The following post is a Response to the "The most honest binary option success story you will ever read" that was posted by Ashlee Young under "Binary Options Success Stories and Testimonials".
Let us get one thing clear: All binary options are scams, with the exception of High Low Options in Australia, since the financial regulation in Australia is watertight unlike Cyprus.
The money you see in your account with these binary options brokers is fake money, monopoly money. Of course the smarter ones keep a fraction of your deposit to pay you out to keep you on the hook. However after that small withdrawal they will keep pushing until you have deposited well over $5000.
The only place where you know where your money is placed, and you can phone the bank to confirm, are real banks offering binary options like Ducascopy Bank or a regulated U.S. binary options exchange such as Nadex.
If you are considering any offshore broker with a dodgy company name that is located in the Seychelles, offices in Cyprus, bank accounts on the Isle of Man and a payment processor in Anguilla then good luck.
Take my warnings to heart and trade only with places that have ruthless financial regulation backing them up (i.e. Not Cysec).
Most of these brokers offer something akin to what I would label as “circus” binary options. That is because the payouts are inherently low compared to online gambling and casino websites which offer payouts around the 97-98% mark. In other words if you choose to gamble at a casino then in the long run you are better off than with a binary broker offering you about 89% (which is rare, most are 70-80%). [Yeah, your the clown playing the fool with your money in front of an audience of brokers willing to let you deposit in under 10 sec and let you withdraw after 2 weeks or never, whichever comes last.]
Additionally the “liquidity provider” or what we would properly call the market maker, is non-existent for almost all these brokers. THE BROKER TAKES THE OTHER SIDE OF THE TRADE. Even if there is some sort of bank or other market maker taking the other side and paying commissions to the broker you will still have conflict of interest. This is evident in that commissions are volume based on both losing and winning trades. Additionally the profitable side of this business is with the market makers and their edge over you since you lose on average in the long run. Of course the broker would side on the theoretically winning side and thus would not be interested in making you money, rather taking it.
Now something that is not obvious to binary options traders: Affiliate networks. Most brokerages work on an affiliate basis whereby for every high valued customer a website or link or ad or whatever brings in they will pay the affiliate a % of the initial deposit of the client (Of course it is not deducted from your imaginary balance on screen, it is deducted from their Isle of Man bank account where you money will soon disappear).
Unfortunately the evident list of schemes,algorithmic robots, signal providers, etc (which are well over the 200) on the internet that promote fake services only offer us more evidence of this elaborate scheme. Basically you sign up for “The Lunar Eclipse Binary Method” [Not real name] scheme that promises that their amazing robot (built using a secret formula that some former “loser” discovered before becoming an overnight millionare) will double your money every 3 days. Once you have signed up you are directed to a page to only deposit a small amount of $250 (although you are advised a $1000 is better) at a brokerage (sometimes even well known ones!).
The end result? Your account balance is $0 in 18hours and 3 min and your account is closed. Or better you get called about an error in the machine and that everything is now sorted out, so go ahead and deposit another $1000.
Sigh…I can go on and on about how these people scam you. In fact trading forex as the author of this article suggests is dangerous as well (for completely other reasons). My advice is forget trading and invest in $100 a month unit trust or ETF or whatever your financial advisor suggests. Do it early and let compound interest work for you.
If you want to trade derivatives (binary options, call and put options, lookback options, quanto options, exotics, etc) then become professionally qualified to do so like I have. You will quickly see that these binary options are nothing but a mockery of true binary options trading (yes go to a proper binary exchange such as Nadex and see how proper trading looks like, it is much different than these circus options).
Good luck, whatever your endeavors.
Posted by Anonymous Reader
George Milios is the founder of onlineforextrading.net, the binary options and forex news portal which is dedicated to providing you with all the information you need to successfully trade.