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Binary Options Abroad
All 0's No 1's
One of the most recent scams to gain some prevalence is actually quite comparable to the shadiest of Casinos in the sense that it both qualifies as gambling, and many of the tactics to unjustly separate people from their money are quite similar. What I am referring to is the underhanded world of Binary Options Trading abroad, and there are many people being sucked into this vacuous enterprise due to the false promises of quick dollars to be made by following, 'Simple,' investment strategies.
With that said, it should definitely be explicitly pointed out that Binary Options, while somewhat difficult to play profitably, are not necessarily a scam in regulated markets. For example, the United States has Binary Option trading that is perfectly well regulated with all of the transaction fees being completely above board. Furthermore, when the game is not rigged against you, an in-depth understanding of short-term market fluctuations may be all a person needs in order to deal in Binary Option Contracts profitably.
However, as with any other trading enterprise, the trading of Binary Options is certainly not easy, and there are a good many skilled investors out there who have years of experience over those just getting into that particular game. However, the system (when regulated appropriately) is fundamentally quite fair and anyone who is willing to put in the work to study statistical trends with respect to short-term moves in either stocks, stock markets, commodities or currencies could theoretically become a decent Binary Option trader.
In fact, I would think that the most regulated market for Binary Option trading, the United States, (Was there ever a doubt?) will be the easiest place to start because the methods of Binary Options are less numerous, in fact, there is fundamentally only one...and it's really easy to explain.
Binary Option Trading in the United States
The simplest way to think about Binary Option trading as it is transacted in the United States is that it is almost like making a Proposition Bet. I say this because, if someone holds what is called a, 'Contract,' until the conclusion of the contract, (always a fixed time) then one is simply taking one side or another of a Yes/No Proposition. For example, if you would imagine a Binary Option contract on the , which is at 4707.98 at the time of this writing, then a Binary Option might ask this question:
Do you believe that, when the markets close on Tuesday, June 28th, 2016, that the Nasdaq Composite Index will be below 4600?
Many people will believe that to be the case given the recent shake-up in the European Union which has also had an impact on many stocks within the purview of the United States indices, and as a result, might suggest that the answer to this question would be, 'Yes.'
As with any other Proposition Bet, excluding those that have more than two options, anyway, there is a, 'Yes,' side and a, 'No,' side and Odds can either be effectively Taken or Laid (though it's not called that) as to whether or not the, 'Yes,' or, 'No,' is going to come in. In the case of Binary Options, there are two positions that can be taken, and those positions are known as the, 'Bid,' and the, 'Offer.'
Playing from the Bid side
Playing from the Bid side is really nothing more or less than taking the, 'Yes,' side of the Proposition that the Nasdaq (to continue with our example) will finish below 4600 on that specified date and time. The main difference between this and any other Proposition Bet is that, while some Proposition bets made between people will occasionally result (assuming that it looks like the result is going to go a certain way) in one person, 'Letting the other out at a discount,' this is always the case with Binary Options because active Options can continue to be traded and are only ultimately resolved for the person that holds a particular Option at the time of the Resolution.
For example, let's suggest that I made a Bid of $44.85 on the position that the Nasdaq was going to finish below 4600 on that specified date and time, but on midday Monday, the Nasdaq actually appears to be trending upward, has done so consistently throughout the day, and actually now sits above 4800. In an event such as this, it can be pretty safely assumed that, in the event that another Binary Option were put in play for Tuesday at the market close was put into play for the Nasdaq to finish below 4600, that the Bids and Offers on that would be less than $44.85.
With a Binary Option, however, each individual Option that is created can remain in play until the conclusion of the event in question. Therefore, while new Options may be created, at the same time, Active Options (referred to as contracts) can be traded from individual to individual. With the Nasdaq at 4800, I have not studied short-term statistics enough to know, but for the purpose of my example, we will suggest that the current highest bid for that Tuesday Option is $28.70. As a result of this, someone who already holds a Binary Contract for this event can actually turn around and sell it to someone else thus limiting the loss. The person who initially Bid $44.85 on the, 'Yes,' may decide that it looks so unlikely for the Nasdaq to finish below 4600 on Tuesday, at that point, that they will Offer their Contract for the $28.70 thereby only losing $16.15 instead.
Furthermore, when playing from either side, there is a finite amount of money that can either be made or lost because when a contract is Resolved by way of the time expiring, the event in question will have either resolved in a, 'Yes,' or, 'No,' so if you Bid (had the yes) and the event in question resolves not in your favor, then you lose your entire investment. If the event in question does resolve in your favor, then you will have made $100 less the initial amount of your investment, less any fees associated therewith.
The Option, once a Contract is made by way of a Bid and an offer, can be traded off at any point until the Resolution, at which point the Contract becomes either worth $0 or worth $100 and is then adjudicated accordingly. As a result of this fact, the amount of money to be gained on the Investment in a Binary Option contract is finite as well as the amount of money to be lost. For example, if you purchase a Binary Option contract in the example above at $44.85, then that is the most that you can theoretically lose, therefore, $55.15 is the most that you could theoretically gain if you hold the contract until Resolution.
Binary Options from the Offer Side
Playing Binary Options from the Offer side is essentially the very antithesis, in every respect, as opposed to playing them from the BId side. In our Nasdaq example, for a Binary Option Contract to even be created in the first place requires that someone agree to an Offer of $55.15 which is required for the Binary Option to have been successfully Bid on the other side of the equation for $44.85. Just like the only possible results upon the Resolution of a Binary Contract are that the resolved Contract is worth either $0 or $100, the only possible sum of the Bid and the Offer is $100.
It is for this reason that I compare it to a Proposition Bet, just a Proposition Bet in which the Taking or Laying of Odds is invoked. Furthermore, when an agreement is reached between two parties to enter into a Contract, in other words, when the Bidder and person making an Offer agree to their respective amounts, the Implied Probabilities that they are entering into are also effectively representative of their investments. That would always be true, of course, if both sides were entering into an agreement that had an Expected Value of +/-$0.00 for either side, but that is almost never the case. Generally speaking, one person makes a good deal for them and the other person has entered into a bad deal.
For example, if I make an Offer on the Nasdaq Option in our earlier example because I am selling an Option, and that Offer is $55.15, then what is happening is that I believe that there is a greater than 55.15% probability that the, 'No,' is going to come in, and whatever I believe that the probability actually is less the percentage expression of the $55.15 I am selling for represents (expressed in dollar amounts) what I believe my theoretical profit on the transaction is going to be. On the same token, if we assume that all Investors are at least attempting to act in their own self-interest, the person who is Buying the Option (taking the, 'Yes') believes that there is a greater than 44.85% chance that the Nasdaq will finish below that on the appointed time and date and, as a result, if you express the percentage probability that person assigns the event and subtract 44.85% from that and convert the result to dollars, then you have the person's Expected Profit on his end of the transaction.
That's what makes the concept of Binary Option Trading so simple: One person has the yes, one person has the no, if both people keep their Contract until Resolution, then they will either end up with $0 or $100 because, when resolved, it either has or has not happened. Therefore, given the event has already occurred, the probability of that event has either become 0% or 100%! As a particular Contract gets traded around (if it does) and as it becomes changed or modified, it does so according to how people perceive the Odds of the event to be changing.
In addition to the apparent ease with which Binary Options can be understood and traded, there are also appealing to investors because both the Maximum theoretical gains and losses are finite and just as readily understood. Furthermore, they are also attractive for investors who do not have much in the way of working capital because of these finite risks on any individual transaction.
For example, Stocks tend to be bought and sold, in traditional Stock Markets, in, 'Lots,' that are usually multiples of 100. While a person might make an investment through a Stockbroker and somewhat limit their risks by having, 'Out points,' that are fixed, they usually involve the ability to gain or lose more than $100. The reason for that is that if 100 Lots of a particular stock are purchased, than an overall move, in either direction, of $1.00 (or more) has already resulted in an overall gain or loss of $100.
Other Comparisons to Traditional Stock Market
However, a good deal of money can be lost by someone who remains active in Binary Options over a short period of time. The reason for that is that, other than stocks that are worth a high dollar amount individually, stocks will generally not fluctuate by over $1.00/share over an extremely short period of time. While some Binary Options will take place over a longer period of time than others, generally speaking, they take place over a relatively short period of time, so people tend to be recycling their money on them more often than with Stocks, (where the average Stock is usually held longer than the life of a Binary Contract) and thus, a Binary Option Investor will generally pay more in fees (we'll get into those later) than will a Stock player in Commissions...depending on how much is bought or sold.
When it comes to the Traditional Stock Market, as with Binary Options, some people will buy Stocks based on what they expect to happen as a result of short-term Market Fluctuations while some individuals will make long plays on Stocks in which they buy Stocks with the expectation that they will gain value over the long run and can later be sold at a profit. Binary Options are an attractive alternative to Stocks for people who would rather play the short-term and do not necessarily want to deal with the potential of losses that could equal more than the overall sum of their trade.
Furthermore, given the way that Stocks are generally sold in Lots, with exception to the Penny Stocks, it is really difficult for a person with Limited Working Capital, say $1,000, to play the market effectively simply because they do not have the capacity to diversify their Stock Investments because some of the more stable companies (if that's what a person wishes to buy) already trade for more than $10.00/share, and as a result, a person in this position would be incapable of even buying a Lot of 100 shares!
With Binary Options, a person can enter into a plethora of Contracts with $1,000, and that is particularly true if they have an eye towards what I would term, 'Long-Shot,' Propositions, by which I mean, taking the Yes or No side of the Contract comes with a significant unlikelihood of the event upon which the person is investing actually coming to fruition.
The, 'Would-Be,' Zero Sum Game
When we are comparing Binary Options to Proposition Bets, we ultimately arrive at the conclusion that they are a zero-sum game. Think about it: If two individuals each take a different side of the Option that will either resolve at $100 or $0, respectively, and the combined sum for which they are taking each side is $100, and the probability of each event, in actuality, were the same as the Implied Probability, then each side would be making a Contract with an expectation of $0.00 in both profits and losses.
However, much like with the game of Poker, there is what I call an, 'Effective Edge,' working in favor of someone who is skilled at dealing in Binary Options as opposed to someone who does not understand the Statistical Probabilities of short-term Market Fluctuations very well. To wit, some of the people playing the game are poor players and some of them are strong players. If the game were played until the end of eternity, and this is a Fixed-Limit game in terms of individual Contracts, and they each started with $10,000, eventually, the strong player would have all of the money and the weak player would have nothing with only extremely rare exceptions that would effectively (if it could be strictly quantified) fall outside of the Third Standard Deviation.
Of course, the probabilities of each particular Contract, regardless of what type of Contract it is as pertains the underlying asset(s) is not quantifiable in the strictest sense of the word because, in most cases, there will be micro-factors (as I will term them) that will be unique to each individual Contract. However, there will also be macro-factors with respect to the Statistics of each event that will generally maintain some semblance of consistency.
In other words, someone with an innate understanding who has done Statistical Analyses of short-term Market Fluctuations, rather than basing their decisions on a hunch, will have the advantage in a particular transaction. Furthermore, it is theoretically possible to, and likely has been done at some point, to create a computer program that will spit out the probabilities of a particular event being in a certain state at completion. Using this information, an individual or group will only play a Binary Option when it is to their mathematical advantage to do so with the only exception being specific micro-level or, 'Outlier,' events that take place that cannot specifically be predicted, but in the aggregate sense, have already been accounted for with respect to long-run decision-making.
Furthermore, it is not as though an individual or group is limited to acquiring one particular Contract for each event. When it comes to a specific Bid/Offer, there can be as many Contracts (even though each individual Contract, upon Resolution, is still construed as being worth $100 or being worth $0) as an individual(s) or group(s) taking the opposite side is/are willing to enter into. In other words, there can be multiple contracts that, if they were written out, would all say the same exact thing.
Furthermore, people who are advanced at working Binary Options will be able to determine a certain price range at which something is a positive proposition for them and can then enter into Contracts both, anywhere within that Range, but perhaps most importantly, on either side of that Range. In other words, in the event that it is advantageous, an individual or entity can play both the, 'Yes,' and the, 'No,' based upon what sort of Contract that they can enter into on either (or both) sides of that Proposition.
Think of it like this: Let's say there was some kind of virtual coin toss and someone foolish enough to pay me $51 in the event that I was the winner and someone else willing to pay me $51 if I was the winner while I only had to pay each of those two parties $50 if I lost. Let us also suggest (though it would be a good bet regardless of what side each other person wanted) that one person wanted to play Tails all the time while the other person wanted to play Heads all the time: The long and short of that is that I would profit $1 with every coin flip.
What Prevents it from Being Truly Zero Sum?
Within the United States, what prevents Binary Options from truly being zero-sum is the fees, though you could theoretically play a zero-sum Binary Option trading with friends, and if you were really just doing it for giggles, you could make the Range $0.00-$1.00, but the sum of the amount that each side has paid remains fully up for grabs and is the cumulative amount of each side's transactions after the event in question has been resolved.
For one example, when you trade Binary Options through , you will pay an Entry Fee and an Exit Fee and each of those two fees is $0.90. Therefore, there is a total of $100 in action and $1.80 in fees associated therewith, at least initially. Where the Exit fee is guaranteed to come into play is that, if both sides of a Contract hold their respective positions until the Contract is Resolved, then the side that finishes, 'In the money,' whether that be the, 'Yes,' or, 'No,' of the Proposition, shall also be assessed a $0.90, 'Exit Fee.' The losing side of the Contract who is said to finish, 'Out of the money,' shall not pay an exit fee.
Therefore, the minimum amount that Nadex will make on a particular Contract (assuming that no greater than a lot of ten is purchased, because they do not charge any Entry Fees for the eleventh contract or more) is $2.70. If a Contract or set of identical contracts finishes, 'In the money,' however, the Exit Fee shall always be assessed regardless of the number of Contracts held by the Investor who has finished profitably.
If we look at this from the position of the small trader, or at least one who has not bought in excess of ten on a particular Contract, then the person will either pay $0.90 or $1.80 in fees. Nadex will always make $2.70 assuming the Contract is never resold, so they are effectively making 2.7% of the total amount Invested whereas, assuming that a Binary Option had an Implied Probability of 50/50, each side will pay $50.00 to enter into the contract, one side will ultimately pay $1.80 in fees ($1.80-$51.80 = 3.475% in fees) or $0.90 in fees ($0.90/$50.90 = 1.768% in fees) of the total money initially invested.
Once again, if we assume an Implied Probability of 50/50 and a total of $2.70 in fees against $100 in total investment, then $2.70/$102.70 = 2.629% in fees. If the Implied Odds were actually the true odds, and both sides are essentially counting on them not to be, (again, assuming everyone is at least attempting to act in his/her self-interest) then each side would be bucking a House Edge of 2.629% on the Proposition.
However, these Contracts can be exited from and entered into even after they have been initiated and that is another aspect of Binary Options that is attractive to many people who like to play them. In that sense, it is much like Hedging a bet in order to, 'Lock in a Win,' or to, 'Cut a Loss Down,' however, unlike Hedge Betting with respect to gambling (which is usually done for pragmatic reasons and is often not mathematically advisable) there might be some cases in the world of Binary Options in which, based on Statistics, selling an Option later on is the Optimal thing to do.
When it comes to Maximum Efficiency, since an Exit Fee must be paid on an existent Contract in the event that it is resold, the most efficient thing to do (with respect to fees) is to hold a Contract until completion. However, it is possible than an Unskilled Investor will have a tendency to overreact to an even shorter term move, and as a result, if the value of selling one side of an Option is greater than the Expected Profit on the current state of that side of the Option in addition to the fees is less, then the Option should be sold. Again, these particular times are something that are going to be recognized by the most skilled of Binary Option investors, who will then capitalize on them.
This is also true on the, 'Cutting Losses,' end of the equation, as well. There may come a point that, even though a side of a particular Contract is currently going for less than the amount for which it was originally purchased, that the actual loss that will be taken upon a sale (the difference between the amount for which it was initially purchased less the amount for which it was sold plus the fees) will be such that the Actual Loss on the overall transaction is still a lesser amount than the Expected Loss of hanging on to that end of the Contract.
However, one area where an entity such as Nadex will make a lot of money (and Investors will lose a good bit of money) are those occasions where an individual will sell their side of an Option when it would be statistically inadvisable to do so. For example, if we get back to our original Proposition which would have the Nasdaq below that 4600 level at Market Close on the Tuesday, then what we could see is that someone sells the, 'Yes,' Option on that for $95.00 if the Nasdaq is at 4488 with a half hour left to go in the trading day. The Option, at that point, would have such a high likelihood of being worth $100 that it would be Optimal for the person to simply hang onto the Option. Granted, the Seller of that Option would have to pay the Exit Fee either way, but now the new Buyer of that side of the Option (though it has a 99%+ probability of being successful and still a positive Expected Value even assuming they will pay a total of $1.80 in fees) is such that Nadex is making $0.90 more on that Option (again, the Exit Fee will be paid either way) than they really should have.
Once again, it cannot be stressed enough that there are some highly skilled individuals and entities that are involved in this game, so the learning curve is such that someone just getting into it would be well-advised to study up on the short-term fluctuations, from a Statistical standpoint, at a minimum, before jumping into the game.
However, with even a rudimentary understanding of these Statistics, a person could theoretically be profitable. Just like with heads-up Poker (and all Contracts, ultimately, are heads-up) you don't necessarily have to be the greatest Poker Player in the world, you simply have to be a superior player to your opponent. It is for that reason that Investors who are short on Capital but long on knowledge might be able to get into Binary Option Trading and experience some degree of success.
Binary Options Abroad
Now that we understand the fundamental components of Trading Binary Options on the highly-regulated United States market, we can now take a look at what the differences are with Binary Options abroad. However, it will first be prudent to take a look at what few similarities there are:
The first similarity with respect to Binary Options abroad and Binary Options in the strictly regulated Market of the United States is that every Binary Option is going to come with a Fixed Theoretical Loss which, of course, is the amount for which it was purchased. In this respect, one difference between the two is that, with some Binary Options abroad, they can no longer be resold at a later time, though that's not always true.
Another similarity between the two different types of Binary Options, and perhaps the ONLY other strict similarity between the two, is that there is also a fixed Maximum Theoretical Profit on Binary Options abroad. However, once again, these Options cannot necessarily be sold at a later time, so as a result, the ability to lock in a profit is not necessarily existent.
With that out of the way, we will now get into the differences between the two types of Binary Options, and there are differences aplenty. First of all, as we have already touched upon, Binary Option Contracts cannot necessarily be sold after they were purchased, so the holder of a particular Proposition is locked in until the point of resolution. While that would limit the ability to, 'Lock in,' a profit or, 'Cut,' a loss, this in itself would not necessarily be disadvantageous. If this were the case with respect to Binary Options in the United States, for example, which in and of themselves are zero-sum, one could still find oneself in a Statistically advantageous situation by getting in on one side of a Proposition or another. While there would be no potential for action after the initial Investment, they could still be played profitably. In fact, for those who deal in Binary Options seriously, more often than not, they will hold an Option until the end or, at least, pretty close to the end.
The most significant difference between Binary Options abroad and Binary Options in the United States is that, in most cases, the Binary Options abroad, when purchased, are purchased directly from the broker. While I would personally classify any form of investment as a, 'Gamble,' and there can be good gambles and bad gambles in either sense, Binary Options as purchased directly from a Broker are even more of a gamble than those in which a flat fee is paid.
The reason for this, and we talked about the, 'Effective House Edge,' against poor investors earlier, is that there can actually be considered to be an Actual House Edge against people who deal in Binary Options abroad. The Broker will generally not charge a transaction fee, but rather, will use his/her/their Statistical knowledge of short-term Market Fluctuations to, generally speaking, only engage in profitable transactions. It is theoretically possible that an individual with even superior skill can pick and choose only profitable Contracts to have, but it would be much easier in a United States market because the numbers are generally designed to be so fundamentally lopsided when purchasing directly from the Broker that, in effect, the percentages against them (on average) are going to be FAR greater (in terms of dollar amount as a result) than the fees that the individuals would pay to engage in a transaction in the United States.
Furthermore, not only is the Broker setting the prices, but they can also play the game on both the Bid end and the Offer end, and they most certainly do. Think about this: Since every transaction is based on either a, 'Yes,' or a, 'No,' Proposition, the Broker effectively has the opportunity to lock in a profit in the sense that it would be the difference between the Bids/Offers that are accepted and turned into Contracts if there was equal action on both sides.
Sportsbooks would love that, the ideal situation for a Sportsbook, as we all know, is to set a Line and get exactly equal action on both sides of that Line because then the Sportsbook, worst case scenario, is going to break even if the result comes in exactly on the Line. With equal action on both sides of a half-point spread, assuming the action is a non-zero amount, then the Sportsbook is guaranteed to profit.
It is exactly the same when it comes to getting a Line through a Broker, on a normal Offer in the United States, if the offer were $59.50 for someone to take the, 'Yes,' side, then someone would have the, 'No,' side for $40.50. Once again, these two results equal $100, which will also be the sum value of the two Contracts when the Proposition is completed. ($100 + $0 = $100)
However, let's imagine that a Broker sold the, 'Yes,' side of something for $59.50, however, that Broker was also able to sell the, 'No,' side for $47.80. In this event, if the, 'Yes,' came in, then the individual who had the, 'Yes,' side of the Proposition would still profit $40.50, and could still only lose the $59.50 invested if things did not go his/her way. Moreover, the person who took the, 'No,' for $47.80 will stand to make $52.20 in the event that the, 'No,' comes in, and that person will lose $47.80 if the, 'Yes,' comes in, so the sum of that is also $100.
However, the total being paid for these Contracts on this transaction is $107.30 and only $100, which would represent 93.2% of the total amount invested is being returned to the Investors no matter which way the outcome goes. As one will immediately recognize, these two sides are both dealing with the same Traditional Binary sums of $100, upon completion of the Contract, but the Broker takes in much more than that.
Furthermore, this is only a theoretical example, in actuality, the Broker might effectively be setting the Edge against the Investor to be even worse than that. Furthermore, people that would have a tendency to invest with these sorts of unregulated Brokers are, in many cases, more likely to try to get lucky on a long-shot Proposition, and much as with the high potential hits with Slots and Side Bets on Table Games, there is often a greater House Edge associated therewith.
In fact, these Brokers are so adept at making the funds of Investors disappear that many people that have experience in dealing with these things would be likely to suggest that a Return-to-Investor of 93% would be exceptionally generous. While these Propositions, at least in terms of what would otherwise be Traditional Binary Contracts, might not have Lottery-Style payouts, they may well have Lottery-style edges working against the Investor.
Finally, even with these products being somewhat similar to Traditional Binary Options, there also exists the potential to get hooked. That is even more of a problem than getting hooked in the United States Market for MANY reasons we will get into later, but for a simple reason that we can espouse upon now, one is getting hooked to a game that comes with a greater House Edge.
For anyone that has played any single-line slot machine with weighted reels, that person would be familiar with the concept of the, 'Close call,' which is when two high-paying symbols will appear on the Payline of two of the Reels, but the third necessary symbol will appear either just above or just below the Payline. There is a similarity between this aspect of such slot machines and playing the Binary Options, whether regulated or unregulated: While there will be many losing slot spins that will not appear to be a, 'Close call,' of any kind, due to the set up of the reels, there will also be a sufficient number of losses that look close to wins to keep the player interested. This is also true with Binary Options, while there will often be positions that a person takes that go almost exactly the opposite way during the lifetime of the Contract, there will also be positions that trend the way that the person wants them to, and actually, there may be positions that cross the target number, but come back down again.
The problem with this is the adrenaline rush and release of dopamine that comes to the individual that believes, albeit briefly, that he is about to have a profitable investment. There is also the rush that comes with the knowledge that the person is getting close to success, or alternatively, when that number has crossed the target (though the duration is not elapsed) that the person is going to have a successful Investment. It is this Psychological factor that can keep some people coming back for more, and further, that factor can also can be combined with ignorance that the person mistakes for intelligence, which is doubly problematic.
With respect to the actual losses, with exception to the, 'Never had a chance,' type losses, an individual can actually point to a specific event or few events that, 'Caused,' him to lose and those events will give the appearance of being unique. To some extent, those events are individually unique, but the culmination of all possible events that could happen, in other words, the known Statistics (that the Brokers abroad are almost assured to be keenly aware of) are not unique taken as a whole. Therefore, we can point to a specific event that prevented the Resolution from finishing above the target as being, 'Unique,' but that there would be ANY EVENT that prevented it from doing such is not unique at all, in fact, that is what the Broker is counting on. Well, that and blatantly cheating/rigging the game in some cases, but we'll get into that in greater detail later on this page.
Another great disparity between the United States regulated Binary Option Markets and those abroad is that the Markets abroad offer, in many cases, more, 'Exotic,' type Propositions. THe only similarity between the Exotic Propositions that are out there and Traditional Binary Options is that both the Maximum Theoretical Loss and Maximum Theoretical Profit are known ahead of time. They differ in every other aspect and are also a Contract that is offered by the Broker directly.
The first type of, 'Exotic,' Proposition that we will get into is one that some people term a, 'High/Low,' and the similarity between that and a Traditional Binary Option is that someone is either essentially taking the, 'Yes,' or the, 'No,' on whether a price of Index will go above or below a certain point. The main difference between the two, however, is in the finite duration of this Contract, if the price goes above or below at ANYTIME within that duration, then the Resolution is a, 'Yes,' and the person on the Yes side will be, 'IN the money,' and the Contract is resolved immediately.
These types of Exotic Propositions generally offer terrible Odds against the person, and generally speaking, usually imply a likelihood (but not always) that the event is more likely than not to happen, so the Investor stands to lose more than they will gain if it is successful. Furthermore, these types of Options usually involve a duration that I will classify as the, 'Extreme,' short-term, though not always. In fact, many of the durations of an Option such as this are only five minutes!
Of course, we are now dealing in sums that would most certainly be considered, 'A lot to lose,' in five minutes, and relative to the net value of most of these Investors, that is an extremely true statement. As we will find out later on, the vast majority of people that even get into Binary Options abroad, unfortunately, have the tendency of being both idiotic and complete suckers.
Even when it comes to these extremely short-term fluctuations, they can be Statistically analyzed, and the Brokers (or someone who provided the information to the Brokers) have already done that and have set it up so that the person doing the Investing has the deck stacked full against him or her. In other words, a tremendous House Edge is still being bucked, and furthermore, the people are in the position of playing a game with a quick Resolution more frequently.
Once again, this can become an addictive endeavor for many investors because, not only is there the excitement aspect of it to be dealt with, but furthermore, the gratification (on a win) is almost immediate. Additionally, there is also the fact that, in many cases, a particular price or Index will slightly go the way that the Investor would like it to somewhere in the duration of the Contract, and when it does, the Investor is going to experience that same feeling of excitement. In fact, some would argue that the excitement experienced by the investor in this particular instance is going to be even more intense due to the fact that the resolution is not only so quick, but when the number starts getting close to the Target, it seems all that much closer but there is so little time in which the desired Target must be reached.
For many people, this could be a complete and total recipe for disaster. Not only that, but the people who are going to be targeted by many of these essentially rigged games, as we are about to find out, are not terribly intelligent to begin with, so they may lack the basic mathematical aptitude to have any notion whatsoever not of how close they got, but actually, of how close they failed to get. When it comes to a five-minute type event, falling one or two cents short of a Target number, in terms of long-term Statistics, might as well be falling ten cents from it because it does not change the fact that the actual result is a lost investment.
Another type of, 'Exotic,' choice when it comes to Binary Options is what is sometimes known as a, 'Range,' Contract. The way that a Range Contract works is essentially the opposite of the way that a High/Low Contract works. As we have already found out, with a High/Low Contract, the Investor is looking for a particular price or Index to go above or below a certain point at some point during the prescribed duration, but when it comes to a Range Contract, the Investor is actually betting that a given price or Index stays within a pre-defined Range for the entire duration of the Contract.
If the price or Index goes over or below the maximum and minimum points of the Range at any point throughout the duration of the Contract, then the Contract is resolved and the Investor has lost his or her Investment. However, if the price or Index stays fully within the defined Range for the entire duration, then when the duration of time has eclipsed, the Contract will resolve and will be profitable for the Investor.
Once again, from the perspective of the Broker, the game has a House Edge against the Investor because the Broker is in possession of the Statistical knowledge to set a Range that is likely to be broken, one way or another, during the duration of the Contract. Alternatively, even if the Range is not likely to be broken, the Broker is offering such a bad price and/or potential return on the Contract that the Contract still has a huge expectation of being profitable for the Broker.
What will often happen with respect to Investors who choose to deal in this sort of Contract is, when the Range is broken (as would be Statistically expected relative to the price/return of the Contract) it is actually not going to be broken by much in terms of actual dollars and cents value of the price or Index, in most cases. The reason for this is because it doesn't have to be, someone could obtain a Range Contract with an Implied Probability of 30% that the Range will be broken, an actual Probability of 50%, but when you look at the Probability of it being broken by, shall we say, more than two Basis points in either direction, that Probability might only be 10%, or perhaps less.
As a result, when an Investor loses on this type of Contract, he/she may look at himself/herself as, 'Not losing by much,' and that seems especially true because, while there are going to be two different directions that could result in a loss, in a significant majority of cases, the Investor is only going to actually lose in one direction or the other. Therefore, the Investor will be looking at what actually happened, from their perspective, 'It went high by just a little bit,' when the actual fact of the matter is, 'It only needs to go High OR Low by anything at all, and it probably will, at least, relative to the Odds I am giving.'
Once again, from a Psychological standpoint, this does the Investor absolutely no favors because they either lack the capability, capacity, or both, to do a proper Statistical appraisal of the situation and realize that they are getting the worst of almost every single Contract, if not every single one.
Furthermore, as most people know, there is a fundamental Psychological tendencies to attempt to either disregard, underplay or come up with excuses for our failures while we remember and celebrate our successes. Some people might counter that with, 'Well, you have an Expectation of losing money on a Contract, so that can't be true because nobody is expected to succeed,' but that is only a partial truth. If we accept that entering into Contracts such as these, when it comes to anyone except the Broker (usually) will result in the Broker having the edge against the Investor, just because of pure and simple Variance the Investor is expected to be successful sometimes.
This aspect of things, again Psychologically, is no different from what gets people attracted to playing Slot Machines or making poor Side Bets at Table Games. The simple fact is that if an individual lost every single play, or for the extreme long shots with no shorter pays (consider a Progressive on a Table Game with a true lottery-style payout) had not ever at least heard about someone winning, the person would simply not play the game. In fact, it has been said that, 'Losing is only the second worst thing that can happen to a first-time gambler, the worst is winning,' and this concept is equally true when it comes to playing the majority of these Unregulated Binary Option Markets abroad. Though, with that said, most of the Investors would not Invest if they lost on literally every single Contract. The player has to win at least once in awhile to stay interested.
These Brokers are also not just going to be experts on the Statistics, or have access to Expert-Level resources with respect to the Statistics, they are also going to understand the Psychology behind all of this and will design everything such that the Investor does experience a successful Investment from time to time. In fact, speaking of Statistics, it would be hardly surprising for some of the shrewdest of these Brokers to have a Statistical understanding of what percentage success rate and overall return to the Investors is the most conducive to buying back into the game and generating the most revenue on a per-investor basis.
However, that is often only going to be true of Brokers in situations where ONLY the game itself is rigged in their favor. In those cases, which, are far from always being the case, one might argue that it is no different than a person playing a Slot Machine. As we know with many Slot Machines, the overall Return-to-Player (100%-House Edge%) is generally not openly stated anywhere on the device, only the cost per play and potential payouts are listed. That is the same concept as with these Exotic Investments, the Investor does not know the edge that he/she is bucking, only the amount that he/she is paying to play and the amount to be gained in the event that he/she is successful. In this sense only, the game can be said to be, 'Fair,' because there is Offer, Consideration and Agreement on both sides of the Contract.
It must be reiterated, and in fact, cannot be reiterated enough, that such is only true when no other aspect of the game is rigged.
Another similarity to Slot Machines, and any other gambling game with a Negative Expectation for the player, really, is that (due to the Law of Large Numbers) the player will inevitably approach the Expected Value of the machine. In other words, if a person plays long enough, then that person is eventually destined to lose all of his/her money with the only exception being if the person has a greater bankroll than the House AND gets exceptionally lucky.
The vast majority of Investors, at least the good ones, want to be profitable because they are Expected to be profitable, though. They do not want to play a game on the basis of luck, they want success to be the expectation and any loss to be, 'Due to bad luck,' an overall loss in the long-run should be an anomaly rather than the Expectation.
However, these Brokers can and often do rig the game in other ways, so even when an individual experiences success in bucking what is almost undoubtedly a tremendous House Edge, they are still going to generally lose in the end. There are a number of ways that the game can be further rigged against the Investor, and we will now detail them in this next section:
How the Game Can Further be Rigged
We used the example of a slot machine earlier to describe how, while a person may still be bucking a tremendous (and unknown) House Edge that the fundamental components of what might be considered a fair deal, Offer, Consideration and Agreement are still in place. However, one thing that a Slot Player, if told upfront, would almost certainly not agree to is the casino stipulating that the player cannot cash out of the machine when the player chooses to do so. In fact, other than the very rarely seen, (if it even still exists) 'Guaranteed Play,' concept on Video Poker, this happens precisely never.
What will happen with many of these shady Brokers is that they will engage in tactics to prevent a person from Withdrawing their money, regardless of whether the person is up or down, when the person decides that he/she wants to withdraw whatever they have left. This is an aspect that is shared with only the shadiest (and often only loosely regulated) Casinos, though of course, this is certainly not true of many Casinos at all...and with our resources both here and LatestCasinoBonuses.com, we have vetted out the majority of such Casinos and will continue to do so.
The first tactic that is used to prevent people from Withdrawing either their profits, or whatever remains of their money after taking a loss, is that the Broker (or company fronting for the Broker) is going to demand a laundry list of personal information in order to, 'Prevent fraud.' Unlike Casinos, who at a minimum, generally request this information in the first place (at least, if a Deposit is going to be made) most of these shady Brokers are perfectly content just to get a Credit/Debit Card number, name on the card, and the Security Code. When it comes time to make the Withdrawal, however, they are going to demand much more information than that.
Imagine if, in order to prove one's identity, an Online Casino asked for a copy of a Social Security card or for a Social Security number, I would like to think that the vast majority of people would not provide the Online Casino with that particular piece of information, especially considering, if they are not Regulated in the United States, then what the Hell could they possibly need that information for? It is not as though there is any mandatory IRS reporting that they are planning on doing, so that certainly cannot be the problem. Of course, even some of the shadiest Brokers would never have the audacity to demand a Social Security number.
The information that will be strictly demanded, at least in most cases, will be a copy of a utility bill to confirm the address, a copy of an individual's Driver's License and perhaps some other identifying information. These Brokers are also going to want a copy of the Credit Card, but unlike Casinos, they probably will not be inclined to allow you to block out Security Codes or some of the numbers on the front of the card.
Having done all of that, these Brokers will still spend an arbitrary amount of time, in many cases, delaying the payout on the attempted Withdrawal based on the pretense that the undeniable information that you have provided them is, 'Still being verified.' What they are really hoping for, at least a good deal of the time, is that the Investor will either become annoyed or frustrated enough to just give up on acquiring the desired withdrawal amount and resign himself/herself to, 'If it happens, then it happens.' Alternatively, some of these Brokers will also be hoping that, given enough of a delay, that the person will eventually do some more Investing, or perhaps cancel the Withdrawal request in order to Invest some more.
When it comes to these delayed Withdrawal tactics, another huge difference between these brokers and Casinos is that there is very little in terms of Online Resources comparable to this site and LatestCasinoBonuses.com that act as a resource, in part, to advise people on what brokers to stay away from. Furthermore, when these Brokers make solicitations by phone, which often result in Deposits being made into accounts over the telephone, they can use different (or fictitious) company names in order to appear more legitimate than they actually are, or alternatively, ones that will not result in much of anything if searched on the Internet.
It also cannot be emphasized enough, and we will talk more about this later, that when it comes to the telephone soliciting of people to get into this game as Investors, the targets for these telemarketers are, to put it nicely, the profoundly stupid. Sorry, but it's true. At a minimum, an otherwise reasonably intelligent person made a profoundly stupid decision, but unequivocally, there was profound stupidity somewhere in the equation.
Ultimately, the vast majority of people will either give up on ever getting their money (or their money plus gains) back, or alternatively, will give it all back to the Broker by way of getting back into Investing and losing it all as a result. However, some people will be more resolute and will continue to call the Broker, or front company, in a repeated effort to acquire the funds to which they have a right.
When that happens, obviously, the Broker will immediately apologize for the unnecessary delay and process the transaction immediately. Yeah, right! The most likely scenario in this case is that the Broker will continue to delay, and upon eventually getting sick of doing that, will begin stonewalling the customer completely by refusing to return any phone calls.
Of course, even abroad, there are a few reputable agencies through which these types of Binary Contracts can be conducted and through which this sort of thing is unlikely to ever happen. However, unlike Casinos who are willing, more often than not, to pay out their winners, there are far more disreputable Brokers than there are reputable ones.
Of course, this is really a worst-case scenario, from the standpoint of the Broker, who would prefer to rig the game in other ways. One way that the game can also be rigged against the Investor is through the employ of software that is itself corrupt. There is a whole litany of ways that such can happen, both theoretically and in actuality, and I am going to outline a few of those.
The first possible way is that the Broker can simply lie about the actual results. What the Broker will hide behind, with respect to the updates of the prices and/or indices, is that they rely exclusively on their Software and reporting sources for their data, and as such, they will state that their data is not necessarily reported in real time. They can also claim that there are glitches that resulted in the data not being reported accurately to them.
When this happens, and it is a first line of defense, in many cases, they are going to demand strict proof from the Investor that, in the event of a High/Low type contract that, at some point, the price or Index eclipsed the necessary point that would result in a Contract that resolved successfully for the Investor. Of course, this may be difficult for the Investor to come by as there are not very many sources out there that will continue to have minute-by-minute results posted for a particular price or Index and leave those minute-by-minute results in some kind of archive.
However, even if there are sources out there that do exactly that, what will happen when it comes to proving a successful Contract against the information that the Broker claims to have in their system, there may be a finite list of sources that the Broker will accept as proof of the fact. The reason for this is that the Broker will often have a tendency to exclude sources for which minute-by-minute results are Archived for any length of time, so as a result, the Investor is able to prove nothing by way of a source that the Broker deems acceptable. In other words, when it comes to something that the customer would readily be able to prove, and something that happened in actual fact, the Broker is effectively able to say, 'No, it didn't.'
The best case scenario for an Investor in a dispute such as this is that the Broker might be willing (when the Broker believes there will be continued business from the Investor) to essentially declare what gamblers might refer to as, 'No action,' on it and return the Investor's money as though no Contract ever took place. Once again, the Broker will often decide this on a case-by-case basis, unless there is a stipulation in the Terms such that this sort of thing will always resolve in this way (unlikely, because then the Investor could claim whatever they wanted to claim) so the Broker will decide in the Investor's favor when it is to the Broker's benefit to do so...and the only time it benefits the Broker is when the Broker believes that there will be the potential for that particular Investor to engage in more contracts.
Another means by which the system can be rigged against the Investor is by way of the Broker simply changing the target in the middle of the event or immediately after the Investor has entered into a Contract. Once again, whether or not the Contract is voided in the Investor's favor is largely going to be at the discretion of the Broker, and as always, will probably only be done if the Broker believes that doing so will result in the person making additional Investments. What they want to do, in any case, is portray something as an honest mistake.
However, in the event that the Broker chooses not to resolve the situation in a manner beneficial to the customer, what they will suggest is that the Contract amount, with respect to the target, did actually rightfully change in the space of time between which the Investor entered into the Contract and the finalization of the Contract on the Broker's end. Once again, in the Use Agreement, there will often be a stipulation that will suggest that the Broker is in the right when an event such as this happens, and therefore, by way of agreement, the Investor really does not have a leg to stand on in the event of a dispute. The Broker, of course, will resolve the matter in whatever fashion the Broker considers best for itself overall.
For example, the customer might enter into a High/Low Contract for which the target price of a commodity is $49.28, but after clicking that the Investor would like to enter into the Contract, the price target then changes to $49.30. While it may seem like these two cents on the price target are not going to make much of a difference, even statistically, keep in mind that some of these Contracts are such that they resolve in as little as five minutes.
In many of these cases, the Investor is not even going to notice the change, or even if he/she does, is going to decide that the switch is not significant enough to justify making a fuss over. However, when dealing with such short periods of time, (and a Contract that probably had a significant edge working against the Investor anyway) a change of even a penny can represent a huge Statistical difference and shift in the probability of success.
One aspect of these sorts of Contracts that is generally left unaltered is the amount that the Investor is risking, and the reason for that is simply because that is something that the Investor will immediately notice. However, the flip side of risk is reward and sometimes the rewards for success may change after the fact. When this happens, the hope is that the Investor will believe that he/she simply made a mistake, or in the alternative, will be satisfied enough with a successful investment that he/she is not necessarily inclined to argue over a couple of pennies. Once again, though, affecting the payouts is the same thing as changing the Probabilities in that it will have a detrimental effect on the customer in terms of the edge he/she is bucking. This method is actually even worse in a way because the Investor is getting shorted on money that was rightfully gained as the result of a successful Contract.
Again, the Investor might think that a payout reduction of a few cents is not going to matter in the long run, but you can rest assured it does in terms of dollars and cents, because if it didn't, the Broker would have no motivation to engage in such tactics.
Furthermore, and this is especially true when it comes to, 'Range,' type Propositions, the Broker may claim to use an, 'Internal,' data source (which will also track the results, but fake them at certain times, on the Broker's own site...at least, occasionally) and according to said data source, the price went outside the Range at a certain point in time. What is ironic about that is that the Broker can offer archived data, in some cases, as to the exact second that the price went out of the Range, however, the Broker requires the Investor to prove that the price eclipsed either the High or Low point on one of those types of Contracts.
One would believe that this represents all of the potential ways for the system can be rigged against the Investor, and one would be wrong. In some cases, and this is especially true with Investors that have a bunch of Propositions going on at once, the system may be designed to straight up Resolve the Proposition the wrong way. Essentially, the Broker is doing that in nothing more than the hopes that the Investor will not notice. If the Broker believes that the Investor will continue to play the game, then the Broker will make it right. Furthermore, they are also capable of setting it up such that the Investor is not intentionally misled by a result again because the Investor will notice.
As with any other screwjob, this is going to be something of a longer play, at least, relative to the first Contract that an Investor enters into. The Broker is not going to want to give the Investor a bad impression right off the bat, so as a result, the Broker might play the game square (other than the odds fundamentally being against the Investor) with the Investor for awhile. The reason for this is that the ideal situation would have an Investor losing all of the money initially deposited with the Broker, and then re-depositing and coming back for more.
Furthermore, the Broker is going to have access to all of the results of the Contracts that an Investor has entered into to determine whether or not the Investor, despite the tremendous Odds against him/her, is actually entering into the Contracts profitably on a consistent basis. When this happens, the Broker can levy any number of accusations against the Investor to get out of paying him or her. The first possible accusation that the Broker might use is that the Investor is using a computer program that does a Statistical Analysis to let the Investor know whether or not a Contract has a positive expectation...you know...the same thing the Broker is attempting to do when determining the price of a particular side of a contract. On other occasions, the Broker might simply accuse the Investor of being a Professional, which is almost invariably going to be a violation of the Terms of an unreputable site.
Of course, when this happens, the Investor has no means of disproving either of those two things because there is fundamentally no way to disprove them. Even if the Investor can provide what might constitute sufficient evidence (to a reasonable person) that no computer program is being used, how would the Investor go about proving that he or she is not a, 'Professional,' especially when they are not the one who gets to define the meaning of the word?
The answer is that the Investor cannot do that, so one of three things is going to happen. The Broker who at least has modicum concern for their Online reputation will simply tell the Investor that they may not enter into any more Contracts and will pay the Investor the entirety of the Investor's balance. The second possible result is, if the Investor is ahead overall, the Broker will refuse to pay any of the profits and will only give back whatever the Investor initially deposited. Finally, the Broker might simply keep all the money and go as far as to tell the Investor that he/she is lucky the Broker does not report them for fraud...even though the Broker does not have any standing to do so, particularly with any United States customers because the Broker is acting illegally simply by operating with a United States citizen.
Of course, in the vast majority of these situations, the Investor is not operating on a Professional basis in any way whatsoever. Even if the Broker were somehow beatable, the Odds are going to be skewed such that any positive opportunities are so few and far between that the individual would have a much greater opportunity playing in a regulated marketed, even in the United States Binary Option Market, and just opting to buck his/her skill against the fees instead. When an individual is accused of trading professionally against the Terms of the Broker, the individual will often be threatened with legal action (a threat that the Broker absolutely cannot back up) and that will often be sufficient to intimidate the Investor into submission. The Investor may simply be getting lucky, of course, but then the Investor may not simply be getting lucky, so the Broker decides it is time to bring out the big guns.
As if that were not enough, there are a bunch of other tools that the Broker can use. For example, the Broker might suggest that any payment errors will effectively result in, 'No Contract,' and will return the initial Investment only on a Contract that was resolved in favor of the Investor. Another fun one is when the Broker realizes a, 'Mistake,' after the fact and will remove money from an Investor's account due to a Contract that was erroneously resolved in the Investor's favor. Of course, almost invariably, the Broker will adjust the data in the system and choose a Contract that took place far enough back that the customer is likely not to have the ability to sufficiently prove that the original decision was correct.
Of course, these are just a few of the ways that the Broker can rig the system against the Investor, with the most egregious and last resort of the Broker simply being to flat out refuse to pay under one pretense or another, or sometimes, under no pretense at all. In many cases, a representative of the Broker or the front company will get on the phone and be verbally abusive to the Investor when the Investor keeps calling and demanding his/her money. It is obviously quite unfortunate when this is the case, but it undoubtedly happens to many people.
The first thing that may come to mind is that only individuals with low intellect would find themselves hassled by such a sordid and rigged game, and I suppose that is probably true, but the initial sale of the would-be Investor has to be convincing. Even more than that, it is not wholly unlikely for the Investor to start out being treated reasonably well by the Broker. Everything is going to be on the up-and-up at first, in most cases, and the Broker will initially be satisfied by the fundamental edge that they have on the Contracts that they are offering.
In short, the Binary Option Trading will be presented as a form of Trading for which risks can be mitigated (that part is technically true) and that a person that can develop a requisite skill level might enjoy some financial success. (That can also be true, if the system isn't flat out rigged) Therefore, perhaps it is not the abjectly stupid who are going to be the only ones falling for this, in some cases, it might also be the reasonably intelligent, yet gullible.
Another aspect of this that might not necessarily attract strictly low intellect people is that the individuals who are responsible for trying to sell people on this form of trading will directly tell the would-be Investor that not everyone is successful at it. Obviously, if everyone who has ever done it, is doing it now or will ever do it made money, then everyone would be doing it and it would simply not exist because no individual or entity is going to voluntarily lose a seemingly infinite amount of money. Therefore, many honest statements will be made such as the individual doing the selling saying that people who are not very good at it lose money. Of course, counter statements may occasionally be offered such as a statement suggesting that the people who are bad at it are so bad, or lose so much money, that a person does not necessarily have to be in the top echelon of investors in order to beat the game.
Of course, that could not possibly be further from the truth when it comes to the Binary Option Markets abroad. In the United States, yes, you simply need be better than those with whom you are entering into contracts as well as better than the fees. Just like when trading in the Stock Market, an Investor needs to be able to beat the Commissions, and ideally, invest well enough that he/she is beating inflation. While it is not easy to beat the fees in the strictly regulated United States Binary Option market, it is certainly not impossible, either.
When it comes to Unregulated Binary Option Markets abroad, other than only the most reputable ones, they are absolutely impossible to beat. If the odds are not too great, then the system is rigged, if the system is not rigged, then they will find a pretense not to pay, if the pretense not to pay is insufficient on its face...then they simply will not pay.
When it comes to hooking someone on Binary Trading, however, the best way to do that is to ensure that the Investor actually has the opportunity to experience some degree of success, and in order to do that, there are many types of options that will be presented to the person that are similar to the offerings of Casinos, with the major difference being, the game is more likely than not to be rigged when it comes to Binary Trading.
First of all, one option that may be presented to the person is equivalent to a No-Deposit Bonus, that is true in the sense that one of these operators may give a person the opportunity to engage in some trades at no cost, and then any earnings the person makes from those initial Trades also have to be traded through a certain number of times (similar to playthrough) before they can be cashed out. Even then, a deposit will typically be required before any withdrawals can happen.
Of course, that is comparatively rare, what is more common is that the individual getting into Binary Trading will be presented with what is the equivalent of an Casinos, 'Deposit Bonus,' in which a certain amount will be added to the account of the Binary Trader, except, the entire initial deposit as well as the Bonus money must be traded through a number of times before a withdrawal can happen.
What could theoretically happen depending on how sophisticated the Software is would be that, early on in the Bonus, the individual will actually be presented with Binary Trade Contracts that result in the individual having a greater likelihood of success. In other words, the offers that are presented do not have to necessarily be universally the same for everyone trading through a particular website. The goal of this, of course, is to give the individual in question a taste of some successful trading before it goes back to the highly rigged Offers that the individual is exceedingly likely to lose money on. The ultimate result when that happens is that the individual will be put into a position where he perceives himself or herself as being, 'Ahead of the game,' and that will instill a false confidence into the individual.
After this happens, the individual will then be faced with some Options that are far more disadvantageous, however, the individual, even after losing (at least, this is the goal of some of the Brokers) will be confident that they have some ability at playing the Binary Trading Market and will make another deposit, perhaps after being offered another Bonus.
At that point, the system could completely reset and end up being a rinse/repeat sort of thing, 'or the Trader might be offered the more disadvantageous offers right off the bat the second time around. The idea is that the person will ultimately have confidence in his/her abilities and it is that undeserved confidence that will ultimately prove to be the Investor's downfall. Furthermore, it is that confidence that may compel the Investor to make additional deposits with the broker or front company.
Of course, they will have a pretty good idea when a person is more or less hooked, so they could theoretically switch it up to actually cause a person to have some success, and potentially, might even allow for a withdrawal knowing it will not be long before the person comes back to the well for another drink. Ultimately, however, there is virtually no question that the individual is going to lose, for the Broker, the real question is: How am I going to extract as much money as possible from this individual?
Another delayed withdrawal tactic that should be mentioned is that a person will often be directed to a, 'Retention agent,' whose job it is to try to convince the person to continue trading my telling them that they just had some bad luck, (if they lost money) or by stating that they are doing an excellent job and should continue to Trade because it looks like they have a handle on how to beat the market. Either way, the Retention Agent might also offer some sort of Bonus in order to get the person to continue to play the Binary Trading game.
Once again, I cannot emphasize enough that not every one of these Brokers abroad is disreputable by default, certainly there are at least a few out there who are legitimate, and furthermore, some of the legitimate ones may even offer similar Bonuses. Essentially, they know that they will be profitable in the long run simply because they have a tremendous edge on all of the Options that they offer. That's also comparable to many Casinos and almost all Land-Based casinos in the sense that they do not cheat because they do not need to cheat.
When we talk about Retention Agents, that is an individual who the Investor may eventually have dealings with as a result of already being active in the Trading, but there are a number of other people involved in the entire process, as well. The first thing that someone must take into consideration is the fact that this is an unsought product, to wit, the vast majority of people that get into these do not even really know what they are prior to having gotten into them. With that in mind, you might ask: So, how do they end up getting into them?
The Marketing Team
When it comes to these overseas Binary Options, the first thing that has to happen is that the potential client must first know what they are and be compelled to Deposit into a particular company and/or website. The way this happens, in many cases, is pure and simple telemarketing. While it may seem somewhat old-school, it is effective, and it is highly profitable for the companies that are making the calls. In fact, the companies that are making the calls will often present themselves as a, 'Middleman,' who does nothing but makes a Commission on the trades, but in reality, it is as likely as not that they are effectively just agents of the Broker.
Of course, the first instinct of many people with respect to telemarketers is to simply hang up, and that instinct could not be more spot-on in this case. Furthermore, I should also like to suggest that you never share your personal information over the phone with someone unless you are the one to initiate the phone call, and even then, it is definitely something that you should be really careful about doing.
The Marketing team is trained not only to present this as being a better deal than it actually is, but they are also adept at gaining the Confidence of the would-be investor. There are a number of different tactics that can be used to accomplish this, and foremost amongst these, are lying about their background. When it comes to this they may say that they attended Universities that they have literally never even seen, or they might also suggest that they have an extensive background working in finance and investments. THey will be able to cite the addresses of companies at which they have never been.
The reason for that is that they are well-trained and spend a lot of time practicing in order to perfect their particular brand of bullcrap. To a certain extent, their livelihood depends on their ability to dupe people because they may work on a partial, if not full, commission basis. However, these commissions are often not on the Trades or even the Deposits, but are actually based on how much a particular individual who has signed up with a company loses. Either way, one thing that cannot be understated is that while fraud and misrepresentation are fundamentally bad, these people are good at it.
There are some people who may wonder why otherwise honest people would take part in such a sordid enterprise, and the simple answer is that it is a dog eat dog world and they want to be the ones baring their teeth. The long and short of it is that these jobs simply pay more money than a lot of other positions that are available to these people who, while they may be fluent in multiple languages, may not necessarily be in possession of any other Marketable skills, or if they are, there are simply no jobs available at which those skills can be employed.
Another aspect that must be considered is the fact that, when an individual begins to work at one of these companies, it is absolutely essential that they perform well in order to keep their jobs. Much like any other salesperson has sales goals that he/she is required to meet or exceed, this specific occupation is absolutely no different.
Even if they are unsuccessful at wowing you with their fictitious educational or occupational background, they will demonstrate what will superficially appear to be high knowledge of Binary Trading. Once again, they are not only going to make it sound easy, they are going to make it sound so ridiculously simple that even the less-than-brilliant people who are still on the phone with them at this point will sometimes be able to understand the ideas that they are conveying and, more importantly, be led into the belief that it is easy for them to do successfully, as well.
During the phone call, the agent will usually try to obtain a deposit from the person and many of these companies require a certain minimum deposit. In some cases, if the agent is unable to secure a deposit, the agent will then have the authority to present an offer for one (or more) of the Bonuses. Now, how some stupid people end up having a lot of money is completely beyond me, but according to one Article I have read, there is at least one agency out there somewhere that demands a deposit of no less than $250.
Another thing to keep in mind is that these agents are absolutely not telling the truth about anything. While I have already explained that their educational and occupational history is almost certainly a lie, some of these agents do not even use their real names and nor are they upfront about the locations from which they are calling. Essentially, everything after, 'Hello, may I speak to,' can be presumed to be a complete and total fabrication.
These agents will not necessarily stop there, either. There are a number of high-pressure sales tactics that these agents will employ in order to try to secure a deposit. For example, some people are literally too polite to hang up on someone, so they will continue to effectively beg that they are not interested in the offer in order to compel the agent to let them off of the phone, but the agent will continue to lay into the person until they finally give the agent what he wants, which, of course, is the deposit. Furthermore, these agents will also be trained to be skilled at recognizing certain voice cues that indicate interest or vulnerability on the part of the prospective Investor, and when they deem it appropriate, they will pounce accordingly.
It cannot be emphasized enough that these are not idiots who are calling the would-be investors and attempting to sell them on the idea. One interesting fact about the telemarketing industry, in general, is that it will give almost anyone a try, but only the reasonably intelligent survive for long on the phones. Once again, it is not just about being able to pitch, but also know what kind of pitch should be delivered to what person. It is not just about answering the customer's questions, but rather, the agent must look past the question on its face and consider both the tone and the wording of the question, and then, the agent must be sure to give the would-be customer the agent that the would be customer has to hear.
I worked as a telemarketing supervisor for some time, as well as being on the phones when I started there, and one of the first things that you learn is, 'If the customer asks a question about the product, there is almost no excuse not to turn that person into a sale.' The reason that is the case is because the customer has now shown a genuine interest in the product or service in question, and rather than declining and causing the agent to have to rebut, they are actually specifically soliciting more information about the situation from the agent. It is for that reason, if the agent can read the tone and wording of the question correctly, that the agent should be able to provide an answer that serves to make the customer even more interested in the product.
The best way to handle such telemarketers, obviously, is to hang up the phone before they have ever said anything at all. However, assuming that a person feels the compulsion to hear the offer out, if it sounds like something that you will not be interested in, (and this should sound exactly like that) then it is essential to politely stonewall them. This is actually beneficial for both parties if you are not going to involve yourself in this because you do not waste your time listening to them and they do not waste their time speaking to someone who is not a sucker.
One thing that is interesting, and another tactic that is used, is that they will often need to resort to subterfuge to get you on the phone to begin with. What the call center will do is trick your caller ID into thinking that the call is coming from a number within your own state, or at a minimum, at least somewhere inside the United States. When a telemarketer has to resort to underhanded tactics just to get you to pick up the phone to begin with, then that should tell you something.
Other than perhaps reporting the phone number from which the call purportedly originated Online so that others will know that the number comes from a solicitation of this nature, despite the fact that it is illegal for these people to call individuals in the United States in the first place, there really is not anything you can do about it. While it may be illegal for them to contact you, in all likelihood, they are not operating out of a jurisdiction in which the United States has any regulatory authority over them making the call, so there is effectively nothing anyone can do about it. Furthermore, any information that you have been given during the phone call is, in all probability, almost entirely fictitious, so you will not even be reporting anything upon which a follow up can even conceivably be made.
There are some other tactics that these people will employ in order to get you interested in the event that you are still listening to them. For example, they may give you examples of Offers on Binary Options that were allegedly recently presented and tell you about some of the gains that their other customers enjoyed on some of the Contracts. Once again, the entire objective is to make all of this sound easy to do, so everything that they will do on the phone call is going to have an eye towards accomplishing that.
Furthermore, it is absolutely essential that you not share any information with these people whatsoever, on the phone or otherwise. It is best to assume that any piece of information that you give them about yourself is subject to theft, even though it may be something as innocuous as an E-Mail address. Personally, I find an E-Mail address to be too sensitive to give to someone who contacted me first because there is no telling what they can do with that, so any piece of information that is even potentially more sensitive than that should absolutely not be shared.
That can also be part of the endgame, if you have provided your Credit Card number to these people and have completed your Binary Option relationship with them, then do not think for a second that they will not be willing to use said information in order to engage in fraudulent transactions, or potentially sell your credit card information to a third party. When it comes to affairs with companies that are not regulated in any meaningful way, the selling of such information is actually a relatively common practice. Obviously, you will be more lucrative to these companies as a customer, but when you have terminated your relationship with them, or at least when they think you have, there is no telling what they may do.
The point of the matter is that there is nothing safe or in anyway beneficial that can come from sharing your information or engaging in any business whatsoever with a cold caller. The only time that it is even appropriate to hear them out is if they purport to be from a legitimate company, who you can later exhaustively research and then contact yourself, in order to hear more about whatever it is they are offering at that point. If you think the telemarketing industry can have some shrewd operators within your own country's borders, keep in mind that those activities are strictly regulated, you haven't even seen anything until you deal with someone that is not subject to any regulations in their dealings with you.
Another reason that they find themselves successful in many instances is because all they really require is for someone to be at least minimally receptive to the idea that they are selling, and that's another key component of telemarketing: You do not necessarily have to be the sharpest person in order to complete a sale, you just have to be sharper than the person with whom you are speaking. Once again, many people will have a tendency to dismiss these telemarketers as, by definition, ineffective because they are working what many people consider a menial job that would be beneath them...but they are very good at what they do.
For those of you who are skeptical about whether or not these people could get away with this sort of chicanery, even temporarily, let me share a few of my accounts of situations that happened in the call center in which I was once employed. While there might be a few other examples that are less underhanded than these, here are a few that immediately spring to mind:
On one occasion, we had a contract with an energy company who claimed that they would be able to save people money on their utility bills by way of charging less per kilowatt hour than the utility company did. The reason that they claimed this is the case is because you would actually be buying your energy directly from them whereas the utility company could buy their energy from whoever they like, however, if you had a contract with the actual provider of the energy then the utility company would effectively have no choice but to purchase at least that amount of energy from that company and that company would pass the savings onto you as their thanks for resulting in these guaranteed energy purchases from the utility.
This is actually one of the few well-known telemarketing scams that still goes on sometimes, and let me assure you that, if you ever receive a call such as this, you are absolutely not interested. As the telemarketing company, we found that the dealings with this company were so shady that we reneged on the contract, which is highly unusual, because the company tended to like trying to make money.
However, this would have amounted to straight up fraud. Essentially, the Utility Company suggested to the customers (through our agents) that the average utility savings that they could expect to see was 18% by way of participating with them, however, they would also get a specially discounted rate for three months after signing up. What the energy company did was provide us with the Kilowatt hour prices that had actually been charged to the customers over the course of a year, however, an Online Search yielded results for the actual average that utility company for the same year, and needless to say, the utility company's averages were lower than the energy provider.
As it turns out, the energy provider based that 18% figure on the special three-month discount, and without that discount, their rates were ALWAYS more than the utility company. Furthermore, the special discount only made them less than the utility company during the Summer months when people were using the least energy in the first place. Therefore, they would ultimately pay substantially more over the Winter, even with the Introductory special for the first three months. The best part of all of that is the fact that, based on how our contract with the energy provider ran, we would never any any calls in advance of the Summer months...so as a result...every single person that our agents signed up was doomed to pay more.
While I will not name the company in this publication as they are still active, and to the best of my knowledge, have never actually been reprimanded for their actions in a regulatory way, I will say that they now go door-to-door in addition to telemarketing. From the correct angle of looking at it, the offer can be presented as though it is actually going to save you some money. The correct answer, however, is to stonewall these jokers, period.
Another example we can look at with respect to shady telemarketing tactics is the way the call center handled its political calling. First of all, political and survey type calling is exempt from any Do Not Call Regulations, and that is relatively fine, as far as I am concerned, provided the companies are reasonable with the times and how often they call. The one thing that I can say, however, is that these tend to be very short-term contracts, so sometimes, a telemarketing company may decide that it will be advantageous for them to handle the contract in a fashion that most people would consider to be underhanded.
For instance, one contract that we had was a political survey for which the company would receive a Bonus if enough surveys were completed. For one reason or another, however, an improbable percentage of the leads were not home on that particular day. Of course, our presentation was such that we gave the strong impression that we were calling near them, but we weren't, so we really have no idea if something major was going on in the area that day. (though we had to disclose our location if directly asked for some campaigns while instructed to politely...I guess...excuse ourselves and terminate the call in others).
In any event, since the company was going to get a Bonus that was incumbent upon completing a certain number of surveys, and since the surveys themselves were not actually being recorded, we were told to go ahead and answer the questions as though a survey were actually taking place and disposition the call as a completed survey after doing so. We were dispositioning everything on Earth that day, someone hung up the phone...completed survey, someone cussed us out...completed survey, answering machine...you get it.
Anyway, we were essentially told to do this in a relatively balanced way, but then, it got even better. One interesting facet of the way our system worked is that an internal and external monitoring could not be taking place on a particular agent simultaneously. Therefore, all we had to do to prevent the company who contracted us from knowing that non-existent surveys were being put through is for a Supervisor to monitor a, 'Target,' agent on an internal basis which would result in the inability for anyone else inside the building, or outside the building, to monitor that agent at all. The Supervisor would then inform the agent that the time had come to disposition some non-existent surveys.
Of course, other than the company who had contracted ours to engage in these surveys, nobody was seriously harmed in the process because it is not as though the survey results were made public with individual peoples' names attached to the survey results. The only real victim was the company who contracted us because they ended up with a bunch of surveys that did not actually exist and were based on our orders from the CEO to keep the answers as balanced as possible with respect to what candidate was being voted for.
If you have ever wondered why the National surveys are more accurate for predicting polling results than Local or Statewide surveys, the most obvious reason is the fact that there is a larger sample size for the National Polls. However, there may be a secondary reason at play, the results of the surveys might be largely fictitious. Unfortunately, I forget what specific race this was or who the two candidates in question were, but one of them won in such a landslide (I followed it out of curiosity) that there is almost no doubt that the legitimately concluded surveys were absolutely not relatively even!
Of course, there are other things that go on in the world of telemarketing that, while justifiable to a certain degree (sometimes) are still at least firmly planted in a gray area. One example of this was selling products to some of the cardholders, or perhaps, even when it came to selling the credit cards themselves. For one thing, if there was what sounded pretty clearly to be a child on the phone, but the child said all the right things and completed the transaction...that actually puts the agent in a legitimately difficult proposition.
Consider the conundrum that the agent finds himself or herself in for a second: The agent really cannot ask the person if he or she is a child because offending the customer is a terrific way to lose a potential sale. However, the agent cannot go through the routine of the sale just to disposition the phone call as something other than a sale because the agent does not conclusively know that he was not talking to the desired party. What is very unfortunate when it comes to selling the credit card products is the fact that, when asked to confirm the name, address and last four digits of the account number, it is actually the agent that rattled off all of that information and all the customer had to do was say, 'Yes.'
The company that contracted us to do those political surveys is certainly not the only company that got the screws put to it by the telemarketing firm by a long shot. The telemarketing company actually had sufficient gall to screw over its primary client, the credit card company, to a certain degree. The credit card company actually offered a Business Card for which the features and the benefits of the card, as well as the Introductory rates, were truly awesome. The downside is, they effectively cold called their own customers that had other cards with them already (on some of the files) whose names got dropped into the Business Card Acquisition file simply because they may have made a purchase at an OfficeMax, or something.
Therefore, the obvious result of that is that the vast majority of the leads did not own a business. The only answer to that was to go out of our way to justify calling something that the person did a business, whether it be selling stuff on EBay or having a yard sale within, I don't know, their entire lives. Basically, any means that they had used within a year to make money that invoked anything other than their primary employer our agency saw fit to construe as a business. It took some time, but the credit card company eventually told us to stop doing this, they only wanted people to have this card if they were either legitimate business owners, or alternatively, if they were fully self-employed.
Of course, we took one look at that request and decided to ignore it completely. We certainly did not want to lose any calling hours on this particular Business Card program, so our sales needed to stay up to justify the credit card company contracting us the call hours for the following month, and the only way we could accomplish that was to continue to churn out business cards to individuals who absolutely did not own a business. There was no other way about it, but in honesty, that is also something of a conundrum for a couple of reasons:
A.) We knew that our competitors, with whom we directly competed for calling hours that were allocated to the call centers by the credit card company, would ignore the request of the credit card company and would continue to do things that way because it would put them at a competitive advantage not to. In fact, there was one telemarketing company that had consistently awful numbers on this particular program until the credit card company released the memo to stop doing this...suddenly that company's numbers improved! Why? They had never thought of doing it that way before and started!
B.) The fundamental concept of the campaign was entirely, hopelessly and fundamentally stupid. For an entity to draw the conclusion that someone owns a small business simply because that person made a purchase at some location that is associated with business purchases on their PERSONAL credit card is such an absurd example of non-logic that, of the people we contacted, they were probably no more or less likely to have a legitimate business of their own than picking a random person from the phone book. The way that the file was put together just fundamentally made absolutely no sense, of course, while we saw that...the powers that be at the credit card company did not see things that way.
Additionally stupid were some of the files in which we would contact actual businesses at their business number, unfortunately, some of these places (if not as many as half) were actually major companies for whom the person that we would actually be speaking to had absolutely no authority whatsoever to make any credit card decisions on the company's behalf. In many instances, these were not even the correct physical locations to reach such a person. However, the business files were one of the few files in which ALL of the information could be changed on an individual file. As a result, we resorted to the same tactics as on the other campaign and tried to find any means of justifying saying that the person with whom we were speaking had a business of his/her own and could, therefore, apply for the business card in their own right.
Another capability that we had on that campaign, as the credit card company understood that we might actually have to call a different phone number (of the intended business) to get in contact with the person who actually had the capacity and authority to make such decisions on the business' behalf, was to input a different phone number into the file and call it. As a result, what we ended up doing was sometimes calling people that we knew (who were interested in the card) or, on rare occasions, each other or previous employees so we could disposition more calls as sales by way of putting actual credit card applications through.
One might think that the telemarketing agency would seriously frown upon such activities and any perpetrators would be terminated as a result, and one would think wrong. What we were unofficially encouraged to do was to save such tactics as calling people that we knew (which, technically, we were supposed to get off the phone whenever we knew someone personally) for days that we absolutely needed to pull a decent number to meet the credit card companies goal for a given month. Of course, that didn't even always happen and individual agents would call people that they knew and obtain credit card applications as they saw fit.
Once again, some of these calls actually resulted in people who actually wanted the credit cards getting them, so it was not necessarily a bad thing for the credit card company, it just happened to be the exact antithesis of everything that the credit card company had ever instructed us to do. You can't win them all, I guess.
There were other shady tactics that took place with respect to people who were already customers that I personally took no part in. For one thing, when we would call to offer a customer a different credit card product through the same credit card company with whom they already had a card, some people offered the presentation in such a way that made it sound as though the customer was simply being offered a different rewards program. Obviously, that was not at all true as an actual credit check would take place and the customer would have a separate credit card account completely.
Personally, I had no part in a tactic such as that because that sort of thing can actually have a lasting effect on a person's credit score. Furthermore, I encouraged all of the other agents not to engage in those kind of tactics for the same reason, needless to say, when I was promoted to supervisor, I was never put in charge of that program. The typical mantra of the company was essentially, short of outright lying, for an agent to do or say whatever he had to in order to get a sale. Strictly speaking, they could not reprimand you for refusing to misrepresent to the customer, at least, as long as you were still making your numbers. However, many of the employees there who were naturally less gifted at sales would result to such tactics in order to stay at or close to goal.
While this is not necessarily the credit card company that I described in all of the previous paragraphs, we did some work for Discover Financial Services with respect to a few programs they had called Identity Theft Protection, Credit Score Tracker, Wallet Protection and some other one that our agency was never contracted to do, so I do not remember it. Anyway, an investigation was launched against Discover Financial Services, through multiple agencies, in which it was found that the credit card company willfully misrepresented the products to these customers. The result of that investigation was a settlement by which Discover was forced to issue over 200 million dollars in refunds to their customers who had these services.
The reason for that is that Discover's scripted presentation of the product made it sound as though these were just added benefits to the card that the customer was being told about that did not cost anything. In the rare event that their pathetic excuse for a presentation was successful, (it truly sucked) the agent would then, 'Slam script,' through the disclosure at such a fast rate of speech that the fact that the product actually cost anything was skimmed over and nearly indecipherable.
The great irony of that fact is that the ONLY way to sell these products successfully was to include the price of the product in one's pitch, otherwise, people would come to the conclusion (when they found out it did have a cost) that the agent was trying to con them. The very notion that sales could actually be successfully completed on any kind of consistent basis without mentioning the price up front is nothing more or less, better or worse, than a patent absurdity. With respect to the disclosure the customer had to agree to, we read it fast simply because we had it committed to memory (I can still recite it to this day and I have not worked there for nearly a decade) and also because we had already disclosed all of these particulars to the customer prior to even getting to the disclosure. The last thing that you wanted to do was to get to a recorded disclosure for the customer to object at that point, so you wanted to make sure that the customer fully understood everything before going on recording.
Keep in mind that all of these things occurred at an American based telemarketing agency who made calls entirely for American based companies where all parties involved (as Discover found out the hard way) were subject to strict regulation. What I can say about everything that happened there, at least to the best of my limited understanding of the laws, is that the telemarketing company itself never knowingly did anything illegal. Actually, there were some individual representatives who probably did, but my point is that the telemarketing company itself never endorsed or suggested we commit any patently illegal acts.
If you take a look at an American company who can commit such acts against the people whom they are calling, as well as their own clients, and you look at Discover Financial Services who had to complete all of those refunds as a result of things that they did to customers they already had, what do you think unregulated overseas telemarketers are capable of?
It is also important to consider that these representatives certainly do not always enjoy or feel positive about what they are doing to these people. However, many of them are in a dog eat dog situation in which it is difficult for them to find any jobs that pay as much as these shady undertakings do. That is certainly not an excuse that I am trying to make for them, I am simply suggesting that they may be able to internally justify their actions even if it remains a bitter pill for them to swallow.
In any event, some of the products and services that Discover Financial Services once offered were, in my opinion, complete and total garbage. However, I will say that I believe Discover has largely reformed and I now view them as a legitimate operator on all fronts and will further state that I find their Inbound customer service to be absolutely impeccable. With that being said, though, some of these products did absolutely suck and a person had to be a total ace to meet goal with any great consistency.
Far from trying to pat myself on the back, I'm trying to make the point that if a telemarketer has an audience with an individual who is at least minimally receptive (read: willing to listen) then many of these guys are intelligent and well-trained smooth operators who take a chance of polishing a pile of crap and convincing the person with whom they are speaking that it is gold.
Furthermore, many of these agents when it comes to the selling of Binary Options will flatly lie about how that entire process works. Because they are not meaningfully regulated with respect to what they do on the phone, and also because there is no law enforcement agency in the United States that has the capability, much less the authority, to take any action against them, they will say literally anything they have to in order to complete a deposit. They will misrepresent the posted terms and conditions of the Broker's site so grossly that they are actually saying the exact opposite of what is the case. They will also omit many relevant details with respect to those same Terms and Conditions. For example, many of them might tell a person that they are going to get a Bonus to Invest with on their initial Deposit without mentioning that both the Deposit and the Bonus have to be invested a certain number of times.
These people will also go to tremendous lengths to prevent their BS from being immediately and easily identifiable as such, as does any good con artist. For example, if they say that they went to a particular University, then they will have studied up on that University to at least the extent that they can answer general questions or make light comments about it that will ring truthful. If they say they are calling from an area from which they are not, they will be aware of any recent major events that have taken place within the area in question as well as other aspects that might come up in small talk, such as the weather.
Furthermore, these people like to target United States citizens, but by no means are those the only people they target. Interestingly enough, while they cannot legally do business within the United States, they are perfectly free to do exactly what they are doing in Europe,as there is no regulation of the sale of Binary Options whatsoever. Furthermore, many of these companies might actually be accountable to a regulator, but that regulator is often a place like Cypress, so take that for whatever it is worth.
Anyway, if you can imagine someone who is ruthless and determined in every imaginable respect, then you have these people.
I suppose that it is necessary for me to emphasize one more time that, even abroad, not all of the Binary Option Brokers and companies associated therewith are completely fraudulent. Once again, some of the companies are certainly legitimate and the only advantage that the Broker has over the investors is that the investors will very rarely, if ever, be presented with an even deal on one of these Contracts, much less will the customer find himself or herself at an advantage on any of these.
By and large, though, these companies are underhanded, fraudulent and reprehensible. There can be absolutely no doubt that you would do very well to avoid any of these companies in the event that they have cold called you because a legitimate entity would have no need to resort to such tactics. People who are interested in Binary Options will have already come to them by that point. There is definitely no reason to invest money with any of these companies or to give them any personal information for any reason whatsoever.
This is advice that I would also give when it comes to any cold calling solicitation situation. There is absolutely no good reason to disclose your personal information over the phone to someone who called you, ever. While it is becoming increasingly difficult, especially with legitimate or mostly legitimate companies, to play any tricks such as claiming that they are calling from somewhere they are not calling from, the bottom line is that as the customers become more sophisticated and the access to information about these kind of scams becomes more widely known, many of the people who work in this industry will find new angles in an effort to maintain profitability and to keep themselves viable. For the high-ranking officers in these companies it is essential to keep up with the changes because they are considered untouchable (with respect to hiring) in many other more legitimate industries.
When it comes to affairs of a business nature, there will always be three types of businesses: There will be strictly legitimate businesses in which everything is completely above board and all of your dealings with them, with exception to unforeseen and unintended situations, will be perfectly in the white spectrum and secure. After that, there will be some businesses who are generally practicing good business, but for whom some of their aspects are shady. When it comes to these businesses that operate partially within a gray area, they are generally not going to violate the law in order to rip you off...at least not usually. The final type of entity is one that operates almost entirely in the Black, virtually everything they say is a lie and virtually everything that they do is in some way underhanded.
The best thing to do is to assume anyone who cold calls you represents the black operations.
With respect to the United States and its Regulated BInary Option Trading Market, the trading of Binary Options comes with a few advantages, particularly for low-capital investors who want to limit their risk in that there is a finite amount to be either gained or lost on any individual position. Furthermore, by way of regulation, other than the Entry and Exit Fees that are associated with entering into a contract, Binary Option traders are effectively playing a zero-sum game. Of course, there will often be investors out there who are more skilled than others, so if an individual does a poor job making decisions with respect to Binary Options, he or she can expect to lose money.
Furthermore, many individuals or entities in the United States who engage in Binary Options trading are highly sophisticated and have access to Statistical Analyses and tools that are designed to give them an overall advantage on the contracts that they enter into. If one starts out in Binary Option trading without an innate Statistical understanding of short-term market fluctuations in the price of a commodity, or perhaps of a Stock Index, then that person is most assuredly going to start of at a nearly insurmountable disadvantage.
It is definitely not a game that everyone should play, least of all, people who are not willing to do their homework. If nothing else, Binary Option trading in the United States could almost be compared to two people betting against each other with respect to some Proposition on a sporting event. Generally speaking, the individual with a greater knowledge of Sports Statistics is going to have the best of a particular Proposition. One does not want to go into a Sports Bet half-cocked such as wagering someone Even Money that player x is going to hit a home run in a specific game, and just as equally, one does not want to go half cocked in making decisions with respect to what is going to happen with short-term market fluctuations.
As we have discussed, Binary Option Trading abroad differs both significantly and in many ways from trading within the United States. For instance, many of the Brokers who do business abroad are not regulated in any way whatsoever and many of those that are regulated are not in a way that some people would consider either meaningful or sufficient. If you want to do Binary Trading in the safest way possible, then obviously, you want to stick to trading within the United States.
Another difference between Binary Option Trading in the United States as opposed to abroad is that Binary Option Trading abroad offers the opportunities for, 'Exotic,' contracts such as High/Low and Range contracts. While the availability of different options may initially seem appealing to some, it is important to keep in mind that one will be bucking against a much greater House Advantage when dealing with the Brokers abroad generally, and specifically, when dealing with these kinds of options. It is also important to remember that the Statistics underlying what makes a specific option a good play or a bad play are also more complicated than with Traditional Binary Options, so these Exotic Options are also tougher to get a handle on, and that is assuming that the Odds are such that there is a handle to be gotten.
The final difference that we detailed with the Binary Options abroad is the fact that the Contracts are presented by the Broker directly rather than two individual investors taking opposite sides of a Proposition. That is relevant because it is obviously in the best interests of the Broker to set up the Contract to be as much against the person as the person is willing to accept. Fundamentally, it can be expected that the Broker will either almost never, or perhaps never, offer a Contract for which the Broker is at an inherent disadvantage.
It is equally important to recognize that the Contracts that the Broker does offer are also going to be based on a deep Statistical understanding of the Options that the Broker is laying out for people. The Broker is never going to offer anything that he actually expects to lose on and will often resort to reprehensible tactics to assure profits.
There is actually one example of that I failed to touch upon earlier, and that is that the Broker reserves the right to simply take certain Options of the Board completely. For example, let us suggest that a commodity price is behaving in an unusually volatile way on a particular day, then what the Broker might do is eliminate the Option to take a High/Low Contract while still permitting people to take a Range Contract. The Broker may not immediately know why a commodity was so volatile on a particular day, but one thing that he does know are that his usual Range Contracts that he offers are even more excellent for him if a commodity is being especially swingy on a given day.
Beyond the ability to simply take some of the Options off of the Board, we discussed a number of tactics that a Broker might use to further separate an Investor from his/her money. These may include such tactics as insisting that they will only use their source of results which did not show that a customer had a successful contract, changing results after the fact, changing the terms of a particular contract (by way of the software) within seconds of the customer agreeing to the original contract and also trying to fudge down what the customer is to be paid in the result of a successful contract.
Of course, those statements only have to do with what a Broker can do to a customer while the game is actually being played, but that has nothing to do with what the Broker might do when the game is over.
Binary Option trading is usually not something that many people seek out from companies abroad, or quite frankly, really even know about. As a result, it is often necessary for these companies to Cold Call customers and engage in sneaky and underhanded sales tactics, if not outright lying, in order to get a customer to make a deposit with their company and start investing. The individuals who are making the calls or the actual companies behind the companies that they purport to represent are often out of the reach of prosecution in whatever country they are calling, or alternatively, are simply not actually doing anything illegal pursuant to the laws of that country.
With respect to revenues, this is not some kind of fringe industry, on the contrary, these companies combined see revenues of hundreds of millions of dollars a year all of which has been largely garnered from people who do not know any better but to get involved with these sordid agencies.
Also, while one might be under the impression that he or she is immune to the sales tactics that will be employed by these agents, it is important to understand that many of them are very good at what they do, so the safest course of action is to either hang up the phone or stonewall them completely. In any event, one should never give a single piece of personal information to a cold caller, in fact, one should not even confirm what a cold caller purports to already know.
Just. Hang. Up.
I would like to point out, one last time, that other than the fact that the individuals entering into the Contracts will be at a mathematical disadvantage, there are some Binary Option Brokers and companies abroad who are reputable and through him the customer will be paid if he or she is profitable and wishes to withdraw. I would not personally recommend getting into Binary Options at all without an incredibly complex understanding of short-term Market Fluctuations, so I will leave you to seek these legitimate companies out if you are absolutely determined to deal in Binary Options overseas.
Finally, Binary Options share much in common with other forms of gambling and have the potential to become addictive for exactly the same reasons that other forms of gambling do. Further, much in the fashion that many system players will make excuses for losing and only remember the wins, these are traits that tend to be shared with players of Binary Options, so it is very easy for an unskilled individual to find himself or herself in deep financial peril as a result of having played around with these Options.
For most people, my ultimate advice would be to definitely stay away from Binary Options abroad because a person is generally going to be bucking a greater disadvantage than can be expected from simply paying the transaction fees on what are otherwise the zero-sum Contracts of Binary Options within the United States. Furthermore, I would generally advise against getting into Binary Options even in the United States unless you are prepared to seriously do your homework to become as skilled as the other Investors who have been doing this forever and, in many cases, have computer programs constantly conducting statistical analyses and assigning probabilities on their side.
Binary Options are superficially attractive due to the fact that they are fundamentally simple. However, while they are easy to understand conceptually, there is an inherent complexity in knowing whether or not one is at an advantage on a specific play. Another aspect that makes them attractive is that both the maximum risk and maximum profit potential are known prior to actually getting into the contract. It is for these reasons that many people will falsely believe that they are, 'Easy enough,' to do successfully.
One caveat that I will toss out there, and this is true of any form of negative expectation gambling, is that if you want to deal in Binary Options in a regulated market, preferably the United States, simply because you think it sounds like it might be fun to do, by all means, go for it! Much like Poker Professionals playing against a rank amateur sitting at the table because poker is fun, the skilled Investors of Binary Options will be glad that you pulled up a seat at their proverbial table. My most important suggestion in that regard would simply to be aware of some of the signs of potential addiction, and most importantly, do not put any money into your Options account that you can not afford to lose.
Also, do not expect to win unless you have done all of the homework necessary to make winning the expectation. If your investments are going south and being sold to mitigate losses consistently, or you seem to end up, 'Out of the money,' on the investments that you ride out until the end, then the most likely case is not that one thing or the other is not going your way...it is that you are simply not any good at it!
For those of you who believe you might learn how to invest successfully, my advice would be to practice (if you can find a resource) and make sure that you actually have the skills to be successful before putting money on the line. Ensure that you have some notion of when a Contract should be entered into on the, 'Yes,' side or the, 'No,' side. Also realizes that individual commodities and indices are different, and as a result, are subject to entirely different probabilities with respect to short-term fluctuations. Also remember not to stretch yourself out too thin, as with any form of Advantage Play, it is important to, 'Stay within your bankroll,' because, 'Running bad,' might be enough to take you out.
Whether or not you decide to get into Binary Options in the United States or abroad, and if so, whether you choose to do it strictly as a pastime or plan to do it with a serious intent of making money, I wish you the best of luck in your endeavors. And, as always, thank you for reading.
Written by: Brandon James