Binary Option Scams
And how to Avoid them
This is an unfortunate situation as it has tainted the image of Binary Options in it’s entirety. Despite the many bad actors on the market, there are good opportunities to connect with honest brokers who treat their clients with the respect that they deserve.
However, finding these particular brokers can be challenging. It is for this reason that we have developed a short guide to spotting the bad actors, identifying their schemes and finding the ideal broker to trade with on an ongoing basis.
Typical Binary Option Scams
When it comes to scams in the Binary Options industry, the saying “if it’s too good to be true” rings true. If you come across a broker or signal provider or any binary options agent online that is promising outlandish returns with very little risk, then your alarm bells should be ringing. Although trading Binary Options can yield a trader success in the long term, it requires analysis and dedication.
One of the binary option scams that we have witnessed is managed account providers who collude with a particular broker. They tell a client that they can Manage their account and earn massive returns for the client. They present a number of fake testimonials along with supposed trading records. Once the client invests an initial trial amount, the provider appears to do rather well. This of course is all inflated as the broker and the provider are working together. The client then invests more money with the broker and once this occurs (and usually just prior to been able to withdraw funds) the provider loses all the money of the client.
Beware the Bonus
Another dangerous “sweetener” that is offered by the broker is a signing bonus. These bonuses often appear to be a generous but come with numerous caveats, which are often impossible to overcome. These include trading the entire bonus amount over a particular limit. We have heard stories from some of our members where they would have to trade up to 13 times their bonus amount in order to withdraw this funds. By this time, the client has either lost all hope or lost all their money. Although these bonuses are opt-in we have also heard stories from members who were given the bonus despite opting-out. This moves from being a mere contractual snag to a straightforward Binary Options Scam.
Withdrawal and Platform Issues
The most unfortunate situations we here of are brokers who refuse to pay out a client’s winnings. These happen far too often for us to recall. After the client has made considerable returns on their trades, the broker changes tunes. Either the broker demands arduous requirements such as numerous forms of ID, or he merely just cannot be reached. We have heard stories from some of our members of brokers who have merely gone AWOL and refuse to talk with their clients.
We have also heard some stories from our members of brokers who have rigged platforms. These platforms appear to just send the clients trade out of the money the moment before expiry. These members took a look at the mispricing and mis-quoting of the currency pairs from the live market quotes.
How to Spot Binary Option Scams
There are a number of tell tale scam signs that one can look for when with both a broker and a Managed Account provider. First among these is a lack of important company information on their homepage. Brokers who operate in the shadows and merely want to grab your money will try to provide as little concrete company level information. It is important to look for key information such as regulatory oversight and legal terms and conditions.
When it comes to client testimonials, none are as impartial as those you can find on other sites. If a broker or managed account provider has a number of glowing testimonials on their own website, this may defeat the purpose. Although I know that there are honest brokers who provide their client’s feedback on their site, these will hold way less weight than if they were on a third party site or forum. If a broker or managed account service is truly as impressive as it claims to be, you are certain to find the same reviews by dedicated clients in other places.
No Service Speaks Volumes
Brokers who are also unresponsive to initial questions and inquiries should be greeted with a degree of scepticism. If a broker is unresponsive to your questions before the initial investment, you can be guaranteed that they will be less responsive the moment that they have your money.
Broker track record is usually also very important. A number of brokers that have had negative reviews in the past and have built up a bad reputation try to re-brand themselves and attempt the same tactics with a bunch of new clients. That is why taking a look at the history of the broker and the website itself is important. A handy tool to do that is something called the Wayback Machine. What this allows you to do is to take a look at a snapshot of the website a number of years back and verify how long the broker has been in the game and whether they have done any re-branding.
Finding the Right Service
Despite some of the bad actors who embark on Binary Option scams, reputable brokers and effective managed account services are present. It is very important however, to know what to look for and how to find the right service for you. One of the most important methods is to do further online searches for the service you are considering. Other Binary Option traders are a great resource for you to tap as it allows you to hear from individuals who know firsthand about the service you are considering.
The Binary Trading Club is a great resource to start. Given that the club is a member based community, fellow traders can share information about the industry comfortably. This includes information on the most effective managed options trading accounts to the best broker reviews. Membership in the club is spread among a number of traders with all skill levels and experience levels.
Speak to Your Broker
Once you have an idea of the type of service that you want or the broker who you may like to use, it would be a good idea to reach out to the broker and ask him all of the important questions with regards to their service. These include inquiring about segregated accounts, regulatory oversight, trading terms, bonus conditions, payout times and account types among others. Depending on how responsive the broker is to your questions, you can get an idea of the honesty of the broker and the customer service that you can expect. Then, when it comes to investing your money, make certain to read all the terms and condition attached to the Bonus before you accept it. If your conversation with the broker was honest enough, then you will know this from the beginning.
In order to find the right Managed Account service, you need to know exactly what you are looking for. You have to set yourself individual risk limits together with acceptable trading strategies. This means that when you have a discussion with a provider, you are able to ask the right questions and make clear your requirements. This will make certain that and managed account provider does not play hard and fast with your funds and make irresponsible trades. It may also help to ask the provider some technical information with respect to their trading strategy. This allows you to vett whether the provider knows exactly what they are talking about.
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