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.