If you are a trader or investor, you might have heard about this relatively new and controversial type of trading method.  Binary options have been a simple way to get started in the options market for some  people who have a high tolerance for risk (or online gambling), however, these options have more detractors than supporters due to the high risks associated to them.  And, as our investigators have seen, there are many fraudulent websites and scams relating to binary options.

“There are no regulations over binary options, and yet the global market is extensive, making it subject to a lot of manipulation and scam,” says Paul Fletcher from Wymoo International. The fact that there are no real assets being bought or sold, and that there is no agency overseeing what happens with these trading schemes should be a clear sign to investors – that binary options are risky!

What are binary options?

To really understand why there is such a conflict with binary options, it is necessary to first understand how they work. Binary options are based on the prediction of whether an asset will go up or down in price in a certain time frame, and usually a very short time frame!   In fact, binary options are susceptible to fraud and banned by many regulators as a form of gambling.

The broker will provide a strike price and will disclose the percentage of the returns that will be paid. With this information, the investor selects the amount that they want to risk, and the timeframe they want to work within, which is usually just hours.  If the bet is correct at the expiry date (or time), the investor will be paid a fixed return regardless of how much the price went up or down. If the investor wagered on the wrong side, they will lose their entire investment. Simple enough, right?  You are betting whether a price of something will go up or down in a matter of minutes or hours.  And how can anyone predict this?  Well, as you might have guessed, it’s nearly impossible.

Contrary to what happens with the stock market, there is no buying or selling shares or anything else. The return does not come from being smart enough to buy and sell a share at the right time, but from wagering if the price will go up or down. This simplicity is one of the main reasons why there are so many scams involved with binary options. Traders pick a side and make their bets. Many people are interested in making this simple wager because it requires no understanding of financial statements or fundamental analysis, and it attracts those hoping to get rich quick.

With so many websites cashing in on this new trading method, each of them is claiming to be the real thing and to be reputable – offering traders the opportunity to make real money.

Smart trading or a sham?

Clearly, binary options are not investments.  They are extremely high risk trading vehicles, essentially online gambling.  Binary options outside of the United States are offered by individual brokers, not on an exchange. Trading firms determine their own price indicators, which allows them to manipulate numbers in their favor. In the past, foreign binary trading firms have been accused of manipulating indicators and illegally signing up investors. Complaints to the SEC have skyrocketed.

International private investigators at Wymoo with experience verifying companies and websites say that scam and fraud cases involving binary options have increased significantly.

The chances of going broke are much greater than those of getting rich, as with most gambling.

Watch out for the scam brokers!

Of course, there is also the high risk of stumbling into a scam broker. In the majority of countries, binary brokers do not need to be certified or to be part of a greater regulatory  entity in order to operate. In fact, most operate illegally. Under these circumstances, it is extremely difficult to find a reputable binary options website or company.  It is essentially like looking for a needle in a haystack.

If despite the risks, you are still hoping to profit from binary options, the first step is to verify that the broker you’re dealing with is legitimate.  International private investigators strongly advise professional international due diligence services before getting started.  Remember brokers and websites (and criminals) set their own rules designed to make them a profit, not you.

C. Wright
© 2017 Wymoo International

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