A lot of people are wary of trading binary options because they have heard about multiple fraudulent operations in the business and they are concerned about falling into a scam themselves.
Ponzi scheme scams
The biggest scam online traders are afraid of is what could be defined as a Ponzi scheme, where you place your money with an online broker, but that broker does not provide the services that are promised and uses the deposits of new clients to simulate profits on your trading account. Luckily, this kind of scams only happens very rarely. You can easily avoid this type of fraud by only opening a trading account with a regulated broker (FCA agreement) that possesses a long track record of client satisfaction.
Be extremely cautious the withdrawal details
The second most common problem faced with scam broker is the difficulty to withdraw your profits. In most cases, client only realized they have become the victim of a scam when they try to make their first cash withdrawal. This is typically the time when brokers stop replying to your inquiries or when the problems start to materialize.
Monitor the alerts from the financial regulators
The most respected financial regulators are constantly releasing binary option broker’s blacklists that highlight the brokers you should avoid. These lists gather the brokers that are not authorized to provide financial services or that have been the subjects of multiple retail traders’ complaints. For instance, the French financial regulator AMF (Autorité des Marchés Financiers) is releasing a binary option brokers black list every quarter. In December 2014, this list was constituted of 155 fraudulent brokers that were not authorized to provide their services in France.
Do not focus on the amount of the welcome bonus
You should always remain cautious about brokers that offer big welcome bonuses. Always keep in mind that the best binary option brokers out there don’t need welcome bonuses to attract new clients. They rely on competitive rates, advanced trading platforms and strong security processes which are all much better competitive advantages than a simple bonus that can lure you to open an account with a scam broker.
Look for multiple online reviews and client complains
There are many websites and public forums out there that gather reviews of the different online binary option brokers, and there exists many topics where clients can share their good or bad experiences. This is an easy way to get a diversified and unbiased opinion about a broker and about the quality of its services.
Another problem: changing terms and conditions
Fraudulent brokers can also modify their commissions or rates without notifying the clients. This kind of fraud is more difficult to spot, as it requires daily observations on a wide range of different underlying assets and binary option types. The best way to avoid this fraud is to compare the different major brokers for a few days before you place your money anywhere. You can also try the demo accounts of all the brokers that are able to provide one. This is a great tool to gain insight into a broker details and to forge your own opinion
Stick to our recommended broker list
Eventually, the best way to avoid any problem is to only register with a binary option broker that you find listed on the website. All our recommended brokers are fully regulated and authorized to provide trading services in the UK by the FCA. They all provide advanced trading platforms and competitive rates on multiple underlying assets and option types. Moreover, we are in close relationship with these brokers’ account managers and we will be able to help you should you face any problem with them.