What Is The Problem With Binary Options?

What Is The Problem With Binary Options

Being predominantly based on digital platforms, trading through binary options may not always comply with the rules and US regulatory needs, leading to involvement in illegal activities. There are plenty of fraudulent activities that traders of binary options can get involved in, so traders must be cautious while getting into trading through binary options. There’s a possibility of traders new to binary options getting involved in fraudulent activities due to a lack of knowledge of the same. So first, let’s discuss what a binary option is.

What Is A Binary Option?

It is a type of contract that deals with the prediction of the price of an underlying asset in a stipulated time, and the pay is entirely dependent on the result, which is either in or against the favor of the trader. Binary options, unlike other trading options, don’t let the trader purchase a particular asset. Binary options have a rate of return that can be up to 80% or more, which is way more than other trading options. If an investor bets $100 on a particular asset and predicts its price to increase, he can get back $100 and earn 80% returns if his prediction is correct. Due to high returns, binary options have gained more popularity recently, and traders are using binaryoptions.com to trade online. However, there are a few problems investors have faced with binary options. Let’s discuss this. 

Owing to the popularity of binary options, unregistered platforms are increasing, which often offer special return rates and result in increasing reports to the security department. The complaints mainly address the inherent risks that binary trading options offer and some cases of fraud, theft, etc. The information includes explicitly –

Refusal to Credit Customers’ Accounts and Funds Not Being Deposited

These complaints are mainly lodged by investors who are encouraged by brokers without any legitimate authority to deposit their money. However, when the customers try to withdraw their deposited cash or the returns they earned, they fail because the platform cancels their withdrawal request and doesn’t credit their accounts. 

Identity Theft

Customers also often complained that online binary trading platforms often gathered several people’s data and used it for illegal purposes causing harm to the image and identity of many. So, it is advised not to provide personal information unless the platform is legitimate.

Unauthorized Charges

Various charges that are unauthorized have been imposed on the credit cards that are used to deposit the money that the customer invested on the trading options website.

Other Issues To Keep an Eye on

  • Brokers often charge an excessive sum of money to credit customers’ accounts which often leads to investors losing even though they have won the bet. 
  • Manipulation of the software leads to changes in results. Often the timeline is extended when an investor seems to “win,” leading them to lose inevitably. The use of technology to distort binary options is often complained about. 
  • Customers also complained about unauthorized calls they received claiming to be a part of a legitimate platform or government agency.

Signs That Should Warn You

  • Internet-based binary options trading platforms may offer an excessive rate of average returns on investment which may attract more customers to invest their money on. This should alarm you to properly check before investing because these policies are used to trick by designing their pay structure so that the customer always loses their money.
  • Making sure that an authorized financial institution backs the platform: Before investing any money, a background check is necessary, along with checking if the trading platform has a valid license and is registered.
  • A proper background check of the broker is needed before investing. This secures your money, and your broker should also provide you with a suitable trading platform and a good service overall.

Be Alert, Do Proper Research and Then Invest

Since binary trading options are gaining popularity, mainly because the returns are way better than other trading options, investors must be aware of the risks that are involved. Security regulators are regulating investment activities. Some registered businesses in the market sell binary options in the US. There are quite a few security regulators that US investors should check. While there is no authorized business in Canada, Canadian investors can also check in with the CSA before investing. Before making a financial decision, it is mandatory to do proper research about the field. 

As in binary trading options, there is no in-between, and the results always have a 50-50 chance. Investors should clearly understand how the system works before investing their money. Even if the factor of luck is at play, prediction is also a game of probability, and having detailed knowledge about the underlying asset on which the investors are betting, is extremely important as well. You need to be careful before investing your funds, and if you take preventive measures, binary trading options can help you earn quite a lot of money.