How to Identify a Binary Options Scam?

Want to trade binary options but afraid of getting scammed? Don’t worry because you can easily identify and avoid them as long as you know what to look for. With the right information and education, you will be able to recognize the red flags and effectively determine a broker’s reliability. Here are some useful steps that you can carry out protect yourself from being scammed:

Make a thorough background check

Never entrust your money with a broker that has only appeared overnight. Make a background check about the brand and determine how long it has been in service. Is it operating for just a month? Is it registered with a financial regulator? These important details can help you in profiling if a certain brand can be trusted.

Contact their customer service department

Just because the brand is showing that they can be reached via email or phone doesn’t mean that they are already trustworthy. What you need to do is to communicate their customer service department and if you do get answer or reply then throw in some inquiries or questions so you can verify they can be answered completely and the response times are acceptable. For example, we contacted 24option’s phone number in the UK to find out if they do have a local support there. Our tests showed that they indeed have a phone support for British traders.

Consider the payout rates

Never get tempted if a broker is offering extremely high payout rates. Trusted brands normally offer a range of 60% to 85% payout for options that expire in the money. Unreasonably high rates should give you a heads up about the platform’s reliability.

Read through the fine print

It always pays to be vigilant. Make sure that you have completely browsed through the terms and conditions page and checked if there are any loopholes or ambiguities before you make any fund transfer. Sure it may be long but a thorough inspection can help you avoid fraudulent brokers. The image below is the user agreement of Finrally with their clients. We read through the terms and everything was clear.

Identify the supported payment methods

A reliable broker should support a number of payment methods for banking such as known credit card brands and other popular payment methods. It is also important to check if there is a secured socket layer (SSL) encryption which guarantees the safety of your financial details.

Try if you can withdraw money from your account

If you are having a hard time cashing out your winnings or your funds then it is could be an indication that it is a bogus broker. Only deposit the minimum amount that is accepted and check if you can withdraw your funds once you have made a few trades. In this example we tried withdrawing our money from Finpari and they were able to process the request in just 1 hour. That means they can be trusted.

Read online reviews

Simply using Google can help you get reviews about the broker that you wish trust your investments with. Be wary though of bogus reviews that you encounter telling you false information about a certain brand. Checking out comments and personal user reviews in our forums will give you more reliable appraisals.

Fully test the platform

You can easily identify if a broker is a scam by personally evaluating its trading platform. Based on the user recommendations in our forum, it is best if a demo account is available so if this is offered by your broker then take advantage of this feature. If not then, you can simply browse through their website to evaluate the quality of the platform.

Communicate with real traders for help

One of the best ways to get real information and feedbacks is by getting opinions from real traders. Online communities like this forum or even seminars can be a good avenue for exchanging personal recommendations on which brands are good and which ones are not. Don’t hesitate to ask for information as this is a community where online traders help each other.

Based on the recommendations of the majority of users in our forum, we were able to determine that the top 3 brokers are the following:

24option HighLow Finrally
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