The new trend in the stock market has changed the mindset of young adults. The youth are willing to know all about interesting facts, terminology, indices, market analysis, and whatnot. The stock and cryptocurrency markets are the two major fields that have captured the highest number of newbie traders and investors.
In this blog, we will cover topics about binary options such as what is a binary option, their characteristics, and how it works. Also, a major part of it will be case studies based on Binary options scams and their recovery.
Table of Contents
What is a Binary Option?
A binary option is a set of two variables, i.e. ‘Yes’ and ‘No’. It is a financial tool that studies the possibility of parties involved in the transaction based on whether the options expire or not (in terms of money). The prefix in Binary which is ‘Bi’ stands for two variables and the option means it is either ‘yes’ or ‘no’.
The advantage of this financial product is that traders will receive a payout if the binary option expires in the money and incur a loss if it expires out of money. There is a fixed amount of payout and loss.
But, here, it will not allow you to position your money in the underlying security. In recent times, binary options scams seem favorable to scammers. We request all our readers to gain knowledge from this blog and other references so that the scammers can’t come near you.
How does a Binary Option work?
The binary options work uniquely. Its functioning is based on the expiry date or time. At the time of expiry, the value of the underlying asset must be correlated with the strike price; for the trade to make a profit. It is an automatic working tool that means the profit and loss are identified by this method and the debit and credit occur in the trader’s account.
Why Scammers are finding binary options a favorable way of scamming?
Binary options scam is becoming prevalent due to the exposure of online trading. Common scams performed by scammers in this area are:
- Fly-by-night brokers
- Price Manipulation
- Bogus Asset Manager
Basically, these three frauds are relevant in this area and these scams aim to gain your personal information such as bank details. The scammers will acquire it falsely and try to take advantage of your specifics.
Cases that are leading Binary option scams
These scams may be nominal, but such scams are taking place, and it is important that we spread awareness about it.
- Sometimes these fraudsters will connect with you over the call and try to convince you of their inappropriate deals. They will contact you as a bogus asset manager and carry out price manipulation. The moment you pay them the asked amount, they will not wait for a second.
- In some cases, they will call you in the pretense of a binary options service provider to make money illegitimately. The semi-regulated binary trading has created cracks in the system to let in scammers.
- Social media surfers might come across dodge brokers who tend to promote their fake profiles on the internet. The irony is, many people do believe in the absurd callings. The same act can take place on phone calls and bogus messaging apps.
- They will provide false hope to the customers and entice them to visit their platform for higher returns.
Case Study: A person who opened an account through a phony broker states that the first statement often gives us a sense of urgency. Why? It persuades you that there is a need to open an account with that phony broker. However, the question that arises is “where is your research?” Furthermore, “why are some people convinced in such silly talks?”
The scammers use various techniques to steal the investment funds. Binary options scams convince a person to invest a large amount of investment. The fraudsters simply talk about unexpected returns, without taxes and fees. Sadly, it is often impossible to recover that lost money.
How to avoid the binary option scams
Binary options frauds can be avoided. However, while money is playing on your mind, think about safety too. Follow these leads of prevention.
A Regulated broker:
Regulated brokers and unregulated brokers both are a factor of risk. As per market research, experts advise an investor to tie up with a regulated broker. The two major things you have to look after are the broker’s license and whether the broker is registered or not. After that, you can visit the investment website for authenticity and reliability checks.
On the other hand, an unregulated broker would not necessarily be a scammer, but they can dupe you. So for the safe side, it is better to look out for a regulated broker. The leading binary options financial regulators worldwide are CySEC (Cyprus), the CTFC (US), and Malta GA.
Beware of vague marketing
One of the traits of a scammer is promising something unexpected. If your broker keeps promising you certain attributes, understand that it is a suspicious trap to fall. In addition, scammers talk a lot about investment and its high return, but they totally ignore the concept of risk. Social media is the hub for these dodgy brokers, where they attract potential users. They often allure users with their luxurious lifestyle and fake reviews of celebs and economic experts. In Binary options scams, fraudsters use slang words such as ‘get rich quickly’, and ‘make money online’. These are the hints so that newbies will not fall for it.
Do your research
It is essential. Your research will lead to progress and give you a chance to know more parameters and be open to more opportunities. Full-fledged research will assist you in understanding the difference between fake and real. Your research should include:
- Identity of broker
- The licensing
- The website
- The reviews, etc.
The research that you will do today will be helpful in the long run, and that is what matters. There are many victims of this scam and they are regretting it to date. It is better to take small steps at a time and just don’t do mistakes that you will regret later.
Scams are normalized; the e-commerce platform has a wide range of them now. So, even cyber securities fail to fill up the loopholes. Although they are trying their best, it is high time to focus on what can be done to safeguard an investor, a trader, and a newbie so that you can fulfill your aim securely.