Top 10 Signs of a Binary Options Scam
It is not unusual to read advice saying you should never trade binary options because there are so many scams out there. Scams in binary options can take on a couple of different forms. There are scammy brokers, who will cheat you out of your money, and there are scammy trading systems and trade alert companies that will cost you but not provide you with the tools you really need to make it. How do you learn how to avoid these scams and stay safe so you can continue to participate in the binary options market?
Here are 10 signs to steer clear of a company or individual who is promising more than they are likely to deliver.
1. You can’t find the name of the company.
If you research a company such as a binary options website and cannot find the name of the company that owns the operation, you probably should not trust that company. After all, you do not know who you are dealing with. Why would you send your money to a complete stranger?
2. Customer service is hard to reach.
Before you join any binary options website or any signal service, you should test out the customer service. Try sending an email and see how long it takes to get one back. Attempt to talk to someone on the live chat line, and see if anyone is there during normal business hours. See if you can reach someone on the phone. If you consistently cannot get a hold of anyone, you should steer clear. Imagine if you had a problem and no one was there to help you. Find out who has awesome customer service here
3. Customer service is unhelpful.
If you can get a hold of customer service, that is a start, but that does not mean the company passes your test. Do you get real information on the phone or nothing but hard sells? When you get on live chat and talk to someone, does that person speak your language, respond promptly, and know what he or she is talking about?
4. The company dodges regulatory questions.
Most binary options companies at this point are unregulated, and those that are usually are regulated as something other than a binary options company (like a private bank). Even good companies may be unregulated. But what you should not accept is a company that dodges your questions about regulation or tries to make up inconsistent answers. If you are told you need to wait for some other customer service person to email you back, or you are told contradicting information, do not trust the company. Another one to look out for is companies that give you a Cyprus business license number and try to sell you on the idea that it is a CySEC binary options regulatory number. You are far less likely to be robbed by a company that is honest and forthright about their lack of regulation.
This article gives more information on the regulation status direct from a binary options broker customer service.
5. You cannot view a trading history.
This applies to companies and individuals selling trading and trade alert systems, not binary options brokers. If you cannot see a trading history, you have literally no evidence that a system works. Even if you can, you do not have proof, but it is still something. A trading history is not just, “I won 98% of my trades last year!” It is a list of actual trades with details on entries, exits and outcomes, as well as specific profit and loss figures.
6. A company tells you that you can win 100% of the time.
This is insanity, yet newbie traders fall for it every day. We live in desperate times, economically speaking, and there are a lot of people out there who are ready to try and take advantage of your hopes and fears in order to make a profit for themselves. There is nothing, absolutely nothing, that can win 100% of the time. Trading is a business of risk, and while a good trading system can reduce your risk, it can never eliminate it. Also beware of other exceedingly high win percentages, like 97%. Many professional traders will be happy if they can achieve 70-90%.
7. “You can make X dollars in Y time!”
Anytime you get some kind of an offer which has a basis in hours, weeks, months or years, you should be wary. “You can make $500 in an hour!” is one example. Another would be, “You can turn $1,000 into $100,000 in one year.” And so on. It is not that you cannot feasibly do these things, but this is just not an intelligent, levelheaded way to approach trading. These pitches are aimed at gamblers who are going to make poor choices before they think twice, not at responsible traders.
8. The company has no reputation.
If you encounter a company which has no reviews online and nobody knows anything about them, you trade with them or buy their trading product at your own risk. Sometimes this just means a company is new, but wouldn’t you rather someone else tested them out instead of you? You might make an exception if a new company appears to offer exceptional service and transparency. Check out our list of reviews
9. The company has a bad reputation.
Do not ignore the warnings of your fellow traders. Yes, every company has its enemies, but if you see consistent reports of problems with a company, especially if those reports involve the same issues again and again, it probably is a good warning to stay away. Companies that consistently make it onto binary options blacklists generally are there for a reason.
10. There is a lack of good signs and features.
While you should be looking for negatives, you should also be searching for positives. Look for a company that provides educational resource for its traders and encourages traders to take time to learn and plan before placing trades. Search for brokers that offer a lot of features. If you are shopping for a system or signal service, look for programs which provide lots of transparent, clear information and allow you to get in touch with the developer if you have questions or concerns.
Here is a list of positive features to look for in a broker to determine whether you have found a trustworthy company that deserves your business. You can also check out our guide to binary options brokers, which can get you off to a good start in your search. We have done a ton of research to put together reviews of the best binary options brokers out there. Take advantage of our hard work; it will pay off.
Photo credits: Red Alert