While there are many traders who have found ways to successfully make returns on their investments, there are others who never got to see the money. When it comes to common binary options scams, it is dodgy brokers who tend to frequently have a hand in them.
The face of binary options in the context of trading has recently changed somewhat with the increasing demand for regulation and appropriate conduct. That being said, almost nothing in this world is impervious to the crafty and shady practices of fraudsters. As such, it always pays to do your homework before you commit to trading with a new broker or online platform.
There are always ways to identify if there is something off with the broker you are using. These 5 helpful will help you determine if caution should be warranted.
A Poor Reputation
First things first in binary options. If you have just moved to a new town and your car has problems, you will need to find a mechanic to do the job. Much like looking for a doctor, lawyer, babysitter, or even a hotel, you will more than likely check the professional or institution’s reviews in order to make up your mind if they are right for you.
If you have found any of the above – and it appears that you require their services – you will be put off if they are rated as poor by others. Reputation in business makes for pretty much everything. If previous clients have nothing but bad things to say about this broker’s conduct and behavior, the chances are that you will too, soon enough.
Unrealistic Profit Potential
If you are being sold on a service which is too good to be true, then it probably is. Any broker that wants you to believe that trading binary options is essentially a way to make huge amounts of profit with little to no effort and with a couple of dollars is lying. No, this is not subjective; they are lying.
If it was that easy, everyone would be doing it. Surely the broker would be spending all of their time stuffing their unending supply of cash into trucks rather than trying to help you get rich.
Trade Manipulation
Brokers have been known to purposefully manipulate their software in order to rip-off their customers. This type of shady practice has seen traders lose huge amounts of money at the expense of binary options traders and customers who are often unaware that they have been cheated.
For example, if a trade fails to expire at the planned time and is open for even one minute longer than it should have been, and the price falls below your target, you lose. Had the time of expiration closed as it should have, you would have won. For the trader who is manipulating their software, they walk away with your money. As harsh as this may sound, it does happen.
A Lack of Customer Support
No answer to calls, no response to emails. The live chat function which is on the site always fails to retrieve an agent. You can’t get a hold of the company to check how to withdraw your winnings…
Not a good sign at all. Customer support should always be on hand to alleviate fears and answer queries. It is that simple.
No Broker History
Without a track record of a broker’s results and customer satisfaction, you are essentially walking into a lion’s den. The chances of falling for a binary options scam significantly increase when there is nothing known about the broker you are using. At very least the broker is an absolute novice and has no right to be doing this. Worst case scenario, this may very well be a scam you are walking into, so exercise caution.
About the writer: Jeremy Biberdorf is the owner & founder of the popular investing blog modestmoney.com. Check out his site for latest investing news and tips
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