Since binary options brokers offer an unregulated financial service, they are riskier to use than a broker with a license. However, many reviews still offer positive opinions.
When we are trading online, the safety of our data and finances is the top priority. That’s why it is incredibly important to check whether the financial services we are using are trustworthy. The anonymity of the internet makes it easy for us to be scammed. Here are some things to look out for when you are using online brokers, specifically for binary options trading. They typically lack licensing and are often rumored to be scams.
Tools for Finding Trustworthy Brokers
Many news articles will warn you about the risk of fraud when using binary options brokers. However, if we want to trade with these financial assets, we will have to accept this risk and limit the chances of being scammed by putting in some research when choosing a broker. When we are looking for a good trading platform online, we can rely on some helpful tools:
Review Sites
Websites and communities with a focus on the topic of trading often test providers and write helpful reviews. Here is one example of an in-depth review of a broker’s features and service.
Typically, these include information on the provider, the legal framework and the scope of functions, features, and customer service of an online broker. Additionally, user comments about their personal experiences can help us get a sense of how traders are treated there and how using the service feels.
Regulations and Licenses
Information on the license of a broker and which regulations they have to adhere to is typically included in reviews. However, it is important to note what exactly a regulation does and why it’s important to look at how a specific service is licensed and which kind of laws they have to stick to in return.
Financial transactions and trading on the stock market are regulated by government authorities in most countries. For example, in Europe the European Commission (EC) has created a directive and several financial institutions that make sure the relevant investment services comply. The contents of such directives can differ between different countries, but overall they make sure the service is legitimate and safe. That’s why it is best to:
- check which services are licensed according to your local laws and therefore safe and legal,
- check if international services might stick to regulations more suited to your trading habits.
Naturally, step two only applies to services that are still legal to use according to the specific local laws. In Europe, for example, a broker that is licensed in one member state of the EU can legally offer their services in any other EU member states without an additional national license from the specific state. In the case of binary options brokers, their service cannot be registered in the US, and they, therefore, cannot legally provide it on US territory.
- This means that the legitimacy of service is always tied to specific local laws.
Good Online Brokers Without a License – Is That Possible?
Based on these regulations and review contents, there are some features that make an online broker a secure service with a high-quality standard. Many binary options brokers, like RaceOption or BinaryCent, are continuously rated very high across several review sites, despite them lacking the most important safety marker, a license. Does that mean it is an untrustworthy service?
Binary Options Traders – Basic Facts
Trading platforms for binary options are offered by unregulated offshore brokers with no license. The reason for this status is that many countries, like the UK and EU member states, have banned binary options trading in 2018.
- Since they want to continue offering binary trading options, they have no choice but to remain an unlicensed service in these countries.
This does leave its users without the safety net of a license and its regulations. However, many test and review sites still claim that using the most popular binary options trading platforms has not given them any reason to call it a scam.
Review Opinions
Binary options brokers cannot get a license, even if they wanted to, to quickly prove their safety standards. The high ratings of many binary trading platforms on review websites lead us to assume that their service is satisfactory for many users. It seems like they try to offer high-quality customer service and many perks to balance the pros against the hefty con of a lacking license.
This makes it very necessary to put in your own research and compare the reviews on any binary options broker. It is highly advised to read the broker’s terms and conditions very thoroughly to find any kind of loopholes and conditions you don’t agree with.
Make sure to not only rely on ratings, but also read customer comments. People who have been scammed tend to be very vocal about this experience online.
Conclusion
Since binary options brokers offer an unregulated financial service, they are riskier to use than a broker with a license. However, many reviews still offer positive opinions. Be aware of this risk and read the terms and conditions before you open an account and enter into a contract with the service. If you want to trade binary options in countries that have banned this practice, you will need to rely on a broker without a license. In this case, using the review opinions and user experiences is a great way of finding a good service.
Fateh has been trading cryptocurrency for 4 years, so he wants to share his valuable knowledge.
Source: https://www.coinspeaker.com/binary-options-brokers-scam/