- 1 Reasons Binary Options Are Not scam
- 1.1 Why Binary Options Are Not Scam
- 1.2 Some Precautions to Avoid Being Scammed
- 1.3 Binary options are a safe and regulated product
Reasons Binary Options Are Not scam
It is true that the Internet is fertile soil for all kinds of things, that it is difficult to control, and that information overload is confusing, as every day we find useful knowledge buried under tons of garbage. Now we will explain the reasons why binary options are not scam.
On the contrary, binary options have been on the market for years. A long time before the Internet went global, and before real-time, 24/7 data communications became commonplace.
Binary options are a a subset of the operations that work globally within a real, regulated and controlled market. Binary options can hardly be used for scamming people, and most scams preying on people thrive on the anonymity and immunity that the Internet provides.
Why Binary Options Are Not Scam
Binary options trading is part of the Financial Derivatives Market. They are another investment instrument within the wide collection of derivatives. They are called that way because binary options are a financial product (also known as derived instrument) whose value depends on the value of another asset, from needed to estimate their value.
So, financial derivatives don’t have a price based on their intrinsic value. Instead, their value is connected to the value of a financial asset, usually referred to as underlying asset. These underlying assets can be stocks, a stock index, commodities, currency pairs, etc.
Because binary options are financial derivatives, they are subject to the same strict of controls and international regulations.
Advantages that Prevent Binary Options to become a scam
One of the advantages of being a financial derivative is that they are financial instruments with risk management.
Features of financial derivatives:
- There is no need to make a high initial investment compared to other financial products with similar returns in general market conditions.
- The price of derivatives fluctuates according to the changes in the valuation of their underlying assets.
- According to the type of formal contract, there are Options, Forwards, Contracts for Difference (CFDs) and SWAPS.
- Depending on where they are contracted and traded, some derivatives are contracted in organized markets (exchanges) and derivatives contracted in not organized or over-the-counter (OTC) markets.
- Depending on the underlying asset, there are financial derivatives based on financial assets such as stocks, bonds, currencies, and there are also non-financial derivatives, which are based on commodities, such as agricultural, energetic or precious metals.
- Depending on their aim, there are hedging derivatives, arbitrage derivatives, and trading derivatives. Hedging derivatives are used as an instrument to diminish risk.
Among all these different financial products, we can find binary options. This is a global market that operates in a transparent and official manner, and is governed by strict international standards and regulations, and is audited by government agencies.
Some Precautions to Avoid Being Scammed
However, there always are and always will be fraudulent websites, which we need to identify and avoid. The least we can do is to select those trading platforms that comply with all legal requirements, and only work with them.
Binary options are a very interesting world, which can be highly profitable for you . It is only natural to fear that such a lucrative market can be a scam. Let’s see how the real market of binary options works, so you can know how transparent it is.
How does fraud work in binary options?
Fraud is a trap designed to lure investors by using deceptive means. This means that there is a premeditated intention to deceive.
The Internet is the perfect environment for scammers, because it makes it easy to find inexperienced investors and offer them the perfect trade, with guaranteed returns and no risk.
In binary options, fraud works by luring investors by offering a level of profitability that is impossible to refuse. This is because it is guaranteed to work always.
Another fear is connected to the fact that these instruments are designed to be traded through a broker. This can make us wonder if binary options were created with the sole purpose of scamming investors.
How to Identify a Reliable Broker that Will Not Deceive You
The first order of business is finding binary options brokers that are regulated and controlled by official agencies. There are several websites with lists of these brokers. If you compare different lists, you’ll find some names repeating in all of them. These are usually the best and most transparent brokers.
We already know that binary options are a simple and accessible investment. The inflection point lies in the necessity of using brokers and their investment platforms.
So, you need to know how to choose a reliable broker when you invest and make sure that their operation is strictly legal.
Outstanding brokers provide a lot of services through their platforms, they propose strategic solutions, they show the credentials that assure their legality, they help investors with solid customer support and indicator panels, and they are transparent in the way they manage your funds.
Why are binary options considered a scam?
Even that the binary options are not scam we need to understand that they are a subset of the financial derivatives market, so they are speculative products. For that reason, their results are random. The first thing we need to know is that there is risk involved, and no legal broker would argue otherwise.
Here is the first scam.
Note: Every time that someone is trying to convince you that there are guaranteed returns and no risk, you can begin to suspect of everything they say.
Binary options are as risky as any other financial investment product. Their risk is always proportional to their potential benefits. As they are speculative, it should be assumed that they are inherently risky, as they have big profit potential.
All financial markets work on the same foundation of risk and potential profit. There is no point in stating that all financial markets are a scam. These markets have the potential or yielding enormous benefits, but they are strange as they are based on speculation. But that doesn’t mean that they are fraudulent. These markets bring opportunities that we can seize.
Binary options are a safe and regulated product
Binary options are a set of serious and highly regulated financial products. There has been a tremendous level of progress in the area of investor protection. All these regulations helped made binary options a quality investment option.
There are control agencies, such as the FMA (the Financial Markets Authority), that created a license to identify the best binary options brokers. Compliance with regulations is a measure of guarantee and transparency for investors.
So, binary options have their own methods of verification as legal instruments to operate in the financial markets.
The CNMV publishes a list of the best brokers, and also a black list of unreliable brokers known to defraud and deceive their clients. This is a useful tool to select the best broker from a reliable list of pre-vetted intermediaries.
As a conclusion, we can be sure that the binary options market is protected and regulated. The only thing we need to succeed is to work tirelessly and invest with intelligence and good sense.
Advice to work with peace of mind
- You need to know your product and your market in depth. Study each operation you will do. Learn about their trends and most viable positions.
- There is a wealth of information on each binary option. There are many tools you can use to understand how they work. This is invaluable to document all your analyses.
- To work with peace of mind, it is fundamental to choose a reliable broker, with excellent customer support and professional advice.
- Avoid tempting offers from brokers that offer you to “Make money by using the three golden rules,” or “make bank in five easy lessons.”
If you are to select a good broker, you need to compare them, see their differences and advantages. Document their quality by reading other investors’ opinions.
The best way to identify reliable brokers that don’t defraud their clients is to check if they comply with all regulations and legal requirements. All the brokers that fulfill this requirement publicize this by showing their online certifications.
Also there are several other professional quality brokers that are waiting to finish certification by official agencies. After this they will publicise their status.
Nowadays, it is easy to spot shady brokers. All the features we discussed in this article prove that the binary options are not scam, but we must beware of deceitful brokers who use the Internet to defraud investors.
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