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Current Day Binary Options Scams You Need To Look Out For!

Will the price of an underlying asset be higher than a predetermined level at a predetermined time? Binary options are a type of financial option that offer either a fixed payoff amount or no payoff at all if the contract is held until its expiration date. 

Considering there is no other type of settlement that can occur, these types of options are referred to as binary options. A binary option is based on a straightforward yes-or-no proposition, as its name suggests.

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What Exactly Is Binary Options Trading?

It is one of the simplest financial assets to trade because traders place bets based on whether they feel the answer is yes or no. Because of this simplicity, it has garnered a lot of interest from traders as well as others who are just starting out in the financial markets. 

Traders should have a comprehensive understanding of how binary options function, what markets and time frames they can trade using binary options, the benefits and drawbacks of these products, and which companies are legally authorised to supply binary options to residents of the United States.

The structure of binary options that are traded on exchanges located outside of the United States is often distinct from that of binary options that are traded on exchanges located within the United States. Binary options are an alternative to speculating or hedging, but the trader should only consider using them if they have a complete understanding of the two different outcomes that are possible with these exotic choices.

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The Art & Science Behind Binary Options Trading

The trading method known as binary options is based on a simple yes or no proposition and limits both the amount of potential loss as well as the amount of potential gain. 

Take, for instance, the following inquiry as a point of reference: When 1:30 p.m. rolls around today, will the price of gold be higher than $1,830?

You make the investment in the binary option if you have the conviction that it will be. You should sell this binary option if you believe the price of gold will be at or below $1,830 at 1:30 p.m. on the current trading day. A binary option’s price is always somewhere between zero and one hundred dollars, and just as in other financial markets, there is a bid price and an ask price. 

At one o’clock in the afternoon, the aforesaid binary may be trading at a bid price of $42.50 and an offer price of $44.50. If you decide to buy the binary option right then, the total cost, minus costs, will be $44.50. In the event that you make the decision to sell right at that moment, the selling price will be $42.50 (before costs).

Let’s imagine you decide to buy at $44.50. If the price of gold is higher than $1,830 at 1:30 p.m., your option will be deemed to have expired and will be worth $100. You have a profit of $55.50, which is equal to $100 minus $44.50. (minus fees). Being “in the money” refers to this state of affairs. However, in the event that the price of gold is lower than $1,830 at 1:30 p.m., the option will be worthless. Therefore, you will lose the $44.50 that you initially invested, in addition to any fees. Because of this, we were out of the money. 

Both the bid and the offer are subject to change up until the option is exhausted. If you want to lock in a profit or reduce a loss, you can close your position at any moment before the option expires. This is preferable to letting the option expire out of the money.

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Binary Options Fraud is A Real Thing These Days!!!

The Securities and Exchange Commission (SEC) has received a large number of complaints alleging that websites that provide the chance to buy or sell binary options using internet-based trading platforms engage in fraudulent activity. The complaints can be divided into at least three groups, which are as follows:

Refusing to Put Money on Customer Accounts or Compensate Them for Money

These complaints typically involve customers who have already deposited money into their binary options trading account and who are then encouraged by “brokers” over the telephone to deposit additional funds into their customer account. 

Customers who have not already deposited money into their account are not typically involved in these complaints. When consumers later attempt to withdraw their initial deposit or the return that they have been promised, the trading platforms allegedly deny the customers’ withdrawal requests, refuse to credit their accounts, or ignore the customers’ telephone calls and emails.

Secret Identity

Identity Theft

These allegations indicate that certain Internet-based trading platforms for binary options may be collecting consumer information for unspecified purposes. 

This information may include copies of customers’ credit cards, passports, and driver’s licences. Do not disclose personal data.

Tampering with Software to Generate Losing Trades

According to these accusations, the Internet-based trading platforms for binary options are accused of manipulating the trading software in order to distort the values of binary options and the rewards for those options. 

For instance, the clock to expiration is extended in an arbitrary manner whenever a customer’s transaction is “winning,” and this continues until the trade results in a loss.

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How Do Binary Options Scams Work?

Fraudsters in the binary options industry frequently advertise their services on social media using adverts that lead to websites that appear to have been carefully crafted. The companies that run the scams are typically based outside of the UK, but they sometimes pretend to have a presence in the UK, frequently using a famous address in the City of London.

Scam companies may change software to distort pricing and rewards, and then they may abruptly cancel the trading accounts of unsuspecting customers while refusing to reimburse them for their losses. Scammers are known to prey on unsuspecting customers who look for investments online, specifically when using search engines like Google and Bing. This is something that we are aware of. 

Although some con artists will promise you large profits in the hopes that you will put money into their scheme, others will promise returns that are more in line with what can be expected from legitimate investments. People that provide or promote products or investment opportunities that can be found through search engines may or may not be authorised or regulated by the Financial Conduct Authority (FCA). You can check the FCA Warning List to find companies that you should avoid doing business with.

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How to Make Sure You Do Not Fall into The Trap of Binary Options Scams?

Be aware of advertisements that you find on the internet and in social media that promise large returns from trading binary options. 

You should only do business with companies providing financial services if they have our stamp of approval. Since it is presently illegal to sell binary options to retail customers, any company that claims to be able to provide such services is likely operating illegally or is a front for a fraud.

Check the firm’s authorization status on the Financial Services Register if you have any reservations about doing business with them. You can also check out our Warning List to see which companies you should steer clear of. You need to make sure the company isn’t a clone by asking for their firm reference number (FRN) and contact details, and then calling them back on the switchboard number listed on our FS Register. 

You should never use a link that is provided to you in an email or on a website that the company that is offering you an investment provides. If someone contacts you out of the blue, puts pressure on you to invest immediately, or promises you rewards that sound too good to be true, you should always exercise extreme caution.

dark hacker vpn attacks

Keep an Eye Out for Investment Returns for Binary Options That Have Been Exaggerated

In addition, some Internet-based trading platforms for binary options may exaggerate the average return on investment by advertising a higher average return on investment than a customer should reasonably expect given the payout structure. This practise is known as “overstating” the average return on investment.

For instance, a customer might be requested to pay $50 for a contract for a binary option that promises a return of 50% if the stock price of XYZ firm is over $5 per share when the option expires. This is an example of how a binary option contract might work. The payout structure has been structured in such a way that, assuming there is a 50/50 probability of winning, the expected return on investment will actually be negative, which would result in a net loss for the customer. 

This design is based on the assumption that there is a 50/50 chance of winning. This is due to the fact that the consequence of the option expiring out of the money (roughly a loss of 100% of the initial investment) greatly surpasses the dividend that the option generates if it expires in the money (about a gain of 50% of the initial investment). In the scenario presented above, an investor ought to anticipate — on the whole — incurring losses.

Fighting Cybercrime

Conduct Background Checks and Thorough Research Before Committing to A Firm or Broker

Check the background of any company or financial professional you are considering doing business with through the SEC’s Investment Adviser Public Disclosure (IAPD) database, which can be found on Investor.gov, and the National Futures Association Background Affiliation Status Information Center’s BASIC Search before making any investments. 

This should include checking the status of any registrations or licences the firm or professional may have. If you are unable to confirm that they are registered, you should not engage in business with them, you should not give them any money, and you should not share any personal information with them.

What to Do If You Have Been Scammed?

You can make a complaint to us about the company or the fraud by calling the FCA Consumer Helpline at 0800 111 6768 or by using their online reporting form. 

If you have already given money to scam artists, there is a good chance that they may try to defraud you again or sell your information to other such parties. The second scam could be completely unrelated to the first one, such as by presenting you with an offer to get your money back or to buy back the investment after you pay a charge.

Sentenced in Prison

Key Takeaways!

The Commodity Futures Trading Commission (CFTC) and the Securities and Exchange Commission (SEC) have received a large number of complaints regarding fraudulent activities related with websites that provide the chance to buy or sell binary options via Internet-based trading platforms. 

There are at least three categories that can be used to classify these complaints: the failure to credit client accounts or to reimburse monies to customers; identity theft; and the manipulation of software to make loss transactions.

The first type of claimed fraudulent activity involves the failure of certain web-based trading platforms for binary options to credit customer accounts or reimburse monies after having accepted money from customers. These complaints typically involve customers who have already deposited money into their binary options trading account and who are then encouraged by “brokers” over the telephone to deposit additional funds into their customer account. 

Customers who have not already deposited money into their account are not typically involved in these complaints. When consumers later attempt to withdraw their initial deposit or the return that they have been promised, the trading platforms allegedly deny the customers’ withdrawal requests, refuse to credit their accounts, or ignore the customers’ telephone calls and emails.

Theft of one’s identity is the subject of the second type of suspected fraudulent activity. For instance, certain Internet-based trading platforms for binary options have been accused, in certain complaints, of possibly collecting consumer information such as credit card and driver’s licence data for uses that have not been indicated. If an Internet-based trading platform for binary options asks for photocopies of your credit card, driver’s licence, or any other sensitive data, you should not provide them.

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