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The question many people ask is: Are Binary Options a Scam? We like to answer this with a No, but some scams do exist.
This is why, every once in a while, it is necessary to add a binary options broker to the blacklist. These are brokers that have failed their clients in one way or another, betraying their trust and making us wary about ever using their services. Here, we will go over the various reasons why a broker might be blacklisted. If a broker is blacklisted, we highly recommend that you stay far away from them.
For the best regulated brokers in the market, check out our top binary options brokers list.
The first reason that a binary options broker might be blacklisted is because they were running a scam. Scams take a few different forms. The first that you might come across is the Ponzi scheme. This is where you deposit your money with a broker, only to find out that they were not actually conducting the business that you had expected them to. The broker might disappear shortly after you made your deposit, making it impossible to get your money back, or they might allow you to trade with them for an extended period of time, but when you are ready to withdraw the money that you have earned, it will be impossible to get it back. You might submit multiple withdrawal requests and not hear anything, or you might be given the run around until you just stop trying and realize that you’re not going to ever see your money again.
Most of the times people will jump on the “scam wagon” if they lose all of their money with a particular broker. They will blame the broker as being rigged. Meaning, they will believe that price jumps against them at the last second causing a loss. Price fixing is another name for it.
Binary options brokers, just like any other type of business, come and go. They might have found that their business model wasn’t as successful as they had hoped it would be and went out of business, or they might have been forced to close because of legal issues. Whatever the reason, a broker that’s no longer open needs to be added to our blacklist. When a broker disappears, it’s a sure sign that they cannot offer you the service that you had hoped. Unfortunately, just because a broker has closed does not mean that their website has disappeared, too. They might still have a web presence, and they might even still be accepting payments for deposit.
Even with all of the financial regulatory bodies out there, many brokers have chosen to stay unregulated. You will find various reasons for this. The broker’s parent company might find that it is too expensive to stay regulated, or they might decide that it limits their customer base to a specific geographical region (more about this below). Whatever their reasoning might be, it is not in your best interest to go with an unregulated broker.
When a broker is not regulated, there is no one checking up on them to make sure they follow the law. There is no one checking that the quotes they give clients on assets and execution prices are correct. No one is doublechecking their banking methods, making sure that client funds are kept in safe accounts and are always efficiently maintained. No one is externally auditing the site, forcing them stay honest and accountable. Sure, a broker might be well intentioned even if they are not regulated, but the chances for a problem go up exponentially when they aren’t. Even one “bad apple” employee within the broker’s organization can cause a lot of problems for you. It’s safer to go with a regulated binary options broker, no matter how pure the broker’s intentions might seem.
In some countries, brokers are blacklisted simply because they are not regulated in that area. For example, if a broker is regulated by a European based body, traders in the United States cannot use that site. That site is blacklisted for U.S. traders. NADEX is the only regulated binary options service in the United States.
Now this is an area that needs to be treated carefully. Just because a broker is not legally allowed to accept traders from a specific geographically are does not mean that they are a disreputable broker. They are very likely to offer a high-quality trading service. But because of various legal rules and regulations, they cannot provide their product to a specific audience. That is just the way it works. And it’s why it is so important that you know which brokers are regulated in your country and are legal for you to use. This will not only protect you from any sort of problems that might occur legally on your end, but it will make sure that the broker that you are using is subject to the laws where you live. It acts as a double safeguard this way.
What’s a greylist broker? Basically, we can’t easily put all brokers in the “good” or “bad” category. Sometimes things are not simple, and that’s certainly the case with some binary options brokers. These are brokers that have just started out, are unfamiliar and untested, or don’t have large enough client bases for us to really get a good idea of what kind of service they offer. There might not be anything strikingly bad about a greylist broker, but there’s also not enough evidence to qualify them as a top-rated broker.
In the grand scheme of your trading, you need to ask yourself a question. Would you rather use a broker that you know is reputable and is trusted by thousands of others? Or, would you rather get similar services from a broker that doesn’t have an established reputation? We recommend sticking to a broker you know you can trust.
What’s your long-term goal as a trader? If you’re like everyone else, your goal can be summed up pretty simply: to make money. You trade binary options so that you can give yourself a chance to make more money. Yes, trading is fun, and yes, it’s a great skill to develop, but the bottom line is that trading gives you the chance to be profitable. Selecting to use the wrong broker takes away that chance. When you use a blacklisted broker, you are essentially choosing a broker that is not going to help you.
Trading binary options is tough. Trading of any sort is risky, and binary options have a particularly high rate of variance when it comes to the outcome. Even a great trader with a firm understanding of different markets can lose money. When you choose a blacklisted broker, you are taking away one of the most powerful tools that you have at your disposal. A good broker is very easy to find, so we recommend spending a few minutes going over which brokers are going to help you the most, and which ones you should steer far away from. It’s only one small step toward being a successful trader, but it’s a very important one. This is your money, after all. You should be doing all that you can to protect it.
Check out our list of the top binary options brokers you can trust.
***Your capital may be at risk. This material is not investment advice.***