Warning about Binary Options

Trading Discussion Binary Options
45

Ah ah, indeed, you get some points here:

  • Indeed, I have no idea about VIP accounts at binary options. Can you please explain what it is and why those are more secured than classical accounts? But in the end the fact is that you gave $60k to a company that was not reliable.
  • Indeed, I am a small time trader! I am not risking much on the markets, and would never put $60k upfront. If you think it makes you more knowledgeable, good for you!

Oh, yes, and I might have forgotten to say I am a structurer in one of the big banks (if you even know what this refers to), and that’s why I think I am more knowledgable on exotic products than you are. I personnally really don’t care if you do not believe me. But please, keep trading exotics, my salary actually depens on people like you :slight_smile:

And to come back to the main subject, I would use binary options only for long term specific views. But I would definitely prefer trading vanilla options due to their liquidity and nice things you can do with those already!!!

46

Please read the following and we aware about binary options…this article was put out after binary options scam detected by the SEC…please read…US Binary Clampdown – SEC Follows CFTC In Issuance of Investor Warnings and Enters Charge Against Banc De US Binary Clampdown – SEC Follows CFTC In Issuance of Investor Warnings and Enters Charge Against Banc De Binary
Jun
7
2013
Posted by Andrew Saks McLeod in Regulation
4 Comments
The United States is well renowned for its commitment to consumer protection, and the latest manifestation of this is in yesterday’s announcement by the Commodity Futures Trading Commission that it intends to pursue binary options broker Banc de Binary for two transgressions of United States law.
Subsequent to the CFTC’s decision to file suit against Banc de Binary, the regulator posted a very concise warning on its website aimed at bringing to the attention of American citizens the potential caveats of trading with off-exchange binary options firms, which is illegal in the United States.
A Further US Regulator Follows Suit
Today, the Securities and Exchange Commission (SEC), responsible for regulating and overseeing the activities of exchanges and venues in the United States followed suit, issuing a further warning to potential investors on what it considers risks associated with off-exchange binary options products, and has also posted its intention to prosecute Banc de Binary for the same transgression as cited by the CFTC.
In yesterday’s announcement, the CFTC intends to bring charges against Banc de Binary for not only offering off-exchange binary options to American customers, but also for operating as an unlicensed Futures Commission Merchant (FCM), also an offence in the United States.

Speaking on the SEC’s decision to bring this case and to raise this subject to US customers, Andrew J Ceresney, who in April this year was appointed Co-Director of the SEC’s Division of Enforcement announced today: “Just because foreign companies can more easily communicate with American investors doesn’t mean they should skirt our longstanding laws that protect investors by requiring registration of securities”.
On citing Banc de Binary, Mr Ceresney issued the following statement: “Banc de Binary contacted U.S. investors through the Internet and YouTube but completely disregarded the U.S. securities laws’ registration requirements. We will aggressively combat such conduct no matter where it originates.”
According to the SEC’s complaint against Banc de Binary filed in federal court in Nevada, the company began offering and selling binary options to U.S. investors in 2010. Banc de Binary induced investors to create accounts with the company, deposit money into those accounts, and then purchase binary options whose underlying assets include stock and stock indices. Banc de Binary’s solicitation of U.S. investors has been quite successful and attracted some customers with very modest means.
For example, one investor had a monthly income of $300 and a net worth of less than $25,000, and another customer was encouraged to deposit additional funds into his Banc de Binary trading account even after he informed the Banc de Binary representative that he was unemployed with less than $1,000 in his checking account.
The SEC’s complaint seeks disgorgement plus prejudgment interest, financial penalties, and preliminary and permanent injunctions against Banc de Binary among other relief. The CFTC today announced a parallel action against Banc de Binary. The SEC’s investigation was conducted by Leslie A. Hakala and C. Dabney O’Riordan of the Los Angeles Regional Office. The SEC’s litigation will be led by John W. Berry and Ms. Hakala. The SEC appreciates the assistance of the CFTC in this matter.
The Investor Alert on binary options was jointly issued by the SEC’s Office of Investor Education and Advocacy and the CFTC’s Office of Consumer Outreach. The bulletin discusses in detail the potential risks of investing in binary options, and warns investors that they may not have the full safeguards of the federal securities and commodities laws if they purchase unregistered binary options that are not subject to the oversight of U.S. regulators.
“Investors should be aware of the potential for fraud in this area as well as of the reality that they can lose their entire investment,” said Lori Schock, Director of the SEC’s Office of Investor Education and Advocacy. “We strongly encourage investors to check the background of brokers and advisers and trading platforms before making a decision to invest. If investors can’t obtain simple background information such as whether the financial professional is registered with the SEC or FINRA, then they should be extremely wary.”
In the United States, it is perfectly legal to trade binary options, as long as they are exchange based, as in the case of the North American Derivatives Exchange (NADEX), which provides a trading environment in which trades are executed via an exchange rather than clients ‘betting’ against the binary options firm itself.
Consumer protection was spearheaded in North America by Ralph Nader’s 1965 book “Unsafe at Any Speed”. The US regulators appear to view these particular products as unsafe at any price.
Forex Magnates intends to report on this matter in detail to provide the industry’s perspective.
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TAGS: binary options, cfd, CFTC, financial, Forex, fraud, markets, north america, regulations, regulator, swap dealer, usa

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47

The way binary options work for VIP’s you gradually put in money starting at USD10,000 and the options platform give bonus equal to what you put in then when funds are low we are asked to top up with our money…so gradually we top up get equal bonus then when we loose our money they ask for you to top up again and again and a bonus will also be given everytime…so the loosing of money is not apparent cause we can still see bonus money in our account…but we never allowed to use bonus and only when our money is lost we are asked once again to top up with our money…never using the bonus so we have an illusion we still have money cause bonus never touched…only at end do we realise the money in our account is all bonus and our money is gone…and bonus cannot be withdrawn…very shady…if broker fraud-steer finished …for us

48

Here is my advice. Get a regulated Broker. That is the only thing you need to trade profitable

49

I highly disagree with that, go and tell the guys who used to trade with MF Global or PFG Best just to name two high proflie cases out of the US.

50

Thanks john for your post.

currently I’m suffering with my broker to withdraw my money & they’re still delaying my request with a new story day after day.

What do you suggest me to do regarding the current situation ?

If I ask for charge-back by my credit card, do you think it’s possible to claim my money back ?

Your reply is highly appreciated.

Cheers,

51

Wow this forum is fantastic! It was slightly difficult to find the common sense talkers in regard to this Binary Option thing as when U first search ‘binary option scam’ U get pages of links to sales pitches, who are adamant it is LEGIT! altho ‘binary option went bankrupt’ got me to the truth :48: If only it was as easy as click, click, click, BOOM ;()

I first read into FOREX almost a decade ago now and basically did not get into it because I don’t have enough money to risk on a worthwhile investment portfolio. Felix Homogratis was the guru I got the best info from and wish I could afford to follow his advises in the market. His return were most definitely not in the 1000% range as I remember it although I forget all the details. My main recollection is from a call I got from a broker whose website promised assistance after I signed for a newsletter. When I told him I could spare a hundred he was like ‘£100 000, yes good’; and I was like ‘no £100, and zero pennies’; then he was like ‘are U joking?’; and I was like ‘when do I get the FOREX guide U promised?’; and the phone went dead. Now all of a sudden hundreds of pounds is OK? I do not believe it!!!

I could almost throw a couple of hundred at one of these free for a month BO subscriptions just to prove to myself it is a whole load of bunkum and laugh at myself in the mirror :o or maybe get rich!! Oh damn that temptation!!

Bottom line is the risk seems to be 99.999% negative & if U fail to win profits on the first run are U meant to chase it in the same way the entire BO system apparrently purports to work from the outset?!? If this were real, money would soon be worthless as everyone could be a millionaire within a year :rolleyes: Indeed total collapse of the economy should insue beforehand as every hoi polloi would have quit their jobs and be sat at home getting rich quick, and dieing :frowning:

52

Ok so I just went for a trip down memory lane and it seems that shortly after I was looking at the Felix Homogratis information on what FOREX is all about (inside information ideally!) alot of people began to get up in arms about him being a scam too, and I just read one report that someone lost $65 000 investment… Damn!

At least I now know where to look for good advice: It’s Babypips.com :slight_smile:

53

Nadex is regulated and based in Chicago. I have had an account with them for a year or two, but have not funded it yet.

They activated a demo for me twice so far upon request (I think it lasts 30 days).

You can type in trading with Nadex in Youtube search and find a lot of videos about how to trade with Nadex.

I haven’t had enough extra money to use for trading, but might give Binary Options a try at some point.

With Nadex I think there are Weekly, Daily, and 2 hour Binary Options.

The 2 hour Binary options are only available at certain hours…so some of you might be in a time zone where only Weekly and Daily Binary options are available to trade…unless you stay up late or get up early enough to catch a few 2 hour binary options.

They also offer Bull Spreads.

But from what I have seen on the Demo it all seems like guessing and speculation as to which direction to trade - especially the Daily or weekly Binary Options where price might need to go at least 100 pips or more in either direction before you are in the money…and there is no knowing which way price will go by the end of the day, or week even if you look at indicators and fundamentals etc. So it is like gambling.

But at least you see what your max loss will be before you choose to make the trade.

For example, if you don’t want to loss too much you can choose a Binary option that has a minimal loss and you can buy minimal contracts for that trade.

But chances are if for example your max loss is $100, and your automatic win will be say $1000 if price is in the money when the Binary Option expires…these types of Options that seem too good to be true if you end up winning usually have to move a lot of pips before they are in the money…and/or the option might expire at a hour when there is a ton of price movement and whipsaw that puts you out of the money at the last second.

It is all really like gambling and guessing, but there might be some techniques you can use to minimize your losses and get some wins if you are experienced and know what you are doing.

54

Hi fellow traders,

I have a well documented experience with one of the biggest broker in the binary options industry, Banc de binary.

It is still a painful experience which I have learnt and thus I decided to blog it and share my experiences to the newbies who are very keen in the binary options industry. Everything is recorded feel free to read.

Do leave a comment and help to share if you feel that it is a worthy read. And till today, I do need help with my withdrawals.

Here is my blog: www(.)exposingbinaryoptions(.)wordpress(.)com

55

Hi fellow traders,
Here’s my take on binary options. It’s attractive because it’s simple like just high/low. The problem is that the rewards for a win are not enough to cover your losses. In each trade, you have to invest a certain amount, and get a certain amount back for a win, this could be 65% or 75% or 85%. But a loss is 100% lost. For example, if you invested $100 into one trade with 75% return, if you win you get $175, if lost you lose $100. Compare: win $75 or lose $100. It’s not balanced! Even if you went to the casino and played roulette and did red/black or high/low it’s more favorable to you than this.
Also, you might be correct about the high or low (get the direction correct) but you have to get the timing right as well, you need to get the option to expire in the money in the right time, if it suddenly changes direction you could be out of the money. Some options offer you a higher rate of return such as 110% or 500% but let me tell you, I never won on those and I think that it’s been set up so that these high rate of return options have a low chance of succeeding. I recommend this: stay out of Binary Options. In Forex you can set it up so that if you win, you could win $100 or lose $30 depending on your stop loss or trade size and it’s more in your favor.

56

BancDeBinary Warning:
1: they are not a bank in any sense of the word. it’s just a marketing trick.
2: they are not a brokerage, they are registered in the CySec as an investment firm (like all other binary options “brokers”) with the right to hold public accounts and it just happens that in Cyprus, binary options are recognized as a financial instrument. that’s how they loop the system.
3: they are very well aware of the holes and loose ends in “terms of agreement” (since they have written it on first place) and will stretch your withdrawal for as long as possible, purposely misleading. in my case it took 5 (five) weeks.

57

The real appeal of Binary Options is not the that it is simple high and low .It is no more difficult to open a forex trade than it is to open a bin one.
And risk management is just the same .
For e.g. you have forex trade that you put a stop loss 20 pips away that if hit will lose you $100
In binary options you do the same . you open a trade for $100 if you lose it is the same as the Forex above .
Some will say but you can close the trade early so you don’t have to lose the full $100 you can do the same in binary options as well ( if you are not doing 60 second trades)

As opposed to having to wait x number of hours or days for the market to move a certain distance in forex to hit your target a profit in bins this can happen as little 30 secs to whatever you choose as well. Also you are not depending on how far the market moves but that it simply moves in the direction of your trade. 1 pipette is enough.

So though Forex has the potential,it’s not a given, to make more profit per trade the time factor and how much the market moves really is what makes bins more appealing Lets work on the example I stated above to show this.
So we have established that in a forex trade you are willing to lose $100 if it hits your stop loss 20 pips away from your price. So it means that per pip a move would equal $5. So it is also true that to make 75%-80% of that $100 (the payout of a bin trade) your trade needs to move 15 to 16 pips in your chosen direction. When will this happen nobody knows and it also why retail traders after maybe having waited 2 days just want to break even or close the trade if it makes just one or 2 pips profit so in reality they will make $10 where else on the bin trade even just one pipette in the direction of their chose they get the full 75%-80%.

As for it being gambling.It is no more gambling then Forex or stocks or other investments are. If this is about odds it still makes no difference because as statics prove 80-90% of Forex and stock traders never make money. For most activities in life it is not the outcome that determines whether it is gambling or not but your approach

On the other hand roulette , slot machines and the lottery are gambling regardless of the outcome.

I think some Forex traders ,especially if they were providing training or sold systems, despise bins because it means a loss of customers. Ironically though they should rejoice because their knowledge is what is needed to trade bins successfully with a little bit of adjustments here and there.

As for scams well they are plenty in bins just as they were are Forex .
Also the industry is maturing and more Forex brokers are starting to offer bins
Alpari
Hotforex(optiontrade)
An acutal bank in Switzerland with an actual banking licence is building their own bin platform(Dukascopy bank)
Lionshare investments has their own bin platform

The fact that some major Forex brokers and banks are taking note tells you that binary options are not going anywhere and with more trusted brokers/banks entering the market this will be a revenue stream other brokers can’t or won’t ignore.
That goes also for Forex training providers.

The scammers will have little room to breathe in the near future.

59

Binary options are not more gambling than forex trading. If you have some strategy and good money management you are able to gain also on binary options. But on the other side, if you have strategy with accuracy more than 70%, which you need to be profitable in binary options, you will be also able to be profitable in forex trading and I think that there are big potential.

60

having a dice-game where you win on 1,2,3 and lose on 4,5,6 and having another dice-game where you win on 1,2 and lose on 3,4,5,6 is obviously both gambling, you are right on that.

forex is like the first game, binary options is like the second one; i think its an easy decision which game to play.

61

JohnyCash this is the type of thinking that i exactly am pointing to be misinformed.
Forex does not have a better record than binary options in terms of successful traders or trades.

I repeat they are both(Forex and BO) [B]NOT[/B] inherently gambling but how you approach them can make them such.

I will dare say that people who lose on either are the most vocal calling these gambling

62

You are right but the whole 70% winning is a bit off. Normally you don’t open trades of the same size always. So for instance while you may open 2 trades which are $50 and lose both and have a third one that is $250 which is a winner. Your winning ratio is less than 70% but you are still profitable. And no i am not speaking about doing martingales here.

I am speaking about trading opportunities where there are higher probabilities than other opportunites where you will tend to do a higher risk within the realm of good money management on your account

63

No, I would (just for mathematical reasons) count that $250 as 5 trades cause its 5 times bigger than the $50 ones. So you have 2 losers and 5 winners which is about 70%.

And again cause of mathematical modelling reasons, I wouldn’t think about good or bad trading opportunities; its 50% probability for both sides (I give you of course the credit that you have a way better winrate).

So, I’m sure you agree with me that when we open lots of randoms trades we will lose much more when doing BO. In forex we just lose spread; In BO its half of the % that the greedy broker takes on each loss.

Tell me more about that record of forex and BO traders, cause I have never seen anything reputable.

And finally let me say: you have my honest respect when you beat the BO game; would be foolish to quit that no matter what has been said here.

64

Yea I was intiailly tempted because it was simple, and U can just install it like a regular program on Ur computer. :41:

FOREX seems to be barriered against the public by a complexity of brokers, and their eliteist attitude. These BO scams stink, because they prey on the poor, who can’t afford a broker. SHAME!!!

65

BO is growing a lot these days with a lot of brokers as 24Option, TopOption and some forex brokers also started offering this trading service as Alpari, Hotforex. I have never tried them out but I really don’t know whether BO can earn money much more than forex with a same deposit or same volume trading or not? And how do brokers earn money, is that the remaning payout (15%)?