Is Binary Options a Fraud? Read Before You Invest [2024 Guide]

Binary options have been a topic of interest in recent years, it is questioned whether they are a fraud or not, they have even been banned in some countries. This type of investment involves a high risk of capital loss due to its volatility and expiration times.

When reviewing binary options we found a world that allows you to bet on whether a stock is going to go up or down, as well as tips to improve profits when recommending binary options websites. But, many can represent fraud. We have surely seen ads where people tell how they have earned 350 euros in a week without much work.

This usually is a scam, and this makes people wonder if you did binary options are a fraud? It can only be said that it involves a high risk of capital loss. Frauds exist, but not because of the market but because of the manipulation of financial instruments by the brokers that are used.

What are the binary options?

Binary options consist of predicting whether a stock on the stock market or any other type of financial instrument will rise or fall in the next few minutes. If the prediction is correct, up to 80% of the bet can be won, and if not, 100% of the bet is lost.

We could also define them as financial derivatives, that is, a financial instrument that derives from another. For example, when it comes to binary options referring to gold, they are based on the price of gold.

This type of binary investments have been prohibited in countries for not complying with their obligations properly and for not giving the correct information, as well as for not acting with justice and honesty in the best interest of their clients.

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Is Binary Options relevant in 2024?

While binary options trading might still exist in 2024, there are several critical reasons why it’s not a wise or relevant investment strategy:

  • High Risk: Binary options are inherently risky due to their all-or-nothing nature. You either win a fixed amount or lose your entire investment. The odds are generally stacked against the trader, making it more akin to gambling than investing.
  • Heavy Regulation: Many countries have banned or heavily regulated binary options due to their potential for fraud and manipulation. The US Securities and Exchange Commission (SEC) has repeatedly warned investors about the dangers of binary options trading.
  • Reputation: Binary options have a widely earned reputation for being fraudulent. Many platforms operate without proper regulation and engage in deceptive practices.
  • Better Alternatives: Legitimate and far less risky investment options exist. Consider investing in stocks, index funds, ETFs, or exploring other trading strategies with better potential for long-term success.

Binary options present a high chance of losing your money and very little opportunity for sustainable profit. Even if technically available in 2024, it’s strongly advised to avoid them and focus on safer and more reputable investment options.

How do binary options work?

  • Create an account with a specialized broker
  • Choose a financial product to invest (gold, silver, currencies, among others)
  • Indicate if the value of the product will be higher or lower than the current value
  • Decide the time and date with which you intend to compare. This is the binary expiration date
  • Define the amount of money to invest and the risk to take
  • Issue the purchase order and wait for the expiration date and time

In this case, when you win, the Broker loses, and vice versa. This is one of the causes for which there are Brokers with illegal and fraudulent binary investments. It is difficult to obtain good returns with this type of investment since they are risky.

Are binary options fraud?

Binary options as such are not a fraud, the scam is really in the marketing around this type of investments, many pages that speak of this as a miracle solution to quickly generate large sums of money. The truth is that making money with binary options is not that simple.

For investing in binary options is necessary to conduct a financial analysis to know how the stock market works, economic news, among others. It is advisable to handle price analysis through indicators and charts and take into account that there are Brokers that are not reliable. To avoid being scammed, it is best to choose Brokers that are registered and regulated by competent bodies.

Binary options are a fraud when we work with Brokers that offer us a high yield and we do not verify that they are registered and regulated in a known country, and that it is verified by competent financial organizations, that is, that it complies with weekly or monthly audits to give confidence to investors.

Tips for choosing the best binary options brokers

You should choose a broker that suits the preferences and needs of each investor, but consider advice when getting the best online binary options trading platform.

Brokers that offer returns from 60%: in advance, we know the profitability to obtain with the investment. The higher the return offered by the broker, the greater the chances of maximizing your profits.

With a return in case the option expires (out of the money): since if a transaction fails, the entire investment will not be lost. This return percentage will depend on the trading platform to be used, it can be between 10% and 15% return for operations that end out of the money.

With a wide range of underlying assets: the more variety of known assets, the more opportunities to invest and hit both the downside and the upswing. An online broker can have multiple possibilities when investing such as currencies, commodities, stock indices, and stocks in international markets.

Reject Anyone Who Wants To Charge Commissions For Everything: If you’re looking to make money, constant commission payments shouldn’t be in the budget. Therefore, before registering, you must verify that they do not charge commissions for everything they do.

With effective customer service: it builds confidence to operate knowing that you have a qualified team capable of offering help when necessary, it is important that they can be contacted 24/7 both by phone, email, and online chat to be possible.

With good security and data protection system: It is very important when investing online that the site where they are going to operate has security measures where personal and financial data are duly protected.

Recommended binary options broker

  • IQ Option
  • Binary
  • Olimp trade
  • Expert Option
  • Forex
  • CFDs
  • ETFs

Tips and Tricks for Investing in Binary Options

Understand what you do: binary options are an investment that represents a risk, therefore, it is important to know how it works.

  • Have a trading plan: a trading plan is essential, each activity to be carried out is organized and listed, you will have an advantage over other investors.
  • Have a trading strategy: without a good technical strategy or trading system, you won’t get very far.
  • Investor profile: it is important to define what type of investor we are, to know where we can stand out more, whether to invest in 60 seconds, in 1 hour, or in the long term.
  • Risk control: it is necessary to use funds wisely, that is, it is necessary to protect the capital account by taking control of risk. It is recommended to risk only 1% of the capital in each binary option, this will give 100 operations in which you can win or lose. Many start by risking 10, 20, 30, or 50% of the capital, which will give fewer investment opportunities.
  • Invest, do not bet: if you do not have a trading strategy and risk control, what you are doing is betting, every time it rises.
  • Control emotions: fear and euphoria can play a trick on any operation, from avoiding making an investment that would later have worked to carrying out more operations or investing more than it should.
  • Discipline: it is a way to control risk and our emotions, this will prevent chaos from reigning when investing.
  • Staying informed: about what is happening in the market to prevent any problem that may affect the strategy and therefore operations.
  • Choose an agent regulated binary options: as already mentioned above should choose a binary options broker registered and regulated.
  • Continue learning: even if you have an excellent strategy, it is advisable to continue learning, in this way you can adjust your strategy to the different changes that may occur
  • Avoid overtrade: Overtrading is one of the most common mistakes made by beginners, especially for short-term investors. Short-term trading is difficult to trade because the price moves so fast, ideally trading the market for an hour at most and taking a break of at least 10 minutes, and so on.

We hope this helps you make the decision to invest or not in binary options. In doing so, they must take into account the recommendations that we have left them and above all choose the broken one to use very well.

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