Are All Binary Option Brokers a Scam?
It really depends on the specific broker. Here at scam broker we investigate and review binary option brokers so that you will know which government agency is responsible for regulating them. Although, many binary option brokers are not regulated and behave more like a backyard casino operation, there are binary brokers who are legitimate financial organizations.
Binary option brokers are monitored, licensed and regulated by the likes of the CySEC in Cyprus and the FCA in the United Kingdom, AMF France, CONSOB in Italy, the CFTC in the USA, ASIC Australia, CNMV, AMF, BaFin, Finansinspektionen, Finanstilsynet, PSZÁF, NBS, and CNB in the EU (European Union) and the list goes on and on. View our comprehensive list of Binary Option Regulators.
75% 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 Does A Binary Option Scam Work?
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 third type of scam is when a broker does not allow investors to withdraw their profits. There a few reasons why a broker can hold up an investors cash, with the main reason coming from the trader accepting or have been given bonus money. You can read more about this on the complaints page.
Why People 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!
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