There is that ugly word again “scam”, it seems like it is used a little too easily lately; it’s almost like it maybe means something differently these days. A lot of times these misguided associations are attached to financial products such as binary options. It’s a little aggravating when this happens to an industry that is working hard to clean up an image that it never should have had in the first place.
I don’t believe that Binary options trading is fraudulent at all and believe me I have been around it a long time. Then again why would you believe me and take my word for it? You shouldn’t, that is why I am going to tell you how to protect yourself when trading binary options and some ways to do things to make sure no one can take advantage of you.
First of all it’s important to know what the word “scam” means. Dictionaries describe it as a fraudulent or dishonest means to get money from someone or something. I looked further and saw nothing about it relating to someone who made an uninformed binary options trade and lost their money or someone who was angry because they lost money after not taking advantage of everything that their online broker offered to help them trade successfully. As with all things, sometimes you have to consider the source before you believe something.
Things to Look Out for to Avoid a Possible Scam Broker
Becoming a binary options broker is not as hard to do as one might think; the trick is doing it well and attracting and keeping a lot of customers. There are only three major software platforms that can run a binary options trading site and anyone can purchase these; basically anyone with the knowhow can start a brokerage site. Here is how you find the reputable ones.
What are some of the Red Flags that Indicate to be Aware of a Broker?
- Return on Investment
If the return on investment for a trade is unusually high or unusually low it’s a bad sign. Too high means the broker is trying to get new customers in a hurry and may go out of business in the process and your investment will go with them. When a return on investment is too low it indicates a site that is only interested in their side of the money equation.
- Poor Funding or Withdrawal Processes
The money in your deposit account is yours and you should have access to it any time you need it. Charging fees is not a scam; all places that perform banking functions do that. With that being said, slow withdrawal times or repeatedly having trouble initiating a withdrawal are big red flags and you need to find a new broker.
- Too Many Bonus Offers
A company that gives you bonuses for everything on their site is a company that is confident they are going to be able to keep your money. You should be wary of a broker that always offers bonuses or establishes unrealistic conditions you need to fulfill before you have access to any bonus money.
Protect Yourself before Joining a Brokerage Site and be Smart about the Money You deposit
Here are some more ways you can avoid feeling like you were scammed:
- Trade only with disposable income that you can afford to lose. You don’t think straight when you just lost your rent money on a trade.
- Trade on sites that are regulated by binary options agencies such as CySEC.
- Stick to trading with established brokers or if you like what a new brokers have to offer only invest a small amount of money with them until you are comfortable they are legit.
If every binary options trader sticks to these ideas and keeps an eye out for what was discussed, I will never have to write about binary options scams again because there won’t be any.
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