One word has been synonymous with binary options for a long time now. Yes, you guessed it; the word is ‘scam.’ No matter where you look for information on this method of trading, you will come across widespread accusations of binary options scams. Unfortunately the volume of them does not seem to be getting any less frequent.
I say unfortunately as a number of regulatory changes that have put in place recently. This has been done in an effort to regulate the industry and is supposed to have helped address these issues.
However it would seem that there are still a wide number of issues cropping up on Binary options websites and forums associated with this method of trading. Far from cleaning up the industry in one swoop it would seem that the current round of regulation may only have ‘tinkered’ at the edges as far as many traders are concerned.
While this may seem to malign the binary options industry it should not be viewed in isolation. It is not just binary options deposit scams that plague the financial world.
Many of the scams and issues that exist in the world of finance have not been limited to binary options exclusively. Much of the financial industry comes under the same level of scrutiny. With a bit of research you will find that almost any area of finance is subject to similar areas of criticism and countless stories of those who end up losing their shirt.
Unfortunately it is a case that any market where money can be made will be subject to manipulation. There are those who are keen to make even more money in any which way possible at someone else’s expense. Being aware of these scams and tricks is the only way to protect yourself.
One of the most contentious issues remains that of bonuses. Forex brokers have for many years suffered the same criticisms for the way in which they use this lure of ‘free money’ to get customers through their doors.
While a ‘bonus’ is generally assumed to offer something for free, when it comes to the financial world it is important to remember that there will be conditions attached. When it comes to binary options, the conditions attached to the binary options broker bonus can vary from the sublime to the ridiculous. Needless to say, bonus terms are rarely positioned to favour the trader, but rather to give the broker the best opportunity to take your money.
The most common condition attached to the bonus awarded is to prevent the trader from making withdrawals from their account until a number of specific conditions have been met. To illustrate this it is probably best to look at an example.
Let’s assume that a trader makes an initial deposit of $500 to their account. On doing this they receive a typical matched bonus of $500. This takes their account balance up to $1000. So far so good. Except the next day the trader decides they need to access some of this money and puts in a withdraw request for $100. Remember, they deposited $500 of their own money, so they should be able to withdraw $100 or it out? Right? Wrong!
In some instances such a request will receive a rebuke from the broker. This can often be attached to a notification from their broker that the request cannot be completed as they have failed to meet the conditions attached to the bonus. Confused and angry the trader hits the nearest forum shouting ‘scam!’
So what has happened here? Let’s look a little closer…
The reason the trader can’t withdraw their funds is because they failed to read the terms of accepting the bonus. It is common that terms will often stipulate that no withdrawals can be made from the account until a set number of conditions have been met. These conditions are often linked to the trading volume on the account.
Commonly the broker will stipulate requirement to trade n times the volume of the bonus before a withdrawal can be made. This is sometimes 30 or even 50 times the bonus amount accepted. In our example using a figure of x30 the bonus amount this would require the trader to turnover $15,000 worth in their account. To put this into perspective, at $25 per trade this would require 600 trades to be made before a withdrawal could be made.
Of course the reason behind this is that the broker expects the trader to go bust before this achieved and so avoids ever having to make any pay-out at all. The lesson here of course, is to check any conditions prior to accepting a bonus on your account.
If you want to sleep without any future worry then the answer is simple. Just reject any bonus and trade only with your own money.