel the withdrawal, they will usually engage in delay tactics such as asking for additional verification of your name or address.
Not all brokers do that, but it is important to register with a broker you’ve gotten a recommendation for.
How to Avoid Binary Options Scams
Now a big question arises, how to avoid binary options scams? Here are some suggestions from my end;
- Always research the background of the company selling a product or service – google the name of the software or service to see if users are praising or complaining about it.
- In case of a broker, always check that the broker is regulated.
- If you become a victim of scam by any binary options broker then do not give up – make sure that you report the whole situation to the appropriate authorities (the financial regulator such as CySec).
Hopefully you’ll use this guide if you’re looking to use any binary options products or services.