They’re known as the ultimate gamble in trading markets. They’re called binary options, and they’re an all-or-nothing bet. Because they’re the kind of investment that attracts risk takers, they’ve also become a favourite investment to build a scam around, and if you are going to invest in binary options, you need to be aware of how much illicit activity is going on in this space and how to avoid becoming a victim of it. What are Binary Options? Binary options are “bets” that can be made on share prices, foreign exchange movements, markets, or economic events. A simple example would be to bet on the share price of a company; you could take out a binary option saying that a company will be trading above its current price in an hour. If you’re right, you get a payout. If you’re wrong, then you lose the entire sum of the investment. Binary options are always short-term. A typical contract will be for an hour or so into the future, though they could range for as long as a few months. One of the appeals of binary options is that they are very easy trades to understand and make. You don’t need to be a particularly skilled or experienced investor to take out a contract. On the other hand, successfully picking the short-term movements of stock prices, or whatever else you’ve placed the “bet” on can be exceedingly difficult, even for professional investors. It’s for this reason that even within legitimate binary options trades, around 80 percent of investors . They’re such a high-risk investment that many markets . In making the decision to do that, the Australian watchdog, ASIC, wrote “‘Binary options’ product characteristics make them incompatible with investment or risk management use by retail clients. ASIC’s product intervention order will protect retail investors from these harmful products at a time of heightened vulnerability.” lose money ban them entirely That’s not to say you can’t take out binary options contracts. It just means you’ll need to find the right platforms and brokers for it. One final thing to note: binary options are often particularly appealing to those on lower or award incomes, as the potential payoff can be a big boost to the pay. For these people it’s particularly important to keep the following in mind: Never invest more than you can afford to lose. Like many of the other speculative assets that are appealing to minimum wage workers (such as cryptocurrency), it can feel empowering to make an investment, when most traditional investments require an upfront amount of money beyond their needs, however, that moment of positivity can quickly disappear when you realise you can no longer afford that car or mortgage, or you’ve gone into debt to purchase more of the options. Secondly, make sure that your broker is a legitimate one, is properly registered, and the company they work for is as well. This is by no means a guarantee that you’ll see a return, but it minimises the risk of the trader turning into a scam. Do your research so there are no surprises. Understand the fees, commissions, taxes, and other costs involved in a transaction, and make sure you have thoroughly researched the company you’re about to take a binary option out on. What Does Binary Options Fraud Look Like? Binary options fraud often begins when an “agent” approaches you on social media. They’re active in social media groups, and will often direct you to a website that for all intents and purposes appears legitimate. You’ll probably never speak to them, much less meet them, in person. From there, you’ll set up an account and take some options out without an issue. But then one of three things will happen: The “broker” will refuse to credit your account or reimburse funds. They might also try to add on an endless series of fees, “taxes” and other expenses that whittle what you’re owed down. Eventually, they’ll stop responding completely and likely disappear. You may even find yourself locked out of your “accounts”. You’ll find yourself subject to identity theft. The information you need to put into an investing account is typically more than enough for a scammer to subsequently commit identity theft. Unless you’re 100 percent sure about a platform, do not provide it with credit card details, passports, or even your date of birth. You’ll never seem to win. Many scam binary options traders will seem like the real thing, but they’ll use software to distort results. You’ll see yourself tracking for a “win” only to see it suddenly (and arbitrarily) become a loss once the countdown expires. Finally, a less insidious trading platform might be genuine about the payouts but be massively overstating the average return on investment, to lure people in, but end up paying them less. It works like this: A customer pays $50 into a binary option contract that promises a 50 percent return if the stock price is at a certain level when the option expires. Assuming it’s a reasonable target and there’s a 50/50 chance of winning, in the long term this structure will result in a net loss to the customer. If the customer wins, they get $25 from the 50 percent payout. If they lose, they lose $50. Over the course of 10 investments, with half winning and half losing, they would have spent $500, lost $250, and got $125 in winnings – in other words, for a $500 investment, they would now only have $375. There are legitimate platforms that have payouts close to or in excess of the 100 percent they need to be for you to have a break-even result on an average day. Here is a . list of some of them However, even with the very best binary options platforms, it is important to remember that these are speculative investments, and you need to be very, very good and familiar with the market if you hope to turn these investments into anything more than a complete throw of the dice. The payouts might seem to be large – and they potentially can be – but at the very most these should account for a small amount of your overall wealth and portfolio.

fees

Target

How To Safely Invest In Binary Options And Avoid The Scam

About Author

Comments

TOPICS

THIS ARTICLE WAS FEATURED IN

Related Stories

Untitled Story

Hot vs Cold Wallets: Which Is Right For My Crypto?

How Structure Finance Will Democratize Wall Street for Retail Investors

Surveying Unexplored Areas of Innovation in the Crypto Economy

"Trading Binary Options in Crypto Is NOT About Instant Wealth" - Artem Levin

Binary Options Trading: Can Trading Bots Make A Difference?

Hot vs Cold Wallets: Which Is Right For My Crypto?

How Structure Finance Will Democratize Wall Street for Retail Investors

Surveying Unexplored Areas of Innovation in the Crypto Economy

"Trading Binary Options in Crypto Is NOT About Instant Wealth" - Artem Levin

Binary Options Trading: Can Trading Bots Make A Difference?

Light-Mode

Classic

Newspaper

Dark-Mode

Neon Noir

Minty

HN StartUps