Have you ever come across a binary options scam? They’re usually expressed as an easy and risk free way to make money online. The reality is unfortunately, far from the truth.

As any seasoned Binary Options trader will tell you, trading binary options requires time, dedication and a certain degree of risk tolerance. Its most certainly not the easy and effortless endeavour these scams mention.

If you are to avoid Binary Option scams and succeed in investing, you will need to know how to spot a scam as well as how to avoid many of the pitfalls that come with trading online.

Unrealistic Promises

If it sounds too good to be true, then it probably is. This may be a really old expression but it is as true now as it was a few years ago. If someone is making promises of returns that seem really unrealistic, this should be a red flag.

Trading always involves risk and markets don’t always move in the direction that you are hoping. What most good traders hope is that the long term returns level out with more wins than losses.

The trader should beware of words like “guaranteed” or “no-risk”. These are no doubt not the best way for the trader to make money.

The Software Scam

This is probably one of the most prevalent scams in the binary options industry. Essentially, it is a touted as some revolutionary piece of computer code that has an edge on the market.

The main advantages, it is claimed, is that no experience is required and all you have to is switch it on and watch the profits grow. This Binary options robot scam permeates the internet nearly everywhere.

This is where most new traders tend to trip up, they think that trading binary options can be simple and that some piece of code can make them profits easily.

All they would have to do is use some simple logic. For example, if such software really did exist then surely it would be in the hands of some powerful quant hedge fund in Wall Street?

Moreover, if this piece of software was so effective, why is it on offer for free? This is clearly a scam as it is just a method for you to deposit with a dishonest broker.

The moment that you have deposited your funds, then you will lose your money and the broker will enjoy your money. They will also give a piece to the software provider to say “thanks for sending the chump”.

The Rigged Platform Scam

Perhaps you decide not to use any sort of trading software and you would prefer to trade by yourself. You then decide to open a demo account at the broker and give your trading a try.

You are pretty surprised at how effective the trading is and have more confidence in your trading ability now. Your win rate is quite impressive and you are thinking of investing some real funds with the broker.

However, the moment that you invest your money you find that your win rate plummets and you keep on losing trades. This takes you by surprise as you thought that your trading was effective.

What has happened is that you have fallen victim to a broker who manipulates the pricing on their platform. The broker has adjusted the pricing while you were on demo and moved it considerably further away when you traded on your live account.

The Professional Manager Scam

This is another way in which the broker can make off with a lot of your money. It involves the broker offering you the opportunity to make use of their professional “binary manager” who will make you money on the platform.

This also involves a certain degree of common sense. If the broker will make money on client losses, it’s in their interest to provide you a managed account solution that will lose you money.

Hence, the professional trader is nothing more than an excuse for the broker to make money off of your account. The moment that you invested with the professional trader they will lose most of your money on a few trades.

If you considering using a managed account solution, you should make certain that the trade is separate from the broker.

Refusing Withdrawal

Perhaps no scam is as blatant as the theft associated with a withdrawal restriction. What will usually happen is that the broker will make it near impossible for the client to withdraw their funds.

They will make numerous demands around supporting documentation. They will claim that the documents that the client has sent in are not sufficient and that they need more.

The main MO behind these requests is to make it really impossible for the trader to withdraw their funds. The broker will eventually hope that the trader will lose interest and give up. This is where the scam turns a positive result for the trader.

Avoiding Scams

These are only some of the numerous scams that are abound in the industry. Despite the fact that Binary Options have been overrun with these types of scammers, it can still be an effective way to make money.

The key to succeeding with Binary Options is being able to spot the scam and choosing only the best brokers to deal with. It usually requires the trader to be due diligent when trying to find an honest broker and platform.

The trader should take the time to read broker reviews to see what other traders are saying about the broker they want to use. It also requires the trader to take the time to better understand how to trade and what strategies to implement.

Trading Binary options is like any other endeavor. What you put in is what you get out. You need to take a certain amount of time to practice your trading skills on a demo account and focus on your strong points.