Binary option scams: what you need to know!

As we saw in the article explaining what binary options are, this is a very attractive investment that seems pretty easy: either you win or you lose. That would mean we’d have a 50% chance of winning. And some brokers would make us believe that the odds of winning would be even greater since a well-informed person with a little bit of judgment would have to do better than in a coin toss game to get a coin toss. However, in a real situation, the money of the binary options you speculate on is the money of the brokers. This does not go through central banks as in Forex. The binary options offered are therefore those of the broker and are often to his advantage. The probability of winning is well below 50%.

By their disconcerting ease of apprehension, binary options thus attract many new and inexperienced traders and they are the breadwinners of these unscrupulous brokers. Some of them are even illegal. It is the AMF that defines the legality of binary option brokers and when you see the size of the list of illegal brokers, you quickly realize that this is an area where many people make money illegally on the backs of others. Metaphorically, I imagine novice traders as flies attracted by the pretty blue light but which becomes deadly when they touch it. Only the most experienced are not fooled.

So here are some tips to avoid falling into the scams of illegal brokers’ binary options:

  • Don’t be fooled by advertisements from brokers offering you thousands of euros just by creating an account with them
  • If the broker has created a sponsored link under Google by showing you the golden goose, run away!
  • If you are on an “independent” broker comparison site, don’t be fooled. Very often, the so-called quality broker sites are illegal and the comparator in question recovers a commission for each account created. What independence!
  • You should only rely on the AMF (Autorité sur les Marchés Financiers) which regulates this activity. It may seem harsh on the surface, but it is there to stop the activity of these illegal brokers. It also provides a list of brokers with whom you should not do any transactions
  • if you are good at what you do and earn a lot with binary options, it can be very difficult to get your money back, if not impossible. They can impose a completely harassing administrative rigour on you. If this is the case with a legal broker, contact the AMF immediately to inform them
  • And if you’re really good at it, you’ll soon get malus or just be sent off the platform like the good players at the casino

To conclude, I would simply advise you to refrain from investing in binary options if you are a beginner. And if you are a little more experienced, only do your transactions on the website of a legal broker, accepted by the AMF.

Brokers of legal binary options in France

Surprisingly, the AMF does not provide a list of brokers of legal binary options in France. It would be so much easier….

We have to look at the companies one by one to see if the broker is licensed or not.

But who are these brokers of legal binary options in France on June 1, 2014?

They are few in number. There are two reliable and trustworthy ones that have been approved by the AMF. This list is subject to change over time, so I would keep it up to date regularly.

A few months ago, they were 4 legal brokers. They have gone up to 2 today….

  1. www.topoption.com
  2. www.optionweb.com

As of June 18, 2014, I have just noticed that there are two brokers missing who are also legal since they are not part of the AMF’s black list:

  • IG Markets
  • XTB

It is interesting to see the AMF’s black list of illegal brokers to see that it is much longer and to be sure not to go to the wrong broker.

What are binary options?

What is a binary option?

The binary option is a means of trading that is based on the rise (call) or fall (put) of a product’s price such as a stock or currency over a specified period.
It is called binary because only two outcomes are possible:

  • or the option ends favourably “in the money” and you receive the fixed amount that depends on the initial investment,
  • or the option ends unfavourably and you lose your entire investment.

binary option on the dollar

Today, any investor can access binary options. Previously, it was necessary to go through a broker.
However, this is more for experienced investors since beginners could lose a lot of money.

There are different types of options:

  • The binary option high/low or cash or nothing

This is the most common binary option. You choose a maturity date and focus on an increase or decrease in assets. If, at the end of your term, your assumption is correct, you win the gain set when you place the order. Otherwise, you lose your bet.

  • The one-touch binary option

You always set a deadline and you bet that the price of the asset will reach a fixed level. You win the gain if the asset price reaches this level before the end of the term.
Otherwise, you lose the bet.

  • The binary option no touch

Same principle as the one-touch binary option except that you bet that the asset will not reach the set level until the end of the term. You win the gain if the price of the asset does not reach the level. You lose your bet if you do not.

  • The zone or boundary option

For this “zone” or “out of zone”, also called “boundary”, you bet on the fact that the asset will close in a predefined zone.

Binary options are risky and be careful with scams

Binary options are doubly risky because:

  1. you can lose your entire investment in a short time. If you are not familiar with this technique, it is still very difficult to win. This is a poker move where you will lose more often than you win.
  2. brokers are not necessarily and can be scammers. The Autorité des Marchés Financiers tries to control this market by raising investors’ awareness of the need to invest in a broker with offices in France, regulated by a European Union country and authorised to carry on its financial activity by the Autorité des marchés financiers and the Banque de France.

So if you want to invest in the binary option, check that your broker is not on the list of unauthorized sites offering binary options.

In summary, what to do to negotiate a binary option:

  1. Find a trusted broker who is not on the list of sites not authorized by the Autorité des Marchés Financiers
  2. Open an account on his website
  3. Select the asset you wish to bet on
  4. Choose the time frame, your deadline which can range from 20 minutes to one month
  5. Select whether you bet on the call or pull of the asset
  6. Choose the amount you want to invest
  7. Validate to buy your binary option
  8. Check to see if you have a gain or loss at the end of your term.

Good to know – Taxation on your earnings from binary options
In France and for individuals, your earnings are subject to income tax, to which are added 15.5% social security contributions