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Nowadays Binary options brokers trading is the most popular way of earning money online. People all over the world start trading every day. It is an exciting pastime and in addition, you are earning money!
First, a new trader should find a broker. It is a very important moment. There are many scams in the Internet and you can lose your money. The easiest way to find a good broker is to look through the reviews. You can read comments for hours in fact. However, you should remember that sometimes people write only negative reviews because of a bad experience. Every person should know that it is a useful practice to write comments about brokers. But very often angry traders or competitors cover broker’s name in mud. Read very carefully and filter the information.
Trustable Binary options brokers. Who is he?
Watch video about options brokers10 Best Binary Brokers In 2016 - Top Binary Options Trading Platforms Review - Youtube
It is hard to tell how much the binary options industry makes. According to estimates of sources of The Times of Israel, only the 100+ binary options brokers that are either based in Israel or are somehow connected to those, make somewhere between billion and billion per annum.
According to the same sources, around 96% of the clients of the binary options brokers lose all their money and barely 2% win, but only for a while. It is no secret that for the large part the binary options are more or less a scam, akin to gambling and no investment whatsoever is involved, no matter what they tell you. If all was fair and the “trading platforms” were not rigged, as many claim, probably the percentage of winners would have been much higher. After all, Fortuna may be fickle, but no one is chronically unlucky.
Action Fraud, the cyber crime unit of the UK police, revealed that between June 2015 and May 2016 it has received 305 reports about binary options, with an average of 27 reports made per month. Those who have filed most reports were men who have being paying via debit or credit card.
So how do the binary options brokers reel in and fleece their victims?
The methods are several and in essence, rather simple.
Setting up the trap
Action Fraud has warned about fraudsters setting up fake profiles on popular social media and claiming they are successful binary options or forex traders. They pose in exclusive locations, driving posh cars and flashing luxurious accessories. They also post fake testimonials of “happy customers”. The “traders” promise a cut from the profits, if you only send them £100-£200, which they will make into 1,000 or £2,000 by trading. In fact they never trade and just make off with the money of the gullible “investors”.
Sometimes the victims lose out twice, as they are told they have won and could win more, if they sent more money. When victims eventually become suspicious and ask for their money back, they are instantly blocked on social media. No money has ever been recovered.
According to the reports filed with Action Fraud, the victims of this variety of binary options or forex scam, 33% were aged 30 years old or less and 9% were under the age of 20.
A more widely used method is cold calling the unsuspecting victims and promising them big returns on their “investment”. Usually the caller pretends to be an experienced financial advisor, stationed somewhere in the country of the person receiving the call.
In reality, however, in most cases the caller is one of the thousands workers in a call center, often in Israel (as revealed by a number of publications in The Times of Israel exposing the fraudulent binary options industry), who does not have much knowledge about finances and investment, but simply follows a script. The tactic is aggressive and the caller pesters the person to send in money and start “trading” until the weaker minded give in.
The fraudsters bank on the fact that most people are not aware about requirements and regulations for the financial services providers and have no investment experience. They also rely on people’s hopes, gullibility and greed. Much like any other gambling business. And much like any other gambling business, the system is rigged so the casino always wins in the end.
Reeling in and fleecing
Once the trap is set and the unsuspecting victim falls into it, there are several scenarios, ultimately resulting in merciless fleecing.
Initially the binary options brokers allow “investors” to win big and press the victims to send in more money. Which they more often than not, do, hungry for more profits. Until they run out of money, that is.
But then there are some that are so enthralled, stupid or greedy, that they continue to play along and borrow money from friends and family, max out their credit cards, remortgage their homes and/or empty their pension funds, ever pressed by the binary options brokers to send in more money.
The problems in paradise usually start when the “investors” decide to cash in or finally smell something fishy and ask for a withdrawal. From here, there are several different scenarios.
In some cases the binary options brokers either dig their heels in and ask for more money to be sent. After all, the goal is to milk the clients dry. If the “investor” refuses or simply has no more money, the brokers disappear from the radar, not returning calls and answering e-mails and messages.
In other cases they come up with all sorts of excuses not to send the money, like for example “we have lost the transfer”, or impose forbidding withdrawal fees and commissions. In the rare cases when a binary options broker, usually a regulated one, agrees to let the client withdraw their funds, usually the sum is much smaller than expected because of the high fees and commissions.
Special attention must be paid to the times when the “investor” has accepted a bonus (and the binary options brokers have a penchant for throwing all sorts of very tempting bonuses at you). In that case there is plenty of small print and conditions, like “the client must trade X sum” in order to be eligible for withdrawal. More often than not, by the time the client trades the sum, s/he has lost everything.
What is to be done
Naturally, the wisest thing one can do is to avoid the binary options brokers like the plague. Or, as New Zealand’s Financial Markets Authority recently put it: “When strangers call bearing investment gifts: hang up”.
Only time will tell what will happen and how long the binary options brokers will continue to do as they please, but meanwhile, be cautious!
Do not accept any investment offers made by telephone, hang up and never share personal financial information with someone you don’t know. If you decide to engage in some sort of investment, research the financial services provider well and only deal with regulated and licensed companies. Usually each country or province (in the case of Canada) has a financial watchdog, which diligently maintains a list of the authorized financial services providers. While at it, also check the warning lists of unauthorized and fraudulent companies. If you are not sure about the offer, talk to a financial adviser, especially if the offer sounds too lucrative.
More information about options brokers
FINRA BrokerCheck reports for Regal Securities and its investment professionals are available at www.finra.org/brokercheck.
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