Every once in a while, you hear of binary options trading success stories, especially if you are always looking at this and other trading schemes online. You will read how an average Joe invested just $200 and turned it into $20,000 by the end of the month.
News of people quitting their day jobs just because they got rich through trading binary options will occasionally pop up on your screens. They will seem lucrative enough to at least get you thinking about investing in this particular, and rather peculiar, type of trade.
However, is it that simple? Can binary options get you rich quickly?
Sadly, life is not as simple as these success stories make it seem, and binary options are not that easy to crack. The risks, scams, and lack of regulations make trading binary options a risky affair, especially in 2021. Here’s why.
It Has a High Chance of Being a Scam
Although binary options trading itself is not a scam, there are many ways to turn it into one. In most cases, it is the brokers who turn it into a scam. They use rigged robots or software to manipulate online trading.
For instance, the software is programmed to keep extending the expiration countdown until the trade becomes a loss for the trader, and the broker can keep a hefty profit. And to validate the platforms, brokers get paid reviewers to release positive reviews about these platforms on various blogs and websites.
The FBI also reported that scammers might try to steal traders’ credentials which can lead to identity thefts. Besides, people lose money as brokers often refuse to credit or reimburse funds.
It is quite easy to fall victim to such scams. Fortunately, there are ways you can get your money back from binary options. To recover money or lost funds, you can reach out to scam recovery companies. These companies have been helping binary options victims by confronting the scam brokers head-on. They can recover the lost funds by gathering all the evidence and systematically confronting these entities.
The worst part about these scammers is that they target even the most vulnerable people in the community. That is why these scams are still going on in 2021 after a global pandemic that left millions economically vulnerable.
Scammers seek out people in financial need and lure them into investing in binary options. The idea of making so much money with such a small investment gets people to blindly believe these scammers, and they eventually lose it all.
Lack of Proper and Sufficient Regulation
The main reason why scams are so prevalent in binary options trading is because of a lack of regulation and supervision. There is no external regulatory body that can settle discrepancies or disputes in your trade. Brokers often take advantage of these unsettling situations and try to manipulate the dispute in their favor.
This lack of an external regulatory body is why the US has labeled binary options as a restricted form of trading. The Chicago Board Options Exchange and the North American Derivatives Exchange (NADEX) have set up the facilities necessary to support binary options traders.
However, despite their efforts, scammers are still running wild. Things are more difficult to maintain and regulate online. Plus, it is a lot easier for scammers to pose as legitimate brokers and steal money from victims.
A lot of Risks for a Small Return
Binary options are comparatively easier to trade than some of the more complicated trading like crypto. However, the return you get in binary options is quite small and insignificant for the risks that you are taking.
For instance, by investing $200 on a certain binary options trade, you can get a return of $500. That means you make a profit of $300. However, you will lose the $200 you invested if your bet does not work out. That means you are taking a bigger risk than you need to for other types of trading. It is easy to lose everything you have in an effort to win something big.
It is easy to see why binary options trading is a grey area right now. And no matter how much people tell you to give it a shot, you should remember that it may be trickier than they make it sound and might not be worth it.