The World of Binary Option Auto Trading Scams

by Girvan Lambert
(Canada)

The world of auto trading based on binary options is truly like the Wild West these days. New auto-trading "solutions" seem to pop up every week, but most of them unfortunately turn out to be scams. Auto trading promises an easy way to cash in for those without any trading skills. The downside is that given the nature of the markets, auto-trading will - at least for the foreseeable future - carry a fundamental flaw that simply cannot be overcome. To put that in a more straightforward format: auto-trading generally does not work. Let's take a closer and more systematic look at this though.

What is the appeal of auto-trading?

Auto trading is a sort of Holy Grail for those eager to buy into get-rich-quick schemes, especially if the people we're talking about have already heard a thing or two about trading and binary options, but they lack any skills and profound knowledge. Its appeal is in the fact that it offers a free ticket to untold riches: all it requires of its "clients" is to install a software, to make a small initial deposit and flip the auto-trading switch. If making money were that easy though, everyone would be doing just that, and pretty soon the world economy would collapse as no one would do any real, productive work anymore.

The problem with auto-trading

Why does auto trading not stand a mathematical chance to actually generate profits on a consistent basis? Most auto traders are based on various technical indicators and technical analysis in general. This is how they generate their trading signals, taking advantage of the fact that technical analysis is indeed easy to automate. Every decent binary option trader knows however that proper technical analysis always has to be paired up with solid fundamentals, in order to yield acceptable results. The aspect of fundamental analysis is where most auto-traders fall short, since they cannot automate it (without applying some truly capable Artificial Intelligence, which quite probably does not even exist yet).

Why do these auto-trading scams exist?

To make money for their perpetrators, obviously. How do these petty scammers make money through their trading robots? They team up with a legitimate broker (or an unregulated one) and they set up a deal according to which they receive a commission for every trader they refer. They then set up their site, hire some actors to shoot a promotional video and make their software available for download. In order for their magic money-making machine to work, their users (or rather victims) have to sign up with a certain broker. That's the deal in a nutshell.
Take a look at some regulated and legitimate binary option brokers at thebinaryoptionbroker.com.

Telltale signs of an auto-trading scam

The first such sign is that the rewards/profits promised by the scheme are too good to be true. The same goes for the advertised winning percentages. If some sleazy online salesman tells you that his software can produce winning rates of 100%, he's selling you baloney.
The video used to promote the "product" has all sorts of inconsistencies and the "random" test-subjects featured in it are obviously bad actors.

There are all sorts of far-fetched concepts touted as the "secret" MO used by the robot. We've seen claims of optical data transmission, various technical indicators the importance of which is blown out of proportion, and even lie detectors used to this end.

Another clue is if no one really wants to put his/her face and name on the product, and when the discussion regarding the above said technical aspects of the robot's inner workings is just too vague.

In addition to the above, we have the usual cocktail of fake reviews and testimonials, coupled with the urgency-inducing claim that only a limited number of people are allowed to gain access to the money-making machine.

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Nov 17, 2017
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recover you funds
by: Anonymous

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Oct 22, 2016
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Haha...Right on!
by: Anonymous

Saw someone actually re-use an old scam. No kidding.

Oct 22, 2016
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binary options brokers can go broke
by: Fritz

There is also another major issue faced by traders whom use even successful legitimate automatic trading systems and that is that these systems can and have caused market maker brokers to go broke because the winning trades are loses for the broker. So if too many traders are using a successful automated trading system with too much volume then it will cause problems for the broker.

The broker has the choice of banning or restricting the successful automated trading system or doing other things to prevent the trading system from profiting such as increasing slippage / spreads / rejection of certain trades etc.

It is no secret that in certain industries - such as successful gamblers within casinos or the sports betting industry they get blacklisted and asked to take their business elsewhere because the winnings of these successful gamblers are losses for these casinos and sports betting establishments.

The same principle applies to most binary option brokers. Some tolerate winning traders with low volume but when too much volume is involved they cannot continue operating a unprofitable brokerage firm. If they cannot pay for their staff or other normal business expenses they need to close up shop or file for bankrupcy.

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