Are All Brokers a Scam?
It really depends on the specific broker. Here at scam broker we investigate and review Forex and binary option brokers so that you will know which government agency is responsible for regulating them. Although, many binary options brokers are not regulated and behave more like a backyard casino operation, there are brokers who are legitimate financial organizations.
Forex and Binary Option brokers are monitored, licensed and regulated by the likes of the CFTC in the United States, CySEC Cyprus, ASIC Australia, FSB South Africa, CONSOB Italy, CNMV Spain, FCA United Kingdom, BaFin Germany, Finanstilsynet Denmark, AFM Netherlands, CNB in the European Union, and the list goes on and on.
View our comprehensive list of Government Financial Regulators.
78% of traders open an account, and lose money trading. Hey, this is the real world and this is reality. Trading stocks, options and Forex is a risky business, and traders do lose money. So just because a trader did not have good luck, or proper risk management, does not mean his broker is at fault. People reading forums and review websites will see the occasional disgruntled traders complaints and read his rant about the broker who stole his money.
Visit the licensed brokers page to learn more about regulated binary option brokers.
Many traders learn about binary options via trading signal software, which are usually just promises of a quick way to make money in the stock market.
How The Broker Scam Works?
There are three aspects of a binary options scam. One being a broker whose trading platform is rigged to make all traders lose money. This is done with bad quotes, and other algorithm modifications. That kind of scam is not very prevalent due to the nature of the financial markets.
The Binary Option Scam that is more prevalent among rogue brokers is unauthorized credit card charges. A scam broker will charge a traders credit card, to add more money to their trading account, because the scam binary option broker gets paid based on new deposits.
The best precaution a trader can take is to use a credit card, not a debit card, that has the ability to dispute charges in the event of fraud. Traders who authorize direct debit withdrawals from their bank account are playing a very risky game.
The Forex Broker Scam is usually centered around managed accounts. Unregulated scam Forex companies will pitch investors to join a managed account handled by one of their senior analysts, and promise high monthly returns.
Fact is; there are no licensed or legitimate brokers that will manage your account, or promise fixed returns.
A common scam is with brokers that don’t allow you to withdraw your money. There a few reasons why a broker can hold up an investors cash, with the main reason coming from the trader having accepted bonus money, or not reading the terms and conditions. You can read more about this on the complaints page.
Make sure you read about the scam with trading robots.
Why Investors Trade Binary Options?
The risk involved in this trade is known. The trader’s gross profit/loss follows the ‘all or nothing’ principle. The trader can lose all the money invested, or make between 70% and 95% profit. Binary Options are a way to make money by predicting if a stock or commodity or currency will go up or down. It works like this.
Let’s say I think the price of oil will go up. I would buy a binary call option, (this means I think the price is going higher) and I will decide how much I want to wager. I can put down $50 on the binary call option, and if oil goes up then I will get around $85, my initial $50 plus my profit of $35. If I am wrong and oil goes down in price, then I lose my $50.
How fast does it happen? That depends on how long you want, you can say 60 seconds, or you can say by the end of the day. Why would I use a binary options instead of buying the stock itself? Because here I can make over 70% return in 60 seconds and when was the last time you saw a stock go up 70% in one minute!
We Investigate For You!
If you have a question about a Forex CFD broker or a binary options broker, we encourage you to first read the broker reviews. Also search in the Binary Options Forum to see if your question was already asked.
Why go with a scam broker, when you can easily trade with a trusted licensed broker.