Binary Trading Scams
Binary trading can be defined as the contract between the buyer and the seller which upon the fulfillment of a specified condition which usually is the price movement, pays to the trader a fixed amount that has been predetermined depending upon how his contract has ended at the time of expiry. If the contract has ended as “in the money” the trader receives the predetermined fixed amount whereas if the contract ends “out of the money” the trader does not receive any thing.
So, simply binary trading involves two possible outcomes, either the trader receives all or nothing. Due to the simplicity of the binary trading it has become the most popular form of trading products. Moreover it offers fixed returns that are governed by structured reward and risk ratio. Binary trading is available on a variety of assets like currencies, stocks, indices and commodities. Due to these very factors binary trading has become quite popular and with the added advantage of hedging features, it has taken the trading world by a storm.
However, the popularity of binary trading has also given rise to a number of scams that are lurking in the market to swallow the gullible and inexperienced traders. Scam brokerage firms and scam trading software are luring innocent and naïve traders into investing money with the assurance of guaranteed returns as high as 75%. Though there are certain platforms that might be able to pull off such returns, one must be aware of the fact that more than half of the software and the brokers are scams. Therefore investing money and time in these instruments should be duly considered.
The binary trading scam that is usually seen is the guaranteed return assurance by many brokerage and trading firms. True that if the anticipation of the price movement is correct even by a single pip, the investment can give a handsome return, but the same investment can be lost in its entirety if the anticipation is wrong by a single pip. Here the brokers usually ask their clients to invest money in such instruments in which they themselves have interests. When on the added increase in investments the prices rise or fall, the brokers quit from the market while booking the profit and leaving the clients lost.
The brokers entice the clients by a 15% money back guarantee in case of a loss. Though this may sound okay for an inexperienced client, the actual fact is that you would have to part with 85% of your investment in case your anticipation of the price movement is wrong.
Similar scams related to binary trading have been noticed in certain trading platforms that guarantee the customers an assured return. However as the price movement is affected by external factors it is actually impossible to guarantee any return. The trading platforms simply require their clients to trade by the given call and put options. This means that they tell the clients where and when to put in the money and when to withdraw it. Though the trading platforms could pull off one or two successful trades for their clients but this is just coincidence since there is no such guarantee of the price movement and any brokerage that claims such is surely a scam.