It’s the scam of the decade!
Binary options brokers are springing up everywhere on the internet, and the public is getting ripped off. With flashy sites and manic testimonials, they are enticing thousands into a speculative trading fad that you should avoid!
Here’s eight reasons NOT to trade binaries…
1. You don’t know who you are dealing with. Almost all websites refuse to tell us who they are, where they come from, who they bank with. Their infomercials make huge promises, but avoid risk statements, and refuse to reveal their identity. But they are often criminal enterprises and want all your personal information–passport number, social security numbers, credit cards, etc. Sure signs of a scam! So stay away from any company not based in USA and regulated by the CFTC. Call them at 888-366 2382 if you are not sure.
2. You’ve got a 50/50 chance of being wrong. In a binary play, you either win or lose. That’s it. You have no way to win more than you lose, and as many people are poor managers, they will probably lose more often than they win. These are bad odds, no better than tossing a coin.
3. The payout favors the broker. Binary options brokers offer 75% to 90% of the winning dollar. That means if you lose, you lose $100, but if you win you only get about $85. That’s uneven and unfair–and its a scam.
4. You can only buy and not sell options. In true options trading, the public can sell as well as buy, and smart traders know that the time value of premiums favors sellers over buyers. (That’s why at Honolulu Options Traders we teach how to sell with limited risk.) But in a binary world, the broker holds the cards. He can sell every play to two people, and only one can be right, so he almost always wins.
Let me explain. One kind of binary option offers you money if the stock goes above, say 66, or below, say 64. Let’s say you decide that the stock is going to move either way soon, and you buy the 66 and the 64. Stock moves to 67. You paid for two options, but the broker has to pay out on only one. There are variations on this, of course, but overall the broker can’t lose, because he will never have to pay out as much as he takes in. You’re the sucker!
5. The broker holds all the money. In a normal stock options account, you can select “margin” and get money transferred out of your account at any time. t’s a scam– ‘nuf said about that one.
6. Brokers are refusing to pay out money. Many people are complaining that they cannot get their money out from the binary broker when they want it. When the supposed broker is located on a Caribbean Island, Nigeria, Russia or Cyprus, what are you going to do? You can register your concern and alert other traders at Binary Option Watch Dog.
7. It’s unregulated. Its the Wild West all over again! Unlike the regular stock and options markets, binary brokers operate independently and without ethical or legal constraints. You can demand, threaten and even sue them if they rip you off, but good luck collecting from them. There there is no requirement for fairness, openness or disclosure of liability, human greed takes over.
8. You have to sit there for hours to make any money. Even if you have a foolproof system and can beat the “house” in binaries, you either need to buy expensive software, subscribe to a chaotic signal system, or suffer from eyestrain and backaches. One online broker claims that you have to follow his system “exactly, with no deviation…” So, its goodbye freedom!
These are all good reasons to avoid binary options until they are properly integrated into the regular market and the odds of winning are improved for traders. Of course, I expect some posters to tell me they’ve made it big with binaries, or that they have an online system that removes the need to wait for payout. Fair enough. I’ll listen and learn.
I’m willing to be wrong about binaries, but until these problems are addressed for regular traders, I’m sticking with selling regular stock options and making good money each month.
Graeme Sharrock
President / Honolulu Options Traders, LLC
Tiger Trading 