Wherever there is an opportunity for investment or profit, there is also potential for scams. The same can be said for binary options trading, but how safe is binary options trading? Once this form of trading began to gain popularity, various fraudulent schemes began to crop up.
Many traders lost a lot of their money and even had sensitive financial information stolen as a result. People are now more aware of such instances and therefore are less likely to fall for such cons. This is why it is important for you to be able to identify the most widespread binary options trading scams. It will help you to avoid being swindled.
The Outright Scam
This is one of the most common techniques used because not only is it easy to manage, it is also quite lucrative for the fraudulent party. Here, the fake brokers will set up a website and will require to deposit a certain amount of money for you to sign up with them.
Once you have transferred the funds, you will be informed that for one reason or another, this money has been lost. You will then be encouraged to deposit more money into your account to help you make back the money that has been lost to you. Long story short, the entire site is fictitious and it is just a way for the fraudulent individuals to keep pocketing your money.
Scams – Preventing Withdrawals
There are other scams where the brokers for all intents and purposes appear to be legitimate. They allow you to place trades, accumulate profits, and essentially engage in binary options trading. You will have no cause to believe that anything is wrong.
That is, of course, until you attempt to withdraw money from your account. When they go to withdraw their money, the broker may cite that they don’t have the minimum amount of funds in their account required to do so. It is here that you will be informed that you need to have more money in your account if you want to make a withdrawal. Or, the broker may say that they have flagged your account as a fraudulent one and then freeze your account. Either way that they choose to go about it, the result will be the same. The broker will eventually stop answering emails or calls and there will be no way for you to contact them.
Taking Control of Your Account
At one point, managed accounts were becoming quite popular. This was a service that some binary options brokers were offering their traders, especially those new to this form of trading. Here, a professional would claim control over your funds and place the trades on your behalf. These individuals were often advertised as being skilled and experienced. They guaranteed to create profits and reduce the risk of the traders losing money. What happened instead, as you can imagine, was once they had control over your account, the funds were drained, said to be lost due to a trade. You were then urged to deposit more money so that a better trade could be placed next time.
Bonuses are a popular way of enticing traders to a particular broker. This is why brokers desperately try to outdo each other, each one promising bonuses bigger than the last. The issues arise when it comes to reclaiming the bonuses. Here, convoluted terms and conditions often act as a barrier to getting this money. In fact, the problem became so prevalent that the CySEC actually placed restrictions on its licensed brokers.
These are the most widespread binary options trading scams. However, this is not a comprehensive list. This is why you always need to be careful about the broker that you are dealing with as well as the services that they offer.
Make sure you pick a reliable binary options broker. How safe your trading is, will depend on the broker.