Binary options trading involves different frauds and unethical activities across the board. Regulatory bodies have tried to set minimal standards for binary options broker to adhere to, but still shady practices are used extensively, which costs traders millions of dollars.
With growth in number of traders there is also an increase in number of brokerage platforms. Regulated brokers are believed to offer good services but some of them manage to steal customer’s money. Scam brokers are ruining the reputation of binary option trade market but even media is causing harm with unbalanced and unfair reports. What has happened in the industry is the scam brokers have prospered with aggressive sales techniques.
Binary option scamcomplaints and reports do not indicate that investors need to avoid trading binary options outright. On the other hand, they need to gain awareness of potential issues and avoid them.
Common but costly binary scams
Downplay binary options trading risk
Binary options broker hides binary options trade risks from uninformed customers. They make false assurances about winning significant amount of money from their trades. Even binary options software with catchy phrases and intricate story lines try to convince you that they can make you rich or a millionaire. Auto trading scams are worse because they downplay risks by hiding behind disguise of being an expert. It is all smoke and mirrors.
Suddenly, you get a call from some brokerage company with interesting investment opportunity. You can earn 80% or more from a deposit of a specific amount. The thing to remember is how did the broker get your phone number? Similar, binary option scams occur with emails.
Unlike phone number, email addresses are not shared within public directories. This is called ‘cold calling’, where binary options brokers buy user lists having personal details and contact customers. Sometimes they buy stolen or leaked databases to call customers already registered with different brokers. If you ever receive a phone call from a binary options company and you did not first register…hang up the phone!
Unclear or hidden T&C
Terms and conditions are legal documents, which define each situation that can occur. It is written in simple understandable language without any ambiguous language, which allows broker to twist the word or phrase, accordingly. For example, there are T&Cs saying no withdrawal for a month following last deposit or initial deposit needs to be trades once or a limit of 5 trades in one minute is allowed.
Scammers even copy T&C belonging to another broker. They are so careless that they even don’t change the broker’s name they stole from. Therefore, read the fine print to weed the good ones from bad. It’s all in the details.
Binary options platform provides one on one sessions with personal account manager. You will be convinced in making a huge deposit, if not now, later. The broker will make an attempt to win some trades initially before everything goes wrong. Besides not allowing someone else to manage your trades, it is sensible to be sceptical about trading advice from claimed ‘experts’, who may basically be unaware about trading strategies. Actually, offering customers managed account is clearly unethical, so be sensible and learn to handle your own trades. Be very careful with how much information you hand over to these companies. If they can, they will empty out your bank account without your knowledge – it’s all in the T&Cs.
Trading binary options is a way to trade financial instrument and not a scam in and of itself. However, there are loads of con artists who target new traders. Research takes a little time. Talking to customer service helps to see their way of working. Overly pushy representative means red signal. Well-mannered customer service as well as clear sharing of information indicates, you discovered a responsible binary options platform.