Binary Options Scams – How To Protect Yourself

Unfortunately, binary options scams do in fact exist. However, it is not in the form of some widespread scheme whereby binary options themselves are just some sort of huge hoodwink, as some folks seem to think (judging by some incoming search terms we see). There is no “binary options scam” as a whole. What there is, however, are individual binary options scams, usually run by dishonest broker affiliates. We have an especial distaste for this particular brand of human scum. And we would like to prevent as many people as possible from falling prey to these often admittedly quite clever schemes.

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We have written about two of these scams very recently: “profit in 60-seconds” and “get rich in seconds”, but unfortunately there are too many of these things out there to write and warn people about each one individually. Luckily, almost all of these scams operate in a very similar manner, because the scammers have found that it’s what works best. But their strength is also their weakness. Because they all work basically the same we can learn to easily spot them and protect ourselves just by learning a few things to look out for. And that is exactly what we are going to teach you how to do in this article, using the newest one of these binary system scams, the “Binary Matrix Pro” scam system as our example. We would also recommend a look at the previously written article linked to above for further examples.

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Binary Options Scams – How They Work

As we mentioned in the opening of this article, most binary options scams are a result of dishonest affiliate relationships with brokers. The brokers are not involved or aware, and have no real blame here beyond maybe not policing their affiliates well enough, a difficult task. Remembering this relationship though is key to spotting these scams in whatever form they may take. Using our Binary Matrix Pro review for our example, let’s look at what they have to say about getting access to their wonderful, free money generator product (sarcasm alert):

“Begin with by opening an account at our binary dealing options brokers and deposit $200 in your acc. “

Wait, what happened to free? Well folks, it turns out there just isn’t no such thing as free money, or free money generators for that matter. Imagine that huh. Every one of these scams operates in this exact same fashion. Just like this Binary Matrix Pro scam, they tempt you with amazing promises, which you can have all for free, but then once you’re hooked on the idea you discover that you must deposit $200 or more with the scam operators “preferred broker” or “trusted broker” which are all just different ways of saying business partner. A business partner who then turns around and pays the scam operator $200+ for sending them a new client. So, quite the opposite of what they want you to believe, you have actually paid $200+ to the scammer for his product before you ever even lay eyes on it. Which is good for them because the products are all frauds that will just empty your account balance as sure as the sun rises each day. Nothing anyone would ever pay for. That is exactly how the Binary Matrix Pro scam works, and how 95% of the binary software/system scams currently out there work.

new binary options scam system

How To Spot Binary Options Scams Anywhere

  1. System/Software Promising Easy Large Returns…
  2. …Get Access For “Free” Or With “Free Trial”…
  3. …But Only If You Open New Acct. + Deposit $200 With Their “Approved” Broker or Brokers

Those three things are really the “calling card” of binary options scam operators everywhere. Other details can differ somewhat, or maybe even drastically in some cases, but the three points above will always be present if it’s a scam. Now, just because one of those things may not be present doesn’t necessarily mean that is isn’t a scam, but it does mean that it might not be. That old saying about if it sounds to good to be true seems to apply fairly well with these things too. Almost all that we’ve spotted make some pretty wild and outrageous claims of easy riches. We hope that this post can save at least some people the loss and the frustration that comes from getting ripped off. It’s a feeling we’ve all had before, and it isn’t a pleasant one. Stay safe out there!

StockPair Drops US Clients – Pair Options Brokers For US Traders

We received a very depressing email message from our friends over at Stockpair last weekend, informing us that they would no longer be able to accept US traders, and would be dropping their existing US clients (which includes us). Ouch. This is a huge blow to US pair options trading enthusiasts, which we most definitely are. Pair options are one of the most flexible and unique speculative vehicles we have ever come across in our nearly two decades of trading. And, unfortunately, Stockpair was the one and only dedicated pair options broker. There are exactly zero comparable pair options trading alternatives to Stockpair (read review). Zero comparable alternatives. There are, however, at least some alternatives.

Over the course of the last year, in an attempt to capture a portion of the growing pair options trading market, several of the larger and more popular binary options brokers added some pair options to their platforms. Of course many of these brokers have also stopped accepting US clients over the last year or so. It is a rough time to be a US-based binary option trading enthusiast. And for that we can thank the ever so incompetent US regulatory authorities. But, for now at least, there does remain a handful of reliable, high-quality brokers who are still serving the US market, and who offer some limited pair options trading.

The Best Pair Options Brokers For US Traders

When we heard this bad news and our Stockpair account got closed out, we immediately started thinking about where we would personally go to trade pair options now. Our first thought was, of course, for Traderush, where we keep our main personal trading account for binary options. Unfortunately, we have also recently been informed by them that they would be dropping US clients sometime in the next few weeks or so! Great, more bad news. We’ve been with Traderush for years now (read review), so this is a big blow. Luckily, they have launched a “replacement” brand for US traders, Redwood Options. They have basically just re-branded Traderush, but for a strictly English-speaking audience. There are a few small differences, but none that could be considered as negatives, just differences. That’s where we’ll be going as soon as this change happens.

We put together this small list of what we think are probably the best five pair options brokers that still accept US traders. All brokers (aside from Stockpair that is) offer their pair options as standard high/low binary options contracts. They have to in order to make them work with their platforms which are made for binary options, not pair options. Nevertheless, they are real pair options contracts, similar to the “Fixed” variety at Stockpair. But on to the brokers themselves…

#1 – Redwood Options | Review |

#2 – GTOptions |

#3 – GOptions |

#4 – BeeOptions |

#5 – TitanTrade |

It was actually depressingly difficult to even find five high-quality brokers offering pair options and serving the US market. We sure hope that US regulators can get it together enough to rectify this situation before we end up with no brokers left at all serving the US market. But for now at least, we do have these to choose from still, and all of them are industry competitors, not underfunded upstarts.

iOption Bankruptcy Saga And What It Means For The Industry

On Oct. 31st, 2013 iOption publicly announced that they were now officially licensed and regulated by the Cyprus Securities Exchange Commission (CySEC). Less than two weeks later, they were bankrupt. What the heck happened here? And what does this sudden bankruptcy of a large and seemingly stable binary options broker — one who had just received regulatory approval — mean for the industry as a whole?

ioption bankruptcy website message screenshot

The iOption Bankruptcy – What Happened?

Just prior to the opening of the first global markets on Sunday, Nov. the 10th iOption began to send out notifications to their marketing people and affiliates that they should stop sending potential new clients because no new accounts would be opened. This was not the first hint of a problem but it was the final confirmation industry insiders had been waiting for. On Nov. 11th, iOption blocked all access to its platform. iOption was officially bankrupt. But what lead up to this dramatic and sudden closing?

Industry insiders had been aware of problems at iOption for a few months, but they did not appear to be insurmountable problems from the outside. Obviously they were. This was a result of several unfortunate factors coming together around the same time, putting too much stress on company finances. A big problem in a business that requires large liquidity reserves.

The first major problem affecting company finances and liquidity was the client drain that had been occurring in the month or so leading up to this event. iOption had many more traders leaving and withdrawing their funds than they had new clients coming in for over a month prior to this bankruptcy. This was a direct result of trading platform outages that had been regularly occurring for nearly two months! Clearly unacceptable from a client’s perspective. Nobody wants to trade with a broker who cannot be relied upon to remain up and running at all times. Especially in such a fast-paced market niche as binary options trading. This was iOption’s most culpable problem in this whole saga and also one of the biggest drains on their liquidity reserves.

Apparently, iOption had been forced to make some changes to their SpotOption powered trading platform in order to get into compliance with CySEC regulatory requirements in their bid for licensing. Unfortunately, the process of making these changes caused some serious problems and is what resulted in the unreliability of the trading platform and clients being locked out from their accounts. So while it wasn’t all iOption’s fault it certainly was their responsibility to ensure a smoother transition than that.

The next major problem occurring at the same time was the financial problems and impending bankruptcies of two of iOption’s e-wallet partners, Liberty-Reserve and Netpay. The problems at these companies resulted in the locking up of many thousands of dollars of iOption’s liquid capital. Strike two.

The killing blow, however, was neither of those. No the killing blow was struck by one of iOption’s own major investors! This investor was put in a very difficult position by iOption though and can’t be blamed for pulling out when they did. After investing hundreds of thousands of dollars in the company they then found out that iOption had not been entirely forthcoming regarding its financial position (which for the reasons outlined above was poor). Since this kind of deception is not legal the investor was able to freeze all access to the capital which they had put into the company. Ouch. On top of the other serious problems iOption was having this was a case of the fat lady singing. Apparently they did reach out to potential buyers as a last-ditch effort but for obvious reasons they were unable to find an interested party.

What Does The iOption Bankruptcy Mean For The Industry?

Aside from the unfortunate position that the former clients of iOption have been put in, there are also wider implications for the binary options trading industry as a whole. So what might this bankruptcy mean for the rest of the industry?

Since their introduction at the retail trading level in 2008, binary options have rapidly grown in popularity. One predictable result of this rapid rise has been the huge influx of new binary options brokers competing for a slice of the pie. When we started trading and writing about binary options in early 2009 there were less than a dozen brokers specializing in binary options trading. There are now over 250 at last count. That is a lot of brokers for what is still a relatively small, niche financial markets product. This level of competition has been great for us traders for the most part, leading to improved service standards and constant innovation. But such a hyper-competitive atmosphere also leads to consolidation. A financially unhealthy broker cannot survive for long in such an atmosphere. Good for the industry as a whole. Bad if you happen to be a client of one of the losing brokers.

The biggest implication here is in regards to the regulatory situation and how a broker just weeks from bankruptcy could be given the “all clear” and officially licensed. Not exactly confidence inspiring. It is important to keep in mind though that this did all happen very fast, and appears to have taken place after the CySEC was provided with and reviewed iOption’s finances. So the short window between regulation and bankruptcy actually helps explain why the situation wasn’t caught by the CySEC. A broker that has been under regulation for some time is not on par with one who has only briefly been under regulation.

We have, however, for years warned against using regulation as an indicator of the reliability, trustworthiness, or overall quality of a binary options broker (or anything else for that matter). The history of financial regulators is not exactly one filled with success stories, after all. Some seem to believe that US or UK regulation is better but the evidence wouldn’t seem to support such a view. Nevertheless, some oversight by someone is probably more reassuring to most people than no oversight by anyone. We always recommend, however, that traders put more faith in a broker’s reputation than their regulation (or lack thereof). In this industry an established reputation for reliability and good business practices is the most reliable indicator of a broker’s quality and trustworthiness one can find. This incident only reinforces that view.

To conclude this article we want to point out that this incident does not reflect on the wider binary options market or the overall safety of deposited funds. It has been an isolated incident that resulted from multiple events occurring around the same time which negatively affected iOption’s liquidity and ability to meet daily capital requirements. As long as you keep up on things and read industry blogs like this one for important news you won’t be caught by surprise. And if you stick to brokers with long-established, solid reputations then you most likely will never find yourself in such a position anyway.