Binary Options Websites – Gambling or Investing?

We investigate binary options websites to find out what these sites are, if they can really be trusted and how their increasing popularity is being exploited by scammers.

Not many people understand what binary options are. It is still a relatively new type of market trading but one that is increasing in popularity. So we’ll get straight to it. In its simplest sense, binary options allow investors to predict whether a specific stock will go up or down within a short time frame. If the investor is correct then they win and if they are wrong then they lose.

The time frame in which the investor has to predict is usually only a few minutes. So for example an investor could predict that the stock price for Microsoft will be higher in 5 minutes than it is currently. If it is not then the investor loses their investment.

Because the time frame to make your decision is so short, being able to both consistently and accurately determine the outcome of the stock price is virtually impossible. Even seasoned stock market traders would have trouble determining if a stock price will be higher or lower in only a few minutes. Whilst websites that offer this type of “investment” (binary options brokers) may appear respectable and professional, it is important to realise that binary options trading is essentially gambling. There is no way of guaranteeing a profit from these websites and the risk factor is high. Worth remembering is that websites that offer investment opportunities in binary options are referred to as binary options brokers.

Also worth knowing is that regulation regarding binary options brokers is poor. This means that binary options websites can pretty much say what they want and do what they want, which in turn leads to some quite shady broker sites appearing on the web. Many broker sites imply heavily that potential investors are likely to profit, even though almost everybody – just as with gambling – are subject to “house odds” in that they are likely to lose out over a sustained period of time.

But the worrying part only begins here, because now the rising popularity of the binary options websites has caught the attention of get-rich-quick con artists, who take advantage both of the poor regulation of binary options and people desperately trying to make money online. They do this by creating websites that falsely promote binary options trading as “proven systems” that virtually guarantee riches.

One such site we looked at was www.MyBinaryRecoded.com by “Ronnie M”, which was being promoted by many familiar get-rich-quick spammers such as Anik Singal and Anthony Morrison. Looking at the website, which at the time was only a week old, we see the question “Can you afford to be passing up $500 to $1000 a DAY”. The site also claimed that there are only 28 free spots remaining in our area, and that mybinaryrecoded.com was “featured” on CNN and MSNBC. The focus of the site was a video news story about working from home. Now these are all red flags that we have previously associated with get-rich-quick scams that dress up Internet marketing information to be that “breakthrough system” that makes anyone who ventures it rich beyond their wildest dreams.

Only when we entered our email and name did we realise that www.MyBinaryRecoded.com was actually promoting binary options websites. The next page on MyBinaryRecoded.com was designed to look like a news story webpage, and now included the claim that we could earn money every 60 seconds, along with other claims about how there was no risk, and how we would be using a “100% proven system” along with more typical get-rich-quick hype. The site then linked to two binary options websites (brokers) and provides instructions on how to use them.

One of the sites was VIPBinary.org, which in itself is a rather shady broker website created in 2011. VIPBinary.org, just like many other binary options brokers, has both an affiliate and “sign up a friend” scheme where members get money for people they refer to the broker website.

And therein lies the scam. Sites like www.MyBinaryRecoded.com are essentially affiliate sites that dress up binary options websites as “killer systems” that are effectively guaranteed to make you rich. They do this so you buy into the binary options websites and the affiliate site gets paid because they referred you. Of course binary options websites are certainly not guaranteed to make you rich and affiliate sites like MyBinaryRecoded.com are just trying to fool you into signing up. It is comparable to selling you a blackjack strategy guide and claiming you can clean out any casino by buying it.

Sites that claim to have “proven systems” or guaranteed methods to binary options are simply taking advantage of poorly regulated trading options and selling you lies and hype. Binary options websites are essentially sites equivalent to online casino websites, and thus they should be treated as such. High risk, no guarantees and having the same pitfalls as gambling, including the possibility of addiction.

Be careful if you decide to venture with a binary options broker and make sure you research the broker thoroughly on the Internet to ensure they operate fairly. And importantly, never trust websites that claim to provide “proven systems” for such sites. There is no such thing.

Further reading –
Forbes.com – Don’t Gamble on Binary Options