Consumer advice centers are very critical of binary options trading. Beginners in particular are usually advised against trading, although binary options are originally intended for inexperienced traders, since trading is easy to learn and not too many complex decisions have to be made.
However, the consumer protection warning is justified, because in addition to the advantages, binary options also have many risks, often from brokers and also be swept under the carpet by the traders themselves. Newcomers get a wrong picture and are quickly frustrated when there are suddenly high losses. We have dealt with the criticism of consumer protection objectively and would like to explain it in an understandable way.
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Not all providers are reputable
In recent years there has been a lot of talk about fraud and rip-off when trading binary options. Many dubious companies take advantage of the high popularity of the binary options and in the process<211>robbed customers of their money with illegal methods. Especially in the early days of binary options, many brokers were not yet regulated and could act in principle as they wanted. This naturally gave many opportunities for manipulation, which were also used by several providers. In the meantime, a broker without official regulation hardly has a chance, because this is legally mandatory in most countries. Nevertheless, there are always some dubious companies and brokers in the industry who try to cheat despite a valid license and the associated conditions. Here, too, the consumer advice centers regularly issue warnings and lists of brokers that are classified as not reliable and from which is therefore urgently advised against.
Dodgy brokers are often inadequately regulated
Of course, the regulatory authorities are also aware of the problems with online brokers in the past and have a strict license to issue a license to Conditions are met, compliance with which is regularly checked. In order to receive approval from the authority, the broker must meet certain criteria. Among other things, there must be sufficient liquidity to ensure stability and security when trading. A transparent company structure and the encrypted transmission of sensitive customer data are also prerequisites. However, not all regulators are the same, and while some are carefully checked and any irregularities are investigated, problems are dealt with much more relaxed. Anyone wishing to register with an online broker should therefore make sure that it is supervised and regulated by a authority considered to be safe. For example, many professional traders attach importance to regulation within the EU, since MiFID guidelines particularly strict admission conditions apply to brokers, On the other hand, caution is advised with so-called "off shore brokers": These are often located in remote states in the Caribbean and are mostly under-monitored by the local authorities, so fraud is much easier here.
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Good brokers also secure their customers' deposits against their own bankruptcy.
Even if online Brokers are of course designed to generate profits, it happens again and again that companies have to file for bankruptcy. This can be a major problem for traders, as the company is now being handled by a bankruptcy administrator and customers may be worried about whether they still have a chance to get their money back from the insolvent provider.
Serious brokers secure their customers from the outset in this case. The customer funds are kept in separate trust accounts and cannot be used by the broker for other purposes. They only serve to finance the trades made by the customer. Due to this clear separation, the customers' funds in the event of bankruptcy are not counted among the bankruptcy assets, but can also be paid out quickly and easily to the customer if the Broker is considered insolvent overall. For this reason too, most experienced traders prefer brokers with EU regulation. Here, the separation of funds is mandatory in the requirements of the regulatory authorities.
As a further safeguard for customers, many brokers are members of so-called compensation funds. In the event of a participant's financial problems, these also take over the secure payment of customer funds, so that financial problems may arise for the broker, but the customers are nevertheless well protected.
The customer funds should be kept at safe banks with a good reputation. A broker that has nothing to hide should also be transparent. If in doubt, you can also contact Customer Service to find out where the funds are managed.
Before registering, a detailed broker comparison should be made
Registering with an online broker for binary options should never be done lightly and "from the gut". Many brokers seem to be pushing for a registration, for which consumer protection also criticizes binary options brokers, but customers should definitely take the time and take a close look at the broker and compare with other providers. Before it is not ensured that it is an absolutely reliable and reputable regulated broker, no registration should be made.
When comparing with other providers, our detailed test reports help, The seriousness of the provider should of course be taken into account here, but other factors such as (hidden) fees, services or bonus offers are also considered by the broker-
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Even with reputable providers there is a risk of total loss
There are always negative reports
Advertising only shows the positive side
Broker advertising does not usually represent the real conditions, but promotes the potential customers dream of big money in a short time Time. Some brokers also use prominent advertising partners, which of course makes a serious impression and also does not suggest that this is a very risky business.
Also regarding advertising methods consumer protection criticizes binary options because wrong facts are often played here. In binary options forums or on consumer portals, for example, there are often reviews that paint a very positive image of the broker in question. These reviews are said to come from real customers, but in reality they were commissioned by the broker. Thus, the customer is deliberately deceived, as the consumer advocates criticize.
Another recurring point of criticism are unwanted calls from the broker to the customer. When opening a free demo account, this also includes a telephone number. This number is then used for intrusive calls, which urge customers to open a real money account.
The trade is only for certain people suitable
The high risk of loss makes binary options a very controversial form of investment. The binary options consumer protection recommendation is: Beginners should avoid binary options better, because they cannot adequately assess the risk. Trading is only suitable for professional investors.
Here it can be added that the money invested in binary options should be considered without exception as risk capital. If you want to invest in binary options, you should put aside a certain amount that you don't need for other things. The binary options are now traded with this money. It is not planned for other things and its loss is also possible. Many binary options providers have no minimum deposit or the amount to be paid is very small. Therefore, even beginners can easily gain initial experience here. There is no obligation to make additional payments, so that only the amount invested can actually be lost. So if you can divide your money in a disciplined manner and really only invest as much in binary options as you can easily do without, you can definitely test trading. However, it should not be considered a serious and sustainable investment by beginners.
Consumer complaints are only partially justified
Complain to consumer centers and on the Internet many traders who have lost money through binary options that these would be fraud and that it was not possible to make a profit on trading.
If the customer has come to a dubious provider, these complaints may be absolutely justified, because in this case the customers will actually be ripped off. Regardless of whether manipulated courses or disbursements not carried out: Here there is clearly a fraud. Customers who contact the consumer center with such problems can get help here, but unfortunately it is often not possible to get the money back because the providers are abroad and the Legal action therefore does not always have much chance of success.
On the other hand, if it is a good and reputable provider, a complaint about lost money is meaningless. It is in the nature of binary options that although a lot of money can be won, everything can be lost. This cannot be blamed on the broker if he has adequately informed the customer. Customers should therefore read their broker's general terms and conditions and put in place a good risk management before they start trading. Only those who are aware of the danger and only deal with money, the loss of which they have calculated and can cope with, can trade with satisfaction and possibly with good profit with binary options.
Conclusion: There are big differences between the providers
Binary options involve a high risk of loss. Even with reputable brokers a total loss is possible at any time. The binary options consumer protection warning is therefore quite justified, because many traders still register with the online brokers despite the indications of the highly speculative nature of the binary options with wrong ideas.
However, it becomes really dangerous if the traders come across a dubious broker. It has happened several times in the past that prices were manipulated in such a way that traders actually had no chance of making a profit in the long term. There were always problems with the withdrawals. Unfortunately, the legal process is often difficult, since the brokers can often evade this by being based abroad. When choosing a broker, care should therefore be taken to choose a provider that is monitored by a reliable regulatory authority and is subject to strict security regulations. This is the only way to ensure that the already high trading risk does not add any risk with regard to the provider.
Even with serious brokers, traders should take the risk for themselves always be aware of a total loss. Each broker's general terms and conditions apply, which should therefore be read well in advance.
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