Binary Options – a Scam or Not?

This extended review of binary options came to us Vladimir from Moscow. This review is very critical. Let’s just say that everyone is entitled to his point of view!

Recently, on the Internet one can more and more often come across quite obsessive advertising of a new “method of making money” – binary options. Along with the Forex market, this method is presented as an opportunity of the simplest way to make money. A person is invited to perform only a few actions to get a fairly good income. And all this against the background of the prevailing negative attitude of most citizens in Russia to such concepts as financier, entrepreneur, banker. That is, the proposed trade in binary options does not involve deep elaboration and study, but is aimed at the traditional Russian chance. In this article we want to find out together with everybody whether the advertised Binary options a scam for suckers or not?

Naturally, binary options did not arise from nothing. Like any other scam, this type of taking money from gullible Russians has its cover. Almost every website, which offers a quick and easy way to make money on binary options, puts a link to quite legal organizations, offering the opportunity to work with binary options. In particular, this applies to Chicago Board Options Exchangewhere options trading is a normal occupation.

Moreover, by referring to the Wikipedia, you can read that binary options are a great hedging tooland the Chicago Stock Exchange is given as an example.

However, almost all of the websites offering to make money on binary options in Russia have nothing to do with the Chicago Stock Exchange and not even with the financial market. Neither do the people who create these sites.

How to trade binary options

Quite a small number of specialists in our country know about the real mechanism of binary options trading. This is used by swindlers, who create a lot of sites – clones of the real platform, providing services to work with binary options.

Consider step by step what is offered to “suckers” who want to earn quickly and thoughtlessly:

1) Register on the site. The procedure is simplified to the point of impossibility, which simply can not be in a serious organization. Everything is done with one goal – to lure the client and draw out as much money as possible.

2) Refill your trading account. Money can be accepted both from a card and from a variety of electronic payment systems. However, there is a restriction on the maximum amount of money that swindlers are ready to accept no more than twenty thousand dollars. That is how they protect themselves from the client’s use of the Martingale system. In general, full compliance with numerous network roulette games.

3) After depositing the account on the main page, the client immediately gets under the influence of intrusive offers to make the first transaction immediately. The client is offered to choose one of the instruments and bet on its fall or rise.

4) If the circumstances are lucky, you can get a refund of the bet and in addition some earnings, sometimes up to ninety percent of the bet. Well, if you do not guess, then the entire bet is left to the organizers of this uncomplicated action.

5) There is usually a quick loss of all money, but most people who believe professional aggressive advertising try again, and some who do not believe professional aggressive advertising try again, and some more than once. This can go on until the client is disappointed or loses all the money.

Interestingly, it’s almost impossible to find information that talks sensibly about binary options. There are tons of texts and videos on the Internet trying to encourage people to gamble. In this case all the information is so confusing that it is very difficult to understand the essence of the deception.

Opinions against participation in binary options trading

The main thing that should stop you from investing in these dubious projects is handing money to people whose whereabouts are unknown. Try to find the real location address of the owner on any website offering to trade binary options. After searching through more than a dozen of such sites, you won’t be able to find even one. At best, if the address is given, it will be a small island with an extremely liberal fiscal system, for example, Cyprus.

The second thing that should be alarming is that clients are offered very short trading periods. While real market conditions suggest at least a few days of option life, fraudulent companies allow you to put out an option even for one minute.

No scam site provides access to quality documentation, does not provide a detailed description of the rules and specifics of working with binary options.

And of course the quality of the site itself. All the sites of fraudulent companies are made simply disgusting, they are monotonous and primitive.

Advertised “winning” binary options strategies

Despite all the warnings, some people still dare to invest their money in the programs of scam artists and try to follow strategies found on the Internet.

Let’s try to dispel the misconceptions imposed by advertising about some strategies:

1) Martingale. The system involves doubling the bet when losing. The disadvantage is the need to increase the bet in geometric progression, which rather quickly leads to the waste of all funds, the maximum amount of which is limited by the rules of the organizers is to prevent the use of this system.

2) Roll-over. Binary options presuppose a specific closing time, while the proposed feature allows the roll-over of the position by one period of time ahead, if necessary. The drawback of this approach is that it is a one-shot deal for a specific option and in full accordance with the laws of swindlers, the client will be asked to pay a thirty percent increase for the option’s roll-over.

There are no fundamental differences with the Martingale strategy. The main thing is to draw some more money!

There are other strategies, but believe me, all of them will not bring you the winnings.

Binary options, it’s a casino!

If you take a serious look at the sites that provide the opportunity to trade binary options, you can not particularly bother to notice similarities with online casinos. Of course, casinos have every right to exist, but one should not confuse gambling and the financial market, because it usually ends badly for finances.

To realize the resemblance, it is enough to simply imagine instead of a trading floor a simple slot machine that gives out the numbers “one” or “two” in random order. If a guess is made, the money invested is increased by a predetermined amount, which rarely exceeds eighty percent of the original amount. If you lose, the bet is lost completely. Binary options represent the same thing: the client in a slot machine selects the direction of the option movement “up” (one) or “down” (two). The distribution of profits and losses is the same. Do I have to explain that the mathematical probability of winning is negative? For the sake of simplicity let’s just say that the probability of each of the events is fifty percent, that is the number of the guessed positions will end up equal to the losses, but the winning is always twenty percent or more less than the losing. So draw your conclusions!

Let’s take a deeper look into the trading process. Of course, changes in the rates of major currencies or stock quotes of companies are far from accidental. Often such changes are successfully predicted by specialists using the methods of stock exchange analysis. Naturally, it is true, but we are talking about specialists, and most of the players are extremely unrelated to them.

In addition, all fraudulent sites are designed in such a way that the process is as close to random as possible. That is why it is possible to purchase options that have a minimum time of existence. No professional can correctly predict the movement of the market for a period of ten minutes. All forecasts are made at least in the medium term.

This is where doubts may arise from those who are familiar with the Forex market. Such people would probably ask: “What about scalpers?” (Scalpers are traders who make very fast deals in large quantities). Concerning scalpers we can say that they try to forecast even very fast market fluctuations, but as soon as they make only one mistake, their previous income is lost. And, of course, the scalper’s earnings are rarely worthy of attention.

Conclusion

Like any job, activity in the financial markets will not allow you to get fabulously rich instantly. It will take long and painstaking work to earn money. And of course, if you decide to take part in the financial markets, it is better to choose the real markets of futures, stocks and options.