How to Avoid Online Trading Scams
If you are new to the world of binary options trading, then you may be experiencing some confusion when it comes to choosing a broker or other services such as robots and signals. How do you know if you are selecting a genuine or a fake company and what is a typical scam?
Identifying the difference between the two can be hard. Often these schemes are so convincing that they resemble legitimate companies and traders cannot spot the difference. There are differences, however, and by carrying out some research, you will be able to identify those brokers, robots and signal services that are legitimate and those that you should avoid.
From the licensing to whether they offer a demo platform to carry out "practise trading" with virtual money, there are critical differences between the real thing and those that will leave a bitter taste and a big hole in your product. To make sure you get the best out of your trading experience it helps to know how to spot the difference.
In this guide, you will learn:
- A typical example of a binary options scam
- The reasons that these fake brokers exist
- How to avoid losing money yourself to scams
A Typical Scam Example
There are a few to be wary of when it comes to trading, some more common than others. Many of them are operated online while others take place over the phone. In many instances, the trader starts their search online which returns many results; if you type the term "binary options broker" into Google, there are over a million search returns.
Now for every genuine one, there could be as many as ten fake websites claiming to be the real deal. Many of them are websites set up to look like brokers with all the terminology and graphics and even customer testimonials (which are fake). What they do is encourage you to make a minimum deposit of $250 and then that's it, your money is gone.
There is no trading platform. Some brokers will go so far as to call you claiming to be a senior advisor and asking you to make a higher deposit. Now while it seems like they wouldn't get away with this for very long what they do is set up under multiple names so that they can scam lots of people in a short space of time.
Like any scam or fraudulent activity, they exist because they are a method for dishonest people to make money.
Why Binary Scams Exist
Like any scam or fraudulent activity, they exist because they are a method for dishonest people to make easy money. Since the introduction of trading, there have been people setting up fraudulent websites and conning people out of their money. As long as people are willing to part with their money, there will always be people that want to take it from you.
If the dishonest few want to make money quickly without any morals when it comes to ripping people off, they will use every trick in the book to make it happen. This particular industry is an easy target because all trading takes place online, is not always regulated and often people don't know how to spot the real thing from the fake.
They even go so far as to ring people up offering them unbeatable deals if they make a deposit and guess what? Yes, you make your deposit never to see your money again.
How You Can Spot a Scam
If you know what you are looking for, then it becomes much easier to spot the genuine companies. Ask yourself this though "does it look too good to be true?" If the answer is yes, then it probably is too good to be true. If someone is promising to return $1,000 in 5 minutes for doing nothing, then be wary and probe further.
Check out the credentials of the company. If you can't find the broker listed on any of the popular review sites or there is little or no evidence that they are a real company then the chances they aren't.
There are also lots of scams that have got uncovered already. These will come up like a beacon in Google with lots of entries about them from disgruntled traders on various forums. Just typing the name into a search engine is often enough to discover if this particular options broker is operating under false pretences or whether they exist.
How to Avoid Being a Victim
There are a few simple steps that you can take to ensure that you don't become the victim of a binary options scam. Firstly you need to ensure that any broker, robot software or signal service that you use are reputable. You can tell this from their licensing (make sure they have CySEC or other recognised licensing), their online reviews and feedback and whether there is an undeniable history of unethical trading.
The next step is to see whether they offer a free demo account. If you can sign up to a brokers platform and trade with a demo account before depositing any funds, this will give you a good idea as to whether it is a legitimate broker or whether it is just a dummy website set up to take your money.
When it comes to phone calls that come from people claiming to be a senior adviser, then be very wary. If they are calling you with "a deal that is too good to miss", don't make any deposit. Calls like this are a common ruse, and they will ask you to make an investment that will disappear.
Now while there are risks and fraudulent websites out there, which you should avoid at all costs, this shouldn't deter you from trading. You need to ensure that you choose your broker wisely and that they are a reputable, licensed firm with an excellent online reputation. For more help and advice on online scams or scams, in general, please visit the resources below;
Shelly is proud of her current position as Head of Brand for a well-known organisation that owns several brokerages in the trading sector. She’s consulted for us since 2015 and readers can benefit from her insider knowledge of how brokers work. Learn more.