In recent years, there have been a number of allegations put out in the financial world that binary trading amounts to a scam system in which much is promised, but very little is actually delivered. To understand these allegations and why they are not correct in most cases, we’ll explore what binary options trades are, how to avoid real binary options scam trades, and how to successfully participate in the binary options marketplace.

An Overview of Binary Options

The basic idea behind a binary options trade is that you are placing a prediction as to whether an asset’s value will be higher or lower than it currently stands and by what amount, known as a strike price, by the time that the option has reached its expiry.

Based on these two options, there are two things that can happen: You’ll be accurate in your investment decision and receive a return or your investment decision is proven to be false, in which case you lose the cost of the investment.

What Gives Rise to the Allegations of Binary Options Scam Trades?

In most cases, the people who talk about binary options scam trades have not actually been scammed ( read more about binary scams on the pages of this binary options scam watch resource ). To be fair, binary options are a riskier investment than many other investments that you can make. However, the nature of the risk does not make the type of trade a scam in and of itself.

True Cases of Binary Options Scam Trades

While the marketplace itself is not built around deceptive practices, there are scams that can happen within the industry.

Here are some of the things that you can do to protect yourself:

Take the time to research binary options. As with any investment, you should never put your finances on the line until you fully understand the system in which the investment will be made.

Ask questions. Before you trust a company to handle your money, ask them questions. When possible, this should be done over the phone, rather than through a chat service, which can help you to confirm that the company you are calling is a legitimate service, rather than an automated scam.

Perform independent research. Rather than trusting the reviews or press articles listed directly on the site for a trader or brokerage firm, do your own independent research on the company’s reputation.

Make Investments Wisely

If you follow some of common sense investment principles, binary options can be a great investment tool. Always be sure that you are comfortable with a company before investing significant funds with them and never make an investment into a system that you don’t fully understand!