The problem of fraud in binary options trading is gaining momentum around the world. The reason for this is uncertainty in the interpretation of terminology and the lack of response of regulators to the fraud. Information technology allows scammers to impersonate a professional company providing brokerage services, and appropriating money. The lack of control and laws leave such actions unpunished.
An interesting fact is that binary options were invented in Israel, and now the main flow of complaints goes towards Israeli companies. What is binary options? Bet on where will the price trend go. But if you win, the client gets 60-90% of the winnings, if you lose you lose everything. By the theory of probability, the funds end up in the dealing center.
It would seem that there is no fraud, and technical and fundamental analyses have not been canceled. But here is a bet on human weakness:
- you always want to get profit in a short-term, that is, to work with expiration in a few minutes. Technical analysis is not working on such time frames;
- even the shares of the largest Internet companies in minute periods are falling in price;
- professional traders know that Forex is the months of training, the profit is not obtained just like that. Inexperienced investors “hooked” on short-term opportunities, although making money on minute expiry is very difficult.
Fraud in binary options
Israeli companies have the claims of the following plan:
- companies provide trading services on behalf of the American and British brokers themselves having Israeli jurisdiction;
- there are proven facts of manipulation of quotes, graphs, etc. in favor of the dealing center;
- financial regulators can’t do anything.
A few days ago the Knesset control committee addressed the issue of fraud in binary options. Management of securities of Israel has identified about 200 companies that work with clients around the world. About 10-15 thousand Israelis are involved in in the companies, the number of missions is difficult to calculate. According to one of the representatives of this company, the monthly income is about 3 million USD per month. The representative did not deny that sells dream to traders while even a bonus program calculated so that a profit is practically impossible to obtain. The money back managed only to those who initiated the chargeback, and who persisted, by calculating the data of the broker and contacting state court.
The laws of Israel are playing the fraudsters at hand. Securities, their activity has nothing to do, and the stakes (similar to gambling) are even banned in the country, but not prohibited outside. So the government of Israel yet can do nothing. It is planned the adoption of the bill, which would prohibit Israeli companies such activities in principle, but who prevents to change the jurisdiction?
The binary options scams cast a shadow on the essence of trading. Binary options is not less complicated job like Forex because to predict the trend direction is possible only after a complete analysis. A similar “kitchen” only scare away potential investors.