Binary Options Regulated and Scam Brokers

[bearmybull]

Thanks NanoAlpha.

I just typed a long reply and hit the wrong button and deleted it........ I will try again....*sigh*

Yes I was referring to BOTS. I did not want to name them as I did not know if naming another forum is seen as spam. I am naming them to get info such as you gave, and not to advertise or promote them in any way. I am wading through their "school" articles. With my limited knowledge, it looks like very credible information. I guess what is actually credible and what not should begin to be clearer with time and effort.

Through poker I think I learned some tools that will be useful as a trader. I understand and apply strict BRM (risk management), am patient, am fairly able to recognize tilt and simply stop when I do. If my position is bad vs certain players, I just leave. If I see I am simply going to be outplayed by better players, I just leave. I am very capable of admitting when I played bad or won through luck and not good play, and can quite easily leave my ego at the door. I also NEVER play with money that I cannot afford to lose, or with money needed for living, family etc.


I would gladly go against the FT at the WSOP. But to do that you have to get there, so its kind of a given . But I get your point.

I will also watch the vids.

I dont know if I am a born speculator, but my point is not to take 500 and make a good income with it (although I would be happy if that happens) but the fact that 500 is an amount I can use that will make no change in our lives if it is lost. It seems to be a good compromise between not investing too much at first and investing enough to make a start at learning. (I dont know if I am right here, so comment away) I also understand that my initial investment my simply be "tuition". If and when it is gone, I would try to understand if it is cause I still have much to learn, or if I just dont get it, if trading is simply something I should not try to conquer. In the first case, I would continue, with the help of FPA and its members and any other learning and information sources I can find. In the second, I would look for another way of making money and accept that trading is not for me. I would hope I can see clearly what is what. As of yet, I am still quite clueless.

I am a hard worker, and do take time to read and study, inform myself and try to see if I am understanding what I am trying to learn. I am always grateful for advice and help, and am actually very happy if someone I respect (and seems to be a person of knowledge and experience) has a go at me for bad decision making, bad strategy or w/e. I dont have a problem with trying to objectively look at what I do/did wrong. I used to be a very dedicated martial artist, (sadly I dont train since a long time anymore) and I also was involved in a 12 step program. These and other experiences in my life have taught me that in order to remove a weakness or fault, you must first recognize and accept that it is there. I am not saying I am a master at this, but I try.

In any case, thanks for your comments.

 

[Joa]

WARNING Binary Options and Brokers WARNING

I am only a member of the FPA - I am not a moderator, nor a supervisor of the FPA

Therefore I act on my own, NOT in the name of the FPA, so sue me if you like.

All the following statements are based on personal experience, esp. with Cypriot companies (and the CySec) and 35 years in Forex.
I am NOT an affiliate to any broker or bank either.

I only want to talk about BINARY OPTIONS and even more about the so called

BROKERS, and CYPRUS

Anyone interested in "trading" (sort of a wrong term in the first place) should conduct a due diligence. This is a risky business, like any trading, Forex included. Some rules must be obeyed BEFORE YOU OPEN AN ACCOUNT AND BEFORE YOU DEPOSIT FUNDS. I've seen too many people here complaining about losing money or having troubles getting their money back, while they never read one thread here in an FPA Forum. Here I lay down a few rules that I apply for myself:

A) Opening an account
Do not ever, I mean it, sign up with a broker, when you were coming through a referral link, or through someone who is connected through an "affiliate program" to that company - that's a sure thing to lose your money because the "affiliate" will get his commission from your money (!!) and from the "trades" you execute.
That is how you read about "reviews" on the internet, they are all run by "affiliates" and/or employees who get their neat share of unsuspecting candidates wanting to make a little money by clicking the link and open an account instantly.
For heavens sake: Money Laundering laws demand that a Bank/Broker knows his client, and a Credit Card is NOT considered an ID!!!!!!!!!!!! I wonder how stupid some people really are, or is it simply greed driving them, easy money?

B) Broker place of business
The vast majority of binary option brokers is registered on Cyprus. That in itself is a WARNING
Do not ever (again), sign up with a so called "broker" who's company is registered on Cyprus, or on the
Seychelles, or in Israel. The trick runs this way: a) The company xyz is a subsidiary, in most cases, of another entity that is registered some other place (Panama, Seychelles, Israel, come to mind). Now this newly formed entity on Cyprus gets a license to conduct business supposedly supervised and authorized by the CySec (which is just another name for a governmental bucket shop). Having now a license, the supposedly Cypriot company establishes a series of Websites (www.whatever.com, www.whatever.net and so on). Mind you, these Websites can be renamed within seconds. They are all from the same source. The name of the Website has nothing to do with licensing and it is not a company either.

C) Regulatory Authority
Companies registered on Cyprus are "regulated" by the CySec. This entity does not deserve being called a regulator. CySec does NOT assist "investors". Their modus operandi screams to heaven. You can file a complaint with all documents attached - and they will acknowledge the receipt. When filing a complaint, you are asked to attach as much documents as possible to back up your complaint. They do NOT look at your complaint's attachments (!!!) even when they ask for it on their website! Four weeks later, you will get another notice from CySec, asking you to supply documents...... This is how CySec works. They play the same game of time as the "brokers" they are supposed to regulate. It's a disgrace to the financial world.

D) General Warnings about the Binary Options Business
a) Do not listen to intermediaries, affiliates, paid web site reviews and so on, it's YOUR due diligence!!
b) Do not open an account unless you have studied the General Terms and Conditions
c) Do not accept bonuses EVER! Get that? Here it's again: DO NOT ACCEPT BONUSES!!
e) Do not sign up with ANY company/broker/Website that is registered on Cyprus/Israel
f) If you made the mistake, and signed up already, do not allow an employee of the broker to trade your account!!! EVER!!!
g) Check the company's place of business, check their phone number. If you are not getting the phone number which matches the place of business (i.e. Cyprus Company with a London number), stay away!!! It's the first sign that it's a scammer's setup.
h) A company that needs more than 48 hours to process my request to withdraw my funds, is a scam!!!!
i) Do ask before you even consider anything like opening an account and/or making a deposit: Who is the broker's bank on the other side where my money goes to? Get the account number and all the details. The more information you have, the better for you. Any hesitance on the broker's side... you get the picture...

E) Rules to succeed in Binary Options "trading"
a) Find a broker (there are only a handful) that has it's registered place of business in the country of the authority that regulates them (i.e. Corporate seat in London, regulated by the FCA; seat in Switzerland, regulated by the FINMA; seat in Germany, regulated by the BAFIN; etc.)
b) Ask the company to list ALL documents required to open an account, ask them as well for ALL documents required to withdraw funds - and the exact procedure to do so. Provide ALL documents, and ask them for confirmation that ALL papers are now accepted, have passed compliance, and that they are valid as well to withdraw your funds. At this point you can fund your account. Not before!!
c) Do not sign up with a company that does not provide a Binary Option Demo-Platform. You need to see how their system works and you need to test YOURSELF. Treat the demo as if it was your real money at stake.
d) Have the bank/broker confirm, that their platform is based on a moving average price (bid+ask/2) and that the opening and closing price are based on one and the same average, meaning that by opening you're not getting a price equal to ask (when going long) and then upon closing it's adjusted to the bid price (a common crooked way by Cyprus Companies). An honest broker will confirm this to you - if not, do not open an account. It must be WHAT YOU SEE IS WHAT YOU GET at any and all times.
e) Do accept that during highest volatility times you might not be able to trade.
f) Accept that you can't trade off hours, you should focus anyway only on high volume markets in the first place. Honest brokers/banks won't have Binary Option available during the off hours (night)
g) Learn to deal with Binary Options yourself - and then execute it all yourself, too. Do not let a third party run your account.

Here is finally how an honest broker/bank in Binary Options works, just general terms:
The Broker has xxx numbers of clients.
Some are short, some are long
The Broker is your counterpart, or in other terms your liquidity provider
The Broker now matches his clients positions and has a net exposure to one side
That net exposure is all he has to worry about and cover his tail end by hedging it.

This is very much the same way that 99% of all Forex Brokers work because clients orders NEVER reach the market, ever. They run it all on their so called "B" Book - which is internally run to manage risk. And here again, only the net exposure is really what concerns them. They all call them ECN, and STP and no dealing desk... and on and on... Yep. STP is straight to the B-Book and who needs a dealing desk, when the order never reaches the market???? Go figure.

So, I hope I've brought a few points across. And even more I hope it saves one or two of the members here from losing their shirts.

Joa

(The above is certainly not the complete guide of do and don't!!) I just hope you're all getting the general idea and use caution.

 

[Pharaoh]

Overall, good advice. There are some more things to watch out for.

Regulation in any EU country gets a company "passported" to the FCA. If you are signing up with an "FCA Regulated" broker, make CERTAIN that their registration is directly with the FCA. Otherwise, neither the FCA or FOS will be able to help you if anything goes wrong.

Binary options is inherently "liquiity-provider-proof". Think about it. What counterparty will pay you (or your broker) a fixed amount based on you wagering if price will go up or down, without regard to whether that price movements is 1 pip or 10,000 pips? There is absolutely no way to pass that risk on to the "real market" any more than there is a way to pass on the risk of too many roulette clients betting on Red at the same time. Because of this, binary brokers operate like online casinos. Other than the possibility of getting some money from partnership referrals, ALL of their money only comes from one source - client deposits.

Therefor, any withdrawals are paid for from client deposits. An bonuses where someone manages to meet the requirements to withdraw them come from client deposits. The salaries of every employee there, even the "expert" who is going to help you "win big" come from client deposits.

This means that any "account manager" at a binary company is effectively being paid for from client losses. If he's really good, he'll bankrupt the company.

NEVER let any brokerage employee trade for you or suggest trades to you. This is even more important at a binary brokerage.

 

[Joa]

Liquidty??

I agree with you for the better part.

Pharao - I think you over emphasize the issue of the "liquidty provider", way too much. We all know Forex to a degree and we know about A-Book and B-Book and how rigged the market really is.

Way more than 90% of ALL FX transactions are taken on the broker's B-BOOK. That means the orders NEVER reach the markets. So what is the story about liquidty? There is no need for that. If you trade like the vast majority of guys on MT4 or MT5 platforms, you experience how rigged the market is. Have you ever checked the real markets and seen the size of positions ?? How do you suggest the broker, calling himself an STP and ECN and no Dealing Desk entity, passes the orders into the market? No way in heaven - or hell. The MT4/MT5 is not made for traders - it's for the brokers the ideal tool to rob you blind.

Any broker matches first clients orders. Anyone telling you that the broker or market doesn't see your stops and limits is flat out not telling the truth. They do KNOW, they see it.

So all a broker, if he's an honest one, has to worry about is the balance of clients orders and positions. THAT is what he hedges in the market, if ever. Pharao, with your experience you know that. Where would all these complaints about FX brokers not paying the clients monies back come from here on the FPA site? It's exactly the same story over and over again. Bucket shop is bucket shop. These crooked "brokers" in funny places try to pretend to match clients transactions like the big boys, and that means they never pass the balance on into the market, they just never planned on doing so anyway because they count on statistics that predict that 90% of all small trades lose.

Brokers and Banks start the markets by taking a certain position of longs and shorts and then they start matching clients orders against their own position. THAT's what liquidity means. On a sub level the broker does the same and passes on only the balance he's at risk with. All this hoopla about Trillions of volume are overdone.

How rigged is the market? Big time. You watch the tick chart on MT4..... You see a line moving fast. It's a LINE, get that. Go to the pain of creating a tick chart, TICK BY TICK, DOT BY DOT.... and you see the gaps. There is no continuous price as the line of the tick chart would make you believe. It's totally erratic and you experience gaps of 1 pip (10 points) regularly. You see 2 pips, 5 pips and more EVERY DAY. These are HUGE gaps. Somebody had the stops close or used a tight trailing stop? I study the market prices in detail and I do have point by point tick charts.

So all in all: The profits come first and foremost from the losing transactions and that ALL regular and standard options expire worthless. Why else would a bank write options and seel them to you??? It's rigged 70 to 30 in their favor. So wouldn't you want to be a writer of options? Do what the banks do? They are in the market to make money........... The odds are stacked against the private investor/trader. Any other opinion is off reality.

An honest Binary Broker/Bank will tell you that THEY are your counterpart. That's why it is so utmost important to check the broker and conduct a thorough due diligence. They do matching of clients transactions first, and yes, profits come from the loser traders. No honest Binary Broker will allow you to trade off hours, they can't match orders anymore in low volume markets. They restrict trading hours, they restrict the position size - and they let you know about it beforehand.

Now in general: Anything we small guys do is a wager. You deal in Forex and that means you're betting that your prediction comes true. Up or down. At the base it's binary as well. And odds are, you're losing because the market is rigged. They chase your stops, they hunt your limits and that is guaranteed money for the broker/bank. 90% of the moves that have nothing to do with reality. Equally, more than 90% is speculation.
Those who are the market makers or liquidity providers (as you call them) are nothing but licensed cheats and regulated robbers. How come there are moves of 300 Pips AFTER HOURS, like at 10PM CET when the big markets are closed anyway? So some little hedge fund is running the price up - and there was not even anything in the market, no news... just nothing. It was and is always straight stop chasing and thousands of little guys lose their shirts. I call that rigged. The small wallets get emptied, the big deep pocket hedge funds get fatter.......
Read the fine print, the General Terms and Conditions: You will with a neutral mind realize that they tell you that they will be robbing you blind - but since they publish it, it's accepted and it's regulated, too!!!!!

Find a regulated honest Binary Options Broker, and you're on par with an honest Forex Broker.

If you fail conducting a proper due diligence, you're screwed - in Binary Options or Forex.

I enjoy it

Joa

 

[Master Yoda]

I think this is an excellent thread

What Pharaoh said is true, we have already seen a binary broker owner lying saying they are BaFin regulated (in Germany) while actually they were just CySec regulated with passport to EU and UK.

Most of binary brokers are located in Israel, honestly I have found only one non-Israeli binary broker so far. So wherever they say they are, no matter where they are regulated- there is a 99.9% chance they are in Israel.

Binary broker were created to rip you off faster than forex as there is no long term trading.

Many of the binary company owners came from the gaming online/ casino online business...

 

[Joa]

What do you consider "longterm"?
I have my serious doubts that traders here trade Forex longterm on daily or weekly charts...
That is exactly what offers the brokers their shots to go chase stops....
If you get the price close enough on "longer term" positions, they see it... drive the prices right to the point.
Everbody thinks that the Trailing stop feature in MT4 is a great too.... think again... by activating THAT one, you tell them you're on a standard trailing stop, easy as pie to kill it...
We have 1, 5, 15, 30, 60 Min charts.... all standard. All known to brokers. The minute ends when it ends, right? .. at the top of the time frame. Watch closely what happens when you run a tick by tick chart, dot by dot....
The more important price to the advantage of a trader would be the 30 seconds....

The Binary Options, the fast ones.... expire when I say - counting 60 seconds, 2 minutes... 5 minutes... from the moment I place the "bet".. THAT is a huge advantage right there. My options all expire at odd times and not when thousands of others do - at the top of the minute, or any other time frame. A tick chart (dot by dot for every price) is NOT time related anymore Now THAT works in MY FAVOR

 

[Master Yoda]

I mean that on Binary you have a deadline to place your "bet", while on FX you may keep any position you like for days, weeks and months

 

[Joa]

My opinion about that?
... ANY type of option has an expiry... and you can keep them for weeks or months, too
You can even trade Binaries like other options and close them if and when in profit, just like other options, or close them to limit your loss.

So the difference between standard options and binary options is not that big with the exception that you can't earn unlimited profits even when you're buying them.
Maybe you should really dig into these things more in detail?
Go to the IG Bank website and check out these binary options and compare to the standard option.

You're a fan of FX trading, I can tell. I've been doing it all during my time as a trader, esp. writing options - I am very familiar with that.
If you were to accept that these binaries won't go away any time soon, and that more and more honest and correctly regulated brokers enter the business (ETX, Dukascopy, IG Bank to name a few), you might want to take a serious look.
My opinion stands as it is: If you understand HOW the broker deals with you, you're perfectly well ok. Deal only with regulated brokers that are located in the UK, US, or CH and stay away from brokers in exotic places like Cyprus, Israel, Malta, Gibraltar, Panama - and the likes.

Since the quoting of the FX market in general is totally rigged, you're forced to go to great distance and find something that actually suits the trading of binary options. The one minute chart on MT4 as the shortest time frame certainly doesn't help any. I've managed to alter a few things so I have a tick by tick chart, this way disconnected from any time frame, and then you realize what you need to do and THEN it helps in Binary Options, suits perfectly well - if you can run some trending tools on such a tick chart.

People wanting to make a quick buck, and not knowing how prices are quoted and/or displayed, will be taken to the cleaners rather sooner than later. I have corresponded with a few people now and I see that they all trade by gut feeling and that works now and then.. and in the long run it will be a disaster.

FX has huge disadvantages, too - and not many talk about it. You got the spread against you, you can only trade longterm, and still you're screwed because to be safe you have to keep the stop away in safe distance. Show me ONE private trader who makes a living by trading FX with his own money at stake. I've done it for 35 years and I know how hard it is.
I've said it before: It's too bad that not more people here are getting serious about the Binary Options and explain how it works and whom to deal with.
All we see here are complaints of those who can't access their money at shady "brokers" because they were simply greedy looking for huge bucks in no time. I just try to help prevent people from getting taken to the cleaners.

Use trend tools, make two transactions per day when conditions are right, risk 200 bucks and earn 150, that makes 300 a day and 6 grand a month. You can live off such things - but you have dozens and dozens of shots per day to do that - and that's the lure for most....
Joa

 

[hoover]

I will quickly say I was one of the many who started shooting for the sky, then common sense took control and I would have gladelly settled for $250 per day in an extra month for extra income. However like maney others I learned to late who to stay away from, Cyprus and Israel for me. I don't know which emotion services first for each individual; frustration, anger, diss-trust or feeling like an idiot. Later they (me) throw their hands up and walk away thinking its a lost cause. Only after about 2 years it wasn't hard to make the $250 a day, and being happy with it. Withdrawing if your with the wrong country, is no party. And I personally cant trade when I cant keep my emotions in check, and I don't think many smart traders like you and others would disagree with that theory. I never lost any more then I lost or got back. But I stopped for over a year and a half now cause I could see nothing but impending doom down the road. Mabey when more bad appples get sorted. Lots of peapal can stand losing but not out right cheated.

 

[Joa]

In general
You really need to keep emotions in check. That is probably the biggest problem for people dealing with BO. It's so fast and easy (appears to be), nothing is easier than keep klicking away to recover your loss.. and lose more and more... and get angry at the market?
THE MARKET, even though rigged, is ALWAYS RIGHT.
You can have the best set of indicators - and still you're behind the curve, no matter how little. By observing the market tick by tick, you get a good feel of what's coming and be prepared and you see the small trend change very fast - and that is good enough in short term BO for making a profit
If your settings on tick charts tell you to go long, you stand a good chance to bring it home with profit. Don't get greedy, stick with your settings and accept that you still might be wrong. Don't chase your loss into a bigger loss. You only need a ratio of 5 Winners to cover for 3 Loosers and you're back in the game.
You do have dozens and hundreds of shots every day at making profit - or loss Be patient and wait and if you don't feel ok, don't enter a position. Do it only when you are 100% convinced that it's right.
You're not supposed to be trading counter trend - something I've done for decades successfully. Binary Options are traded WITH the trend!!!! Believe me, I had to fight against myself for weeks by re-training my brain and accept that what I've done for decades doesn't work in Binary Options... It was a battle to just "go with the trend". The art is to catch that all promising trend at the beginning and that is only possible when you run a tick by tick chart, really every price paid counts....
Joa