Binary Option Warnings, News And Scandal

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Binary Options News, Warnings, Deals And Scandal

Binary options is interesting if nothing else, read on to find out the latest warnings, news, deals and scandals rocking your favorite brokers.

Binary Options Regulators Sending A Clear Message

Binary options are interesting if nothing else and if the regulators have one message to send it is this; don’t market your unregulated unlicensed products to our citizens. They aren’t saying don’t let them trade, just quit using those aggressive marketing tactics to lure in deposits from people with no business trading. The latest warning comes from the BSBC, one of 13 provincial Canadian regulators, who is targeting Edgedale Finance. The warning, you are not licensed or registered to offer financial products in Canada, where binary options trading is legal, so quit soliciting to our people. Edgedale Finance has since enacted blockades on their website for Canadian citizens, it is also not a recommended broker of BinaryOptions.net.

The BSBC warning may seem like small potatoes in the greater scheme of binary trading but they are not the only ones targeting unregistered binary options brokerages and the aggressive marketing tactics used by some. Belgium has already instituted a ban on marketing binary options in that country although its citizens still have access to EU/CySEC regulated brokers. France actively updates its warning lists and has also begun to turn its focus on the marketing aspect of the industry as it is often seperate from the brokers. Holland may be the next to institute a marketing ban following a Q&A session between the Dutch finance minister and members of parliament.

The Dutch parliament is concerned by the more than 50 complaints received over the past 2 years. Allegations ranging from fraud to aggressive marketing and unlicensed brokerages operating outside the reach of financial recovery. The minister explained how regulated brokerages are operating in Holland using the financial passport provided by the EU and MiFID regulation. He went on to explain how the EU regulators are working to address conformity issues, marketing and other issues plaguing the binary community but also suggested a ban on marketing could be forthcoming.

Binary Options Regulation Scam?

The Financial Commission, Finacom.com, has announced the acceptance of GEB Investments as an “A” level binary options broker. Finacom is a third party resolution service headquartered in Hong Kong whose purpose is to mediate disputes between the clients of its approved brokers and the brokers. Clients of member brokers gain the benefit of the Investor Compensation Fund which insures deposits up to $20,000. The question is, and has been for a few years, is just how valuable is Finacom approval? There are only a small handful of binary options brokers on their list and none of them are high on our list of approved brokers. GEB Investments is a brand operated and regulated in Belize by a parent company headquartered in Cyprus, GEB is not a CySEC regulated brand or a recommended broker at this time.

Scandal Rocks The Binary Options World

Scandal once again rocks the binary options world and it’s no surprise who is at the center of it. Long time black sheep of the regulated community Banc De Binary has backed out of its deal with South Hampton FC. The deal, in which BDB sponsored the football club in return for promotional favors, only lasted 2 weeks and is reported to have been canceled at mutual agreement. Spokesperson for BDB said that the expectations and results were not in line. The news comes as a big shock after a number of years of successful partnerships between top rated teams and popular binary options brands. Techfinancials based 24Option partnered with Juventus in 2020, leading the pack, and has since renewed the contract for additional time.

Ways to Avoid Scam in Binary Options Trading

Binary options are very popular among traders all over the world, and when something is as popular as they are, many scams want to take advantage. It is impossible to prevent scams from entering the market as even the best regulation can’t challenge innovative methods scams and fraudsters are using.

Still, if traders want to trade safely, they can do so by following several easy steps. In this article you will learn:

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What are Binary Options Scams?

Binary options scams are usually companies that claim to be legit brokers or auto trading services but are frauds. Once you deposit the money with such company, you won’t see that money again as it is impossible to make a withdrawal with such brokers.

Scam brokers are considered to be those that practice scam tactics in convincing new clients to make a deposit. Such methods include

  • Cold calling
  • Downplaying the risk
  • Using stolen data

In case you receive a phone call or an email from a broker you never registered with. It is best to ignore it. Don’t let them convince you. Scam binary brokers will always claim how something is an exclusive opportunity, just for you, but it is never true.

Also, the fact that a binary broker is using stolen data and can reach you via private means of communication such as email, only shows how shrewd they can be. Do you really want to provide your credit card detail to a company such as that? Probably not.

Also, keep in mind that sometimes you can find out that a broker is a scam only after you made a deposit. For example, they can insist on offering you managed account where you lose all control of your investments. They can make threats, use psychological games and pressure you into making more and more deposits. The broker should never neglect your opinion or manage your investments.

Another thing that is very suspicious and that can indicate that a broker is a scam is the lack of terms and conditions on the website. Terms and conditions not only helps you understand the service better but also offers you an insight into your obligations and procedural elements. If the broker is hiding something, the first sign of a scam is missing terms and conditions. This document is usually very long and complicated, but don’t hesitate to read it and ask for additional explanations.

Terms and conditions explain all about withdrawal limits, procedure, reveal details on how dormant accounts are handled etc. They are also obligatory, unlike the stuff is written on the website. Keep this in mind. Compare the content of the website with content of terms and conditions and if there are too many differences, avoid that broker for your own good.

You want your money to be safe from the very beginning of the trading process and it is much easier to check broker status without involving with scams in the first place.

How to avoid binary options scams?

Binary options scam brokers tend to be very convincing with their promises. They can make you think how they operate in a magic world of binary unicorns where you will become a millionaire.

The first rule of avoiding binary scams is keeping a cold head. If the broker promises something that sounds too good to be true, it probably isn’t. Be realistic and don’t expect to become a millionaire over course of night, no matter how lucrative binary options might be.

The other important rule is to read news and reviews so you know what is going on in financial markets. Objective 3rd party reviews can help you in avoiding scams, and regulatory bodies often issue warnings on different types of frauds, including binary scams. Of course, keep in mind that sometimes regulatory bodies react to little too late, so look for other suspicious signs as well. Avoiding scam brokers requires some effort.

There is also a solution of trading only with regulated brokers. Regulatory bodies all over the world issue licenses for binary options brokers. Even though sometimes regulated brokers turn out to be scams, mostly because of changes in the ownership structure that might affect the way they operate their business.

Also, you can checklists published by your local regulatory body, but keep in mind that sometimes regulators tend to be slow in detecting scams. They sometimes issue a warning on a broker that is long gone or that has already scammed many customers. The best way to read about scams is to be focused on specialized media that will give you fresh information and introduce you to reliable brokers.

What to Do After Depositing with a Scam?

Ok, let’s imagine the worst-case scenario. Imagine you made a deposit with a scam binary broker. What now?

First, it is important not to deposit any more money with that scam broker! There is a high chance the broker will call you and ask for more money but don’t do it. Every dollar deposited is a dollar lost.

Next thing you should do is request a withdrawal. There is a high chance your scam broker will say it is not possible if you don’t deposit a certain amount. Ignore it and request the withdrawal again. If necessary ask for legal advice and let the broker know you are not alone. Research other cases with your broker on online forums and see how other people got their money back. Of course, if you are trading with a broker that offers bonuses, keep in mind that in case you accepted a bonus, you have a specific trading volume you must reach before making a withdrawal.

You can also contact your local regulatory body and ask for help. Don’t forget to contact the regulatory body where the broker is licensed, in case they have a license. They can do necessary steps and revoke the license and prosecute the broker if needed.

Act fast and don’t let the broker waste your time. Make sure to keep all correspondence and make a screenshot of your trading account in every stage of withdrawal. Often, scam brokers close the accounts without prior notice, but this way you have evidence that can be crucial in your case.

Don’t Gamble On Binary Options

There are lots of ways to lose your money in this world but here’s one I hadn’t encountered before: binary option Web sites. They have become popular over the past few years with new ones appearing all the time: anyoption.com, bulloption.com, spotoption.com, binaryoption.com, etc. etc.

The sites appeal to the same type of people who play poker online. But they somehow have an aura of being more respectable because they represent themselves as offering a form of investing. Don’t kid yourself. These are gambling sites, pure and simple. It’s probably just a matter of time before regulators move in on them.

Until that happens, they seem to be doing great business. A Google search for binary option Web sites produced 870,000 hits with promotions like “earn up to 75 per cent every hour” and “81 per cent profit in one hour or less, trade all major markets”. You can buy these options, which are also known as all-or-nothing options, digital options, or Fixed Return Options (FROs), on stocks, commodities, indexes, foreign exchange, and other derivatives.

In fact, you can place a bet (which is what it really amounts to) on just about anything that is publicly traded, depending on which Web site you use (some offer a wider range of choices than others). Some sites provide free guides to binary option trading to get you started.

I was alerted to this phenomenon by a reader who sent me this email:

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“My dad has recently gotten involved with trading binary options online. The basic premise for the site he uses is at a specific time, say 1:25 p.m., you can put down perhaps $100 that XYZ stock will either increase or decrease in price within five minutesby 1:30 p.m. If you are wrong, you get $15 back. If you are right, you win about $70.

“I’ve proven to him that, mathematically, the site has an edge and you must be right 55% of the time in order for your bet to have a neutral expected value. I am also a professional online poker player by trade so I have an extensive understanding of probability, the online gambling markets, and how these sites work.

The problem is he feels he is at a great advantage, citing his ability to read a bunch of charts, follow news, etc. He is a smart man, a former lawyer, and has been following stocks for years, but I feel that he may be overestimating himself here. I’ve looked into online binary options trading a bit and it seems to me that the consensus is that very few people outside of professional traders can beat the trading sites consistently for good money. My dad is up $2,500 or so betting $100 and $50. The best I could do is to warn him about statistical variance affecting his perceived ability and that short-term volatility along with the inherent disadvantage will make consistent winning incredibly hard.

“I’m looking for a way to definitively convince him to stop and that his edge isn’t as great as it seems. I tried talking to him multiple times about the subject but I’m not as knowledgeable about the field and ultimately that becomes my shortcoming when trying to convince him why he shouldn’t continue to be involved with this. Any help would certainly be appreciated.”

I found this correspondence especially fascinating because the writer is a professional online poker player — a gambler by trade. Yet here he is trying to convince his dad that online gambling is a bad thing. I agree, it is. But it’s understandable if the father is skeptical about advice from a son who does the same sort of thing, albeit in a different form.

But that’s for them to sort out. What intrigued me was to discover that binary option trading has become a kind of pseudo investing sub-culture. I went to the site our reader says his dad uses and did some research. It describes binary options as “an exciting new type of investment” — note the use of the word “investment”.

“When a binary option is purchased on our platform, a contract is created that gives the buyer (known here as the investor) the right to buy an underlying asset at a fixed price, within a specified time frame with us, the seller,” the Web site explains. The option must be held until maturity (even if that is five minutes away); unlike regular options it cannot be sold before then.

These sites promote themselves as offering controlled risk (you can’t lose more than a specified amount), low cost, big gains if you guess right, and ease of use — you can trade from home whenever markets are open and set up an account with a credit card.

So what arguments would I use to convince dad to quit? For starters, this sort of thing can quickly become addictive, especially to market junkies. Although the amounts bet may be small, the total can quickly add up if many trades are done in a day. It wouldn’t take long for things to get out of hand.

Second, no one, no matter how knowledgeable, can consistently predict what a stock or commodity will do within a short time frame. Will Apple (AAPL) shares go up or down in the next 10 minutes? Unless there has just been some major announcement from the company, there is no way to even guess at that.

Third, the house definitely has an edge. This particular Web site pays $71 for each successful $100 “trade.” If you lose, you get back $15. Let’s say you make 1,000 “trades” and win 545 of them. Your profit is $38,695. But your 455 losses will cost you $38,675. In other words, you must win 54.5% of the time just to break even.

Finally, these Web sites are unregulated. No securities commission is protecting people’s interests. This is a financial Wild West.

If people want to gamble, that’s their choice. But let’s not confuse that with investing. Binary options are a crapshoot, pure and simple.

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