Are binary options a scam

Binary options have a bad reputation and it is very common that you hear that binary options are a scam. This is not exactly true but it is very easy to understand how we ended up where we are. The market have been plagued by a number of dishonest brokers who offered a scam service. A service where it was impossible to make money. Thousands of people have been tricked out of large amounts of money.

The majority of scam brokers have been shut down but new ones keeps popping up and there are still scam brokers on the market. You need to be careful to make sure that you do not fall victim to one. There are numerous websites around where we can read reviews and find the help we need to avoid scams. It is usually easy to avoid the scam brokers as long as you use common sense and the many resources that are available for binary options traders.

Trading against the broker

It is important to know that you always trade binary options against the broker. There is no open market for binary options and there is no third party involved in the transaction. The transaction is between you and the broker. If you earn money the broker lose money. If you lose money the broker makes money. Most brokers are very open about this and you can easily find the information if you read their information about binary options. This information is also high lighted on almost all binary options websites.

There are despite this many traders who feel scammed when they find this out after having lost money. This was never a secret but they were too lazy to learn about the instrument they started trading. They did not get scammed. They broke the first rule of investing and scammed themselves by not knowing what they were trading. By not knowing how binary option works.

Binary options will always favor the broker. You lose 100% if you lose but you only earn 80-90% if you win. The odds are stacked against you. You can however make money by being a skilled trader who only chose to invest in options that have a high probability to mature in the money. About 60% of all the options needs to mature in the money for you to make money.

Bonus problems

It used to be very common for brokers to offer bonuses to new customers. This is a lot less common now since several jurisdictions have banned bonuses. This is a positive development. Bonuses have caused a lot of confusion in the past. A lot of traders have accepted large bonuses without understanding the trading requirements associated with bonus. They have then felt scammed when they are not allowed to withdraw any money because they have not yet fulfilled the bonus requirement.

Banning bonuses should reduce this type of confusion.

High risk

It is very important to understand that binary options are very high risk. Most traders who start trading binary options end up losing money. Only about 10% of all traders become successful and actually make money.

Aggressive marketing

Binary options are not a scam but a lot of binary options marketing is. It is very common that you see advertising for binary options that promises the moon. They make binary options seem like an easy way to earn a lot of money. Anyone can start trading and earn thousand their first day. This is technically true but it gives the traders unreasonable expectations. It makes them expect to make money when the truth is that most of the will lose money. Many traders feel scammed when their expectations are scattered.

Less aggressive marketing could help give the industry a better reputation and reduce the number of traders that feel scammed.

Scam services

There are a large number of scam services available online that claims that they can help you earn money trading binary options. This includes trading system and trading signals. Trading systems and trading signals are scams. They are not wroth paying for. If you do you will end up losing the money you spent to buy the service and then you will lose more money when you trade using those services.

It is common that signal providers show statistics that shows how they have made money for people in the past. This history is almost always fake. We do not know of any honest signal service on the market right now. Any trader skilled enough to have a high success rate will trade for himself rather then sell the signals for a few hundred a month.

Signals are usually useless even if you find a good provider. The reason for this is that the information have a very short life span. A few minutes is usually enough for the trade to be gone. I recommend that you do not spend money on signals or other services. Take the time to learn how to analyze the market yourself.