The nature of financial trading has given rise to a whole host of new trading methods. Speculating on an asset’s price is the founding principle of most new trading styles, such as forex and binary options trading. The market, existing solely online, has also removed many regulatory mechanisms and exposed consumers to shady vendors who are not too keen on respecting the rule of law.
However, most binary options brokers are legitimate and under the regulatory supervision of national watchdogs such CySec. The binary options industry has modernized and even democratized the nature of trading as the threshold to enter the market and make money has been lowered. Moreover, the element of leverage – allowing traders to leverage a small amount for big gains – allows individuals with limited means to trade with a significant chance to succeed.
Nevertheless, the advantages are often accompanied with unwanted disadvantages. Many dodgy vendors have popped up like mushrooms all over the world wide with the sole purpose of luring in traders who might be easily swayed by glossy websites and promising ads. Such scams can take many shapes, and it is imperative to understand the dissimilarities between trustworthy institutions and those with very little or nothing to offer besides poor results.
Scam or Not a Scam – That is the Question
Binary options scams can emanate from various sources, and this make spotting the bad ones from the good ones slightly trickier. The two main elements that should get the alarm bells ringing are either unrealistic promises of radically high gains in a very short period of time or a promise to sell you a brilliant product without strings attached.
Luckily, there are forums available that allow traders to openly discuss their experiences with other traders. It is important to use these resources so that you do not fall victim to these unscrupulous practices.
Another warning sign is when the broker in question fails to provide the client with all the requested information. For instance, with Binarries.com we contacted each and every broker in order to determine if we were accidentally promoting bad apples. Alas, we were not.
Perhaps the most obvious reason to change brokers is when the broker makes it close to impossible to withdraw your funds and instead, offers a litany of excuses instead.
Other aspects that should be cause for concern are erroneous market pricing data or unclear payout percentages for profit-generating trades. According to the generally accepted broker-traders relationship, the payout percentages should always be fixed.
The best way to avoid being an easy victim is to come up with a checklist of questions that should be posed to the broker’s customer service. Make sure to peruse our broker reviews to familiarize yourself with all the numerous brokers.