Scams and frauds are nothing new to the financial world. For decades, and even centuries, there have been nefarious individuals who have been trying to get people to part with their money, providing nothing in return.
For a while, many people believed binary options trading itself to be a scam. However, over time and due to legitimate brokers and practices, this soon became a trusted way of making money. Financial authorities even began regulating the industry, ensuring that the best brokers received licenses from reputed agencies.
Despite this air of legitimacy surrounding binary options trading, there are still individuals who are inventing scams based off of this form of trading. Here is everything that you need to know regarding binary options trading fraud:
What Do The Scams Consist Of?
Of course each fraud has its own method for eliciting money from traders. There is one technique that is more common than others and it is frighteningly simple. Here, one or more people set up a website that claims to have a foolproof way of placing trades. They promise incredible returns and profits.
They often have some convoluted way of describing their strategy and platform and how it is much better than the others that are typically used. A hallmark feature is that many of these sites exaggerate just how much money you will be able to make by investing a small amount.
These profits tend to range anywhere from $5000 – $10,000. The site creators will also reiterate that this can be done within a short period of time – perhaps a couple of weeks or a month.
The website will require you to sign up for an account and then to place a minimum deposit to begin trading. The minimum amount money requested is often about $250 but it can vary and can even go up to about $500. Another popular lure is to claim that the more money that you trade with, the more you can make back. What happens here, however, is that this money will be ‘lost’ on a trade and your account will be drained.
Often, you will find those associated with the site contacting you in one way or another, trying to get you part with even more money.
Sometimes, these frauds may promote themselves as brokers. Others may state that they use an automated systems of sorts. While the concept may differ, the results do not. These scams end up taking all of the money you have placed in your ‘account’.
How to Avoid Binary Options Scams
The only real way to make sure that you do not fall prey to this type of fraud is to only go with brokers that are licensed. These are binary options brokers that have received licenses from the proper governmental authorities. This means that they are regulated and have been properly vetted.
There are many sites that may claim to be licensed. However, you should procure the license number – this should be present on the website – and check it with the corresponding financial agency. By doing so, you give yourself the best possible chance of avoiding a scam or fraud.
If you are still tempted to go with an unlicensed broker, the next line of defense is research. Read reviews, take a look at the complaints filed, and in general, find as much as possible about the broker. This, too, will protect you to a certain degree.
These are the most important things that you need to know about binary options trading scams. Hopefully, you will now be able to avoid them.