A binary option trade involves a trader and a broker. The trader pays a strike price for a contract on an underlying asset and then chooses which direction he feels the price of the asset will go in a predetermined time frame. Once the contract reaches the expiry the trader will make a profit or be in the money if they chose the right direction; or they will lose their money if they choose the wrong direction. That is called being out of the money. Having only two possible outcomes is what makes this type of trading so appealing to traders. This means that it is growing in popularity at an exponential rate. While this is a very good thing, it also means that there are more people trying to operate a binary options fraud. For this reason it is very important for new traders especially to know how to identify an honest broker as well as a binary options scam.
It is very sad that there are those out there who want to take away from the reliable and qualified brokers by creating a binary options scam. This type of negative activity can be detrimental to those brokers who are reputable. There are some things that are clear give always when trying to identify reputable brokers while avoiding those that are running a binary options scam.
The first thing to look at is the guaranteed returns rate. When they offer a return that is more than 80 to 90% it is likely that they are not legitimate. This does not mean that just because a broker offers a large percentage on returns that they are to be totally ignored. It just means that you will want to proceed with caution and be careful to observe for other warning signs that might indicate they are a scam site. You do want to stay clear from brokers that guarantee a return on every single trade no matter what the percentage. Even though the risks are lower with this type of trading than other market options there will be some times when a trader makes a wrong choice and ends up out of the money. It is unavoidable; so any broker that states traders will end up in the money with every single trade is to be completely considered a binary options fraud.
Another binary options scam that occurs all too frequently is jumping on board with a brand new broker. It is always better, especially for novice traders to invest on broker platforms which are well established. This can help traders avoid many a scam. When traders choose to use trusted brokers who are well established they will not only be very likely to avoid any binary options scam, they will also be more likely to make a profit. It is also important to note for novice traders that an experienced broker will be able to help them work through the particulars. A reputable broker will have a solid and helpful customer service and perhaps different educational tools which can help the beginner work through the process of trading successfully. A broker who is established and well known to have a good reputation will not mind helping guide new traders through the process until they are comfortable with it.
One way to ensure that a broker is honest is to see if they are really registered with their country's regulatory body. If the broker is registered it is probably not going to be a scam. However, one that is not registered, and claims that they are, is most certainly going to be a binary options scam. It is very important to do some research on any potential broker. Read some valid reviews and enter some discussions and forums. Asking questions of other traders, especially well experienced ones is one of the most effective ways to provide protection from a binary options scam.
We hope that this article has given you some hints and tips to identify a Binary Options Scam. If your still unsure how to identify a Binary Options Scam [http://www.masterbinaryoptionstrading.com/category/binary-options-scam] check out this online resource for a more hints and tips.