February 2, 2017

How to Avoid Scams

Despite the bad reputation that they often get, binaries are not a scam. It is important to be aware of them though, as there are brokers and signal providers who are untrustworthy and may operate scams.

Don’t be quick to write off the concept of binary trading though, based on a few dishonest brokers. It is those few people who are bringing down the image of this form of trading, and stopping people from investing in binary options. Although regulators are slowly starting to get to grips with these operations, and the industry is slowly being cleaned, you can, in the meantime educate yourself better, and help yourself to avoid scams.

You can use these simple checks to help you avoid scams:

  • ‘Make money online’ or ‘Get rich quick’ marketing.
    • Do not be fooled by these claims to make money quickly. It really should be a huge red flag. This is because digital options are a high risk/high reward investment vehicle, and are not a get rich quick scheme. Operators who make these claims are being dishonest and should be avoided.
  • Cold Calls.
    • If they are a reputable broker, it is unlikely that they will make cold calls, as they simply do not need to. So, if you are being hassled by cold calls, the chances are they will be from an untrustworthy broker, so tread extremely carefully should you choose to proceed with a company who contacted you in this way.
  • Bonus Terms and Conditions.
    • Make sure you read the Terms and Conditions of any bonus you choose to get, as some will tie in any initial deposit until the turnover requirements have been met. This deposit is still the trader’s money, and honest brokers will not use this before trading has actually taken place. Honest brokers will likely give you the offer of cancelling any bonus if you find that it does not suit you as a trader. In fact, CySec, who is the leading regulator, has banned the use of deposit match bonuses can lead to clients ‘over-trading’.
  • Account Managers.
    • Traders should be really wary of account managers who wish to trade on behalf of clients, due to the obvious conflict of interest. This is because the managers will generally encourage traders to trade with figures that are way beyond their means. This process of ‘upselling’ should be avoided and traders should be extremely reluctant to let anyone trade on their behalf.
  • A trader must know their broker.
    • Although this one seems fairly obvious, it might surprise you with how many operators will force clients towards a broker of their choosing. Simply do not proceed if marketing demands a new client to sign up with a particular broker, or they tell you to pick a broker from a limited list. As a trader, you should know the broker that you are going to trade with.

Being aware of the above will help those who are new to binary trading avoid untrustworthy and less responsible brands.