Are Binary Options Scam?

The question of whether digital options is all one big scam operation or not is one which will attract diverse answers, depending on which stakeholder you direct the question to. Many people on the trading side of the equation will tell you straight away that the entire concept of binary options trading is all one huge fraud that seems to be occurring with impunity while the regulators look the other way. Option brokers will immediately indicate that there is no such thing as a scam in the digital options arena. As independent observers, we will deliver the findings of our review of the market right here on whether binary options are a fraud or not.

Firstly, we want to say that the trade of binary options is not in itself, a fraudulent business. However, a review of the entire situation shows that there are huge systemic lapses that have presented an opportunity for conmen to invade the option market place. Due to the fact that these bad eggs have virtually had their way uninhibited for a long time, many traders have been burnt and this has generally reduced market confidence. So while the binary options market is not a scam, there are scams operating within the binary options trading arena.

Why are there many scam operations in binary options?

The answer is not far-fetched: a failure of regulation. A review shows that in many jurisdictions, there is no regulation of the digital option market whatsoever, due to the classification of binary options trading as a form of gambling. This has allowed any Tom, Dick and Harry with a little money to burn to move to certain countries with relaxed market conditions, and become brokers. It may surprise some to know that with as little as $20,000, an individual can become a broker in certain countries. With no regulators asking the necessary questions or determining who a broker truly is, these “brokers” setup their operations and start collecting money from unsuspecting members of the trading public, luring them with their sweetly worded and beautifully designed web pages. It is only when these fly-by-night brokers eventually have problems paying clients their money, that some of these traders now do what ought to have been done ab initio: ask questions. Majority of scams are perpetrated by these pseudo-brokers.

Another broker-related scam operation playing out now in the binary arena is what we would call the “bonuses scam”. Many brokers now use bonuses to entrap their traders so that these traders would be unable to make withdrawals. Some brokers require traders to generate trade volumes equivalent to 30 – 40 times the bonus amount in order to be able to withdraw their money. How are traders to meet such targets without risking too much money as they try to cover the requirements? If a broker places such stiff requirements with many withdrawal conditions, watch out.

Perhaps the most annoying of all scams is that where brokers cancel the trading accounts of their trading clients and then seize their money for no justifiable reason. A certain trader once filed a complaint in an online forum about a Seychelles-based broker who seized his $1000 after he filed several withdrawal requests, citing something about “duplicated trading activity by an unauthorized third party”. Wow. How low can some people stoop?

The best and time-tested way to trade binary odds in a fraud-free environment is to use a regulated broker. A regulated broker will be required by the regulatory authorities to put certain things in place that will serve to increase confidence and protect the option trading entity’s money from any broker-related issues.

You can trade with confidence because fixed odds are not a scam, but only trade with a regulated entity. Make inquiries. Take time to ask questions. Then you can be on the path to make the best of the financial markets.

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Risk warning: Trading binary options, CFD or other leveraged products carries a high degree of risk. Be aware that you can lose even more than the capital you invested. Only trade with money that you can afford to lose. This site is purely informational and cannot replace getting professional advice before trading for real money.