What is a scam?
By definition, a scam is a fraudulent scheme performed by a dishonest person, group or company in the attempt to obtain money or something else of value.
The fraudsters usually misrepresent themselves to gain the victim’s trust, making them believe they are dealing with a person of authority. The internet has created many new ways where dishonest people try to make you part with your money. It has made it easy for scams like phishing, scam baiting and email spoofing to do the rounds. This has many times led to the cliché: “If something sounds too good to be true, it usually is”.
Is Binary Options too good to be true?
Because of binary options’ very nature of quick trades, promises of high payouts and relative easiness to open an account and start trading, many people has fallen victim to “easy money”. Despite warnings of losses, greed and fear usually get the better of new traders and they cannot control themselves. Placing uneducated trades and then losing their money cause them to blame others and spreading rumours of binary options scams.
What is Binary Options?
Binary options are where you predict the movement of the markets over a certain time period. If your prediction is correct by expiry, you get to keep your investment on that trade plus whatever percentage gain your broker offers. If you predicted wrong, you lose your investment on that trade.
Since Binary Options Brokers opened their doors in 2008, they have been victims of accusations of being scammers and fraudsters. Binary options trading became very popular as it is relatively easy to start trading in binary options. Some Binary Options Brokers offer as much as 95% return on your money in as little as 60 seconds. Some even offer specialised software called Robots. Traders can use these robots to predict the outcome of their trades more accurately. Some robots can even be used for automated trading.
Is it legal?
These days most brokers are regulated. They have to follow a strict set of rules. Most are guided by The Cyprus Securities and Exchange Commission (CySEC) which is in regulation with European law. This also ensures safe trading and greater consumer protection. It is advisable to always choose to use a regulated broker.
Binary Options Trading is certainly not a scam. This comes, however, with a big BUT. While there will always be a risk of losing money, nothing will prepare you more than education and experience. When trying to trade without knowing the ins and outs of the markets, Binary options trading can very well be like gambling.
When wanting to earn those big paychecks, as advertised, one probably has to risk more than what one is comfortable to lose. Just because you can start big doesn’t mean that you should. Start small, learn what you need to learn and get comfortable with the process and get to understand the markets. Never risk more than what you are willing to lose. It takes time and effort but those big paychecks surely are possible.