Updated: Sep 12, 2019
Binary options scams are everywhere online.
In this article, I am going to explain what binary option trading is and what a binary option scam looks like. My aim is to help you avoid falling victim to one of these scams by giving you as much information about these as possible.
What is a Binary Option?
According to the US Securities and Exchange Commission (SEC):
A binary option is a type of options contract in which the payout depends entirely on the outcome of a yes/no proposition and typically relates to whether the price of a particular asset will rise above or fall below a specified amount.
So a binary option is basically trade where you have two possible outcomes… either lose completely or win a predetermined amount.
Other forms of trading typically carry a more continuous trading outcome. Where you can bet on the companies stock to go up over time, for example. Whereas binary trades only win or lose completely. There is no middle ground.
While this type of trading is legitimate, there are many scams operating in this space.
What Is a Binary Option Scam?
A binary options scam could fit into a couple main categories.
On one hand, it could simply be misleading marketing that lures you into depositing money into a broker, under the false pretence of making quick and easy money.
And once you deposit your initial funds (typically $200), the scammer who led you there, makes an affiliate commission off of you. In other words, affiliates using false advertising to earn commissions.
On the other hand, the trading brokerage itself could be a scam. This is quite common because many scam brokers operate anonymously and from overseas.
If this is the case, they may manipulate trades to make you lose more often, you could lose your money outright, or you could even become the victim of identity theft.
In some cases, a binary option scam is a mixture of all of these components.
Beware of Unregulated Brokers
Regardless of what type of trading you do, it is always important to be careful which broker you decide to trade with, some are regulated and some aren’t.
If you go with an unregulated broker, you could deposit money and never hear another word. There’s a LOT of people reporting losing money right off the bat and have no luck getting a refund or withdrawing any money.
There are even reports of credit card fraud and identity theft, since a lot of them require passports, driver license, credit card info and other sensitive information as standard operating procedure.
The point is, be extremely careful when choosing a broker or you could become another person losing money to a scam binary broker.
Binary option trading is not a scam in and of itself.
However, this industry is saturated with scam marketers and brokers. Who’s sole aim is convincing you that it will be easy to get rich using their special software. Most of the time, this is not the case and people end up losing money.
There are far better and more legitimate ways to earn money online. Avoid anything promising you will “get rich quick” because it’s probably fake.
I hope you found this article helpful.