Are Binary Options a scam?

On the internet, you will always read from scam with Binary Options. Trader lost their invested money quickly because of scam brokers or internet-gangsters. The term “Binary Options” is actually in a very bad spotlight but is it really a scam or not? – Find out on this page.

Do brokers cheat on binary options?

Many former users doubt that Binary Options trading is a serious business, as they have lost all their trading capital. Many of these cases are not Binary Options scams, but the traders have misjudged the risk and did not expect that the total loss of binary options is actually possible as quickly as possible. However, some users were actually cheated of their money by dubious brokers and thus had no chance to trade profitably.

There are many possibilities for Binary Options fraud by brokers. Since the prices are set by the providers themselves, it is conceivable, for example, that there has been deliberate manipulation and that the broker has thus caused a significantly higher loss to the customer than would have been the case without price manipulation.

Trusted Binary Options Broker IQ Option

Another problem is brokers who simply do not pay out the profits of the customers. The customer requests a payout and then nothing happens for a long time. It is possible that customer service calls the trader and tries to persuade him to cancel his payout and continue to use the money for trading, or maybe one day the broker simply disappears from the scene. Since many providers are located abroad, it is often difficult for the traders to get their rights and therefore their money in such a scam. Therefore, from the outset, when choosing a broker, it should be ensured that only reputable providers are entrusted with their own money. We will explain how to recognize these in the further course of this article.

How to avoid to get scammed by a Binary Options Broker

First of all, you should check the background of a Binary Options Broker. Is the company reliable or not? How long does the broker exist? Is the platform regulated or not? You should ask all these questions. Try out a free demo account to get your own experience of the platform. I recommend using only regulated brokers if you want to invest real money.

If you start to trade with real money you only should invest the money you can afford to lose. If you do not trust the broker you can use the following strategy: Only deposit so much money you will need for the trades. Let the rest be on your bank account.

According to that, I created the following checklist for avoid scam:

  1. Are you using the right URL? – There are many copy sites from scammers.
  2. Is the Binay Options Broker regulated?
  3. How long exist the company?
  4. Can you try the platform for free?
  5. Does the Broker promise unrealistic profits? – If yes, be aware.
  6. Is there a reliable support? – Test it.
  7. Start investing with small amounts of money.

Check out the following trusted Binary Options Brokers:

Broker:

Rating:

Advantages: 

Start trading: 

IQ Option logo
5/5

+ Yield up to 100%
+ Best platform
+ 24/7 support

Deriv logo
4.5/5

+ Yield up to 95%
+ Auto trading (bot)
+ MetaTrader 5

Pocket Option logo
4/5

+ Yield up to 92%
+ Bonus program
+ Accept any clients

Why is trading with binary options so risky?

Not only the high risk of Binary Options fraud makes trading so dangerous. Even with good and reputable brokers, Binary Options trading is not recommended for every investor, because of the high risk of losses. There is a lot to be gained from every trade, but the potential loss is even higher and usually affects the entire stake. With a good trading strategy and targeted technical analysis of price movements, it is possible to identify trends and thus predict price developments more accurately, but these methods have narrow limits in Binary Options and can usually only bring clients a relatively small increase in the number of trades won. Even the best traders lose a lot of their trades and therefore have to expect temporarily high losses. Even if the professionals make an average profit by making good decisions, this does not mean that they are safe from the dangers. They can also be affected by variance so that with binary options, every trader is threatened with a total loss.

Investing in financial products is always risky. Be aware that you can loose your money.

Since Binary Options are strictly speaking financial bets, there is also a danger of addiction under certain circumstances. Won trades trigger a feeling of happiness to a particularly high degree and the fast-moving trade stimulates vulnerable people in particular. For this reason, attention should always be paid to possible signs of danger.

Binary Options are among the riskiest investments in the financial market. While shares are traded on the stock exchange, trading with Binary Options takes place over the counter and is therefore carried out directly between the broker and the client, with no intermediate station in between. This of course opens up many opportunities for fraud for the broker and has been exploited by many dubious providers in the past. Since the broker can set the prices himself, the customer is strongly dependent on the broker offering binary options in a serious manner and not manipulating the prices in such a way that they result in a higher loss for the customer.

Binary Options Broker contract

Another point that makes Binary Options a much riskier form of investment is the omnipresent threat of total loss. With shares, it is only in absolutely exceptional cases that a share loses its entire value. Even ailing companies still have a certain residual value, for which investors can then sell their shares. Binary Options on the other hand are “all or nothing” transactions. Here either the profit is paid out or the entire stake is lost. Thus, the balance on the customer account is usually subject to high fluctuations and depends to a considerable extent on luck. Another argument that is often used is that Binary Options do not acquire real value. Only a bet is placed, and if the trader wins the bet, he will be paid a predetermined amount. With stock trading, on the other hand, the client acquires shares in a company and thus has real ownership, which can also increase or decrease in value if the trader is not active at the time.

What measures are taken to protect the traders?

It is important for traders to know that both their data and their money are in good hands. Therefore, trading is only desirable if Binary Options can be traded seriously with a broker without fear of fraud or unprofessional handling of the customer’s security.

When Binary Options came on the market and quickly became very popular, there were still many poorly regulated or even unregulated brokers. In the meantime, trading for European customers is only allowed to be offered by those who have a corresponding license. This can be issued by the FCA for brokers based in the United Kingdom. However, a license from the country of origin is also permissible. Especially many brokers are based in Cyprus. This is related to the tax advantages there because Cyprus offers good conditions for online brokers, who can pass on the cost advantage to their customers and are therefore able to offer particularly favorable conditions, which is of course a competitive advantage. At the same time, however, Cyprus is also a member of the EU, which is why brokers there are regulated according to strict EU law. This is an advantage for customers and also makes Cypriot brokers popular.

Is it possible to trade binary options successfully?

Therefore it is often assumed that Binary Options without fraud are impossible and that successful trading is impossible. In fact, the majority of traders are unable to make significant profits in the long run, and many even suffer significant losses. On the other hand, however, there are certainly traders who trade successfully with Binary Options. These traders have to work hard for long-term success, are constantly educating themselves and pursue consistent risk management so that they can cope with the recurring phases of high losses.

The right charttype and analysis tool can help you to make profits

In many of the brokers’ advertising videos, these professional traders are hailed as some kind of heroes who make a lot of money every day without much effort. At the same time, interested newcomers are persuaded that they could quickly become just as successful with little effort and possibly even live from trading. What is not mentioned here is that even the professionals expose their assets with the Binary Options to great risk and can only be successful because they do not invest their entire free capital.

In a Binary Options scam forum I could read several reports from failed traders who followed the dream of becoming a trading professional and invested too much money. Of course, clients need to be thoroughly informed before entering the trading market, so users could have known that trading with Binary Options does not lead to long-term success overnight. But brokers also have a responsibility here. As long as misleading advertising is used to convey that even laypersons can make big money quickly with Binary Options, traders will always fail because of them.

Are the bonus promises serious?

New customers can receive a bonus from many brokers. The broker then credits the trading account with additional money with the first deposit. This is a very pleasant extra, which is of course gladly taken by the traders. However, especially with bonus offers, the terms and conditions should be read carefully, after all, with a contract you should know what is in it before you sign it.

For a bonus, there is usually a rule that trades must be placed for a certain amount before the bonus is released and paid out to the account. The exact conditions for bonus offers at the respective broker are often very hidden and can only be found after some searching. Even with bonus promises, the positive sides are often overemphasized, while the negative sides are completely hidden.

The customer is happy about the additional credit on his trading account and starts trading directly. With a bit of luck, he might even make a profit. The disillusionment follows when he wants to cash out, because either the complete payout is blocked until the bonus conditions are met, or the bonus expires at the payout. Only when the customer has achieved the required turnover is the bonus fully released and converted into real money credits.

Luckily the most brokers do not block any amounts of money in your account nowdays.

What does the earnings of a binary options broker consist of?

Binary Options Brokers earn money because traders can win less than they can lose on a trade. Thus, on average, the provider makes a profit. Trades are hedged between each other and the customers. Customers should therefore not be blinded by the euphemism that “the trade is completely free of charge” when looking for a broker. It may be true that no fees are charged for keeping an account or placing a trade. The costs result from the lower payout price compared to the potential loss. If one compares the providers here, considerable differences in costs can sometimes be seen.

Conclusion: How do I behave correctly as a newcomer to binary options?

I hope that this article will help readers who are thinking about entering Binary Options trading to make the right decision. Binary Options are only suitable for a small number of investors and should only be traded with capital, the loss of which traders can easily bear, as a total loss must also be taken into account.

If you want to register with a Binary Options Broker, you should make sure that the conditions for Binary Options that apply there are serious and fair. The general terms and conditions should also be read carefully, as they often conceal conditions that make the broker unsuitable for serious trading.

Comprehensive training in chart analysis is essential, as it increases the chances of winning. Many brokers offer free training material for this.

Even if you have found a reputable and securely regulated EU broker, you can never be sure about Binary Options. A total loss is possible every day and it is difficult to estimate one’s own profits and losses. Therefore, all traders should only use as small amounts as they can lose without great financial or psychological stress.

The moste asked questions:

Are Binary Options risky?

Yes – Binary Options are risky like any other financial product. You can win a high amount of money or lose your investment amount. It is a risky investment. You should be aware of the risk that you can lose all of your money. Use professional money management to be successful in the long run.

Are Binary Options a scam?

No – The financial product is not a scam and in some countries, it is a regulated method to invest into rising and falling markets. The problem with this topic is that there are a lot of scam websites that are trying to scam you by using Binary Options.

How to avoid a Binary Options scam?

You should only trade with trusted Binary Options Brokers. Avoid scam websites that promise free money or high results in trading. Check out the website where you are registered for trading in detail. Is it a real company or not? Is there a regulation or not? Can you test the platform for free? On my website, you will find regulated and safe brokers.

Check out my other posts about Binary Options:

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