Binary trading options are the current way to make money quickly through trading in commodity, stock and monetary assets. Similar to other inventions to make money, there is a high potential for fraud. Recently the SEC has issued an Investor Alert to watch out for fraudulent schemes that promote binaries and binary options tools for trading binary options platforms. These scams may involve credit refusals, reimbursement issues, software manipulation and identity theft. A ring of brokers who were using software to guarantee “losers” was recently indicted.
Β· Many options markets that are internet based may not be complying with U.S. regulatory requirements. This gives rise to illegal activity. A trading platform requires clients to deposit a set sum of money, buy a binary call or put contract. You may be required to pay $50 for an option that gives you back a set return percentage if the stock price rises above $5 per share when the expiration limits are fulfilled. If the stock price rises above the $5 per share price at the expiry time, the outcome is positive and the investor receives the promised return. If the asset expires lower than the $5 prediction, the investor loses all his/her money. This can almost be construed as internet gambling.
To increase your chances that the trading platform is legitimate, investigate their advertising. If the platform states that you will receive a higher payout than is customary, you should move on to a different brokerage and trading platform.
Β· Identity theft is an issue ramped in any financial sector. If your selected trading platform requests a credit card to be on file or your driver’s license data, move on to another platform. You do not need to provide any of these identifying documents to trade on binary platforms.
Β· Watch out for trading platforms that manipulate expiry limits to generate losing trades. It is very difficult to regulate internet-based platforms that manipulate trading software to distort prices and payouts. If you find that your trade is “winning” but the time has been extended be wary. You may be the victim of fraud that is manipulating the expiry time to assure that you will lose your investment.
Registration and regulatory requirements from the SEC do include listing the binary option contract as a security. You cannot offer or sell certain types of trades without registration. Watch out and investigate to ensure that the sale of your particular asset is legal.