Binary Options Broker Scam
This is a pretty hot subject and this debate has been going on for spot Forex brokers for many years and still is. Spot Forex has been and is still a bit finicky business and it is not surprising that the same questions that arose within the spot Forex community, now arise within the Binary Options community. Trading is not as easy as it is marketed by the brokers, that’s for sure. Trading is a business and if you have trouble with this notion then you will have very little success. You cannot trade on a whim, in other words gamble, and think you can rake in the cash.
Are the Binary Options Brokers really scamming us?
I personally think the vast majority of the Binary Options brokers have sound business practices, up to a certain extent at least. As with any business, they are in it for a profit and I am sure you would be as well. Further all businesses have customers that are not satisfied for some reason or other. Usually the problem is that the expectations on the part of the customer was higher than what the product delivered. Everyone of us have bought a product that didn’t meet expectations. That doesn’t mean that company is a scam, does it? It just means you were expecting something different to what you got. Of course there are various aspects to this – it could be low quality or lack of features etc. Usually it boils down to a price/value distortion for normal products. For brokers it’s a bit different because the product is not tangible and very much abstract. The product the brokers offer can be compared to Rubik’s Cube if you like. If you can not solve it doesn’t mean it’s broken, right? It means you don’t possess the skills to solve it, nothing more, nothing less. Would you return such an item? I am sure some would and perhaps that’s where the problem lies, at least a part of it.
Binary Options Brokers and Marketing
Having said that let’s look at the brokers and their marketing schemes and the troubles they create. I am not going into the marketing practices they are using selling Binary Options as something that is easy. It’s not, although it certainly is easier than trading, say, spot Forex. I think the biggest problem Binary Options traders have with the brokers are related to the deposit bonuses they are using to lure in new clients. As these deposit bonuses are very juicy it wouldn’t surprise me if some brokers automatically add such bonuses to the traders accounts the moment he makes his deposit. You might ask what is the harm in that? Well, if you have ever read the Terms & Conditions of these deposit bonuses you would understand that it’s very bad business practice to automatically force upon a trader such a bonus. Let’s look of the Terms & Conditions from VIPBinary:
VipBinary offers a number of attractive reward features to its new and regular customers. Bonuses and one time trading credits rewarded to customers are part of VipBinary’s promotions program. These bonuses are limited time offers and the terms and conditions associated with any bonus rewards are subject to change.
In order to withdraw your full bonus, you will be required to execute a minimum trading volume of 30 times for every $1 bonus. The bonus can only be withdrawn when the preceding stipulation has been fully met and fulfilled.
The withdrawal of funds from an account before completing bonus conditions will immediately nullify the bonus and will be removed from the account.
Any indication of fraud, manipulation, cash-back arbitrage, or other forms of deceitful or fraudulent activity based on the provision of the bonus will nullify the account and any and all profits or losses garnered.
Read the text highlighted in red. What this means is that for every dollar you receive in bonus you have to trade it 30 times. Let’s take an example to make it more digestible. You deposited $1000 and then accepted a bonus of 50% or $500. Wow, you think, they just gave me $500, cool. Not so fast! To be able to withdraw your winnings or remainings of your capital, you first have to generate a turnover of 30 x $500 = $15000. If you are trading $100 lots that means a massive 150 trades before you see any of you trading capital or winnings. That will take a long time to achieve. If you make 4 trades a day, that amounts to almost 2 months of trading, day in and day out. As you can understand, some might get very upset by such deposit bonus terms.
If you accepted such a bonus without reading the Terms & Conditions, the broker has no fault. It’s your responsibility to read the fine print. On the other hand, if the broker deposited a bonus in your account without your consent, he is to blame and should promptly lift any restrictions on on withdrawing you capital.
"Helped me chose a broker. Thanks!"
Very informative. Won’t make that mistake now. Which I had know this a couple of months ago, would have save me a lot of trouble.
BOcapital is a broker that handles binary options. They advertise that there are no spreads charged and you can withdraw up to your account balance at any time.
I placed $100.00, the min. deposit, into my trading account on May 28, 2012. On May 30, 2012 my account was up to $750.00. At this point I tried to withdraw $150.00, to test the waters, following their directions to the letter. The withdrawal section of the platform would not let me enter $150.00 but would let me enter $100.00. So I contacted support to ask why. They replied by email that they didn’t know but would get back to me. I accepted this and went back to trading.The next trade I took I had 25 pips added to the strike price and another 20 pips were added to the market price when I committed to the trade. I am now trading against 45 pips to break even. At first I did not realize this until after the trade was engaged. I was used to checking the price listed as “our price” then setting up the trade using their line chart as a guide before engaging the trade. Needless to say I lost that trade. I still wasn’t sure how because according to my Meta 4 platform I had won by 32 pips. I use meta trader 4 to track my trade.
On the next trade I took screen shots of the market price before I did the trade setup and then a screen shot at trade setup and a third screenshot when I committed to the trade. This clearly shows the 25 pip spread added to strike price and then another 20 pips added to market price when the trade was engaged.
With three screenshots taken within a 2 second time laps, it’s easy to see what was going on. I contacted customer service with this new problem. They had “never heard of this happening before”. They said I need to take a screenshot so they can investigate the problem. I sent the screenshots I had taken explaining the price changes on every screenshot. Their next email said they were having a problem reading some of the numbers so I placed the screenshots in the body of the email where there could be no problem in reading. There next email said they would turn the matter over to the tech dept which is in another location and get back to me by Monday. When I asked if they could resolve the withdrawal problem they asked for a screenshot of what the withdrawal section of the platform said. I had already did a copy and paste of what it said but I did follow up with the requested screenshot anyway.
My account now has $588.60 in it and I can’t trade against a 45 pip spread with a 30 min. option. This spread situation was not present during the demo account or the live account till it hit $750.00 mark.
They state in their FAQ
“Is there a minimum withdrawal amount?
You may withdraw any amount up to your remaining balance”
The withdrawal section of the platform still reads
“You have reached the maximum withdraw request allowed. If you would like to modify your request go to the “Withdraw Request” and cancel the previous request”
It still shows my first withdrawal of $100.00 pending as of May 30.
I have not been contacted by them today and they said on Friday I would be contacted on Mon. morning. They now refuse to answer any emails.
THIS COMPANY IS A SCAM!!!!!!!!!
XPMarkets is another scam. They wait until your account balance approaches 200% of your initial deposit and start adding 20pip spreads to your entry strike prices, putting you initially 0.0002 out-of-the-money on all your trades.
Their Terms and Conditions also make it so that you cannot recover your initial deposit without reaching 10x that amount in your account.
I filed a credit card dispute to recover my deposit, but I will never be able to recover my profits, and neither will you.
Stay away from XPMarkets, and beware of brokers on the Tradologic platform – that seems to be what all these brokers have in common.
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Your analysis of the stipulations regarding the bonuses is slightly flawed. When a broker tacks on an additional chunk of cash, I see the possibilities before I consider the red tape and issues you’ve highlighted.
Sure, it may be very hard to ever get the actual bonus but you can certainly make money off of using that capital and deposit that. I happened to try out a broker called GR88trade and got the 100% first time bonus. I put in $200, got the bonus and was trading with $400. I got crazy lucky on a 4 string winning streak and went to withdraw about $1300 to which the customer support person approved right away but told me they would retract the $200 bonus because I hadn’t fulfilled the requirements. $1300 – their $200 and I withdrew $1100 the next day. Not bad given I only put in a couple hundred bucks to start.
Granted, since then, I’ve lost that all back on another broker.