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Today, a substantial number of binary options are traded through online trading platforms . These web sites often do not comply with U.S . regulatory requirements Pocket Option Day Trading . In fact, the increase in the number of these platforms has led to an increase in binary-option related fraud complaints to the CFTC.

Complaints include scams in which binary options trading firms claim they deposited money in an investor's account but did not. They might deny requests to return funds or even require hidden fees to return assets. Many online binary options trading platforms overstate the average return on investment or even manipulate past charts to make investing appear more promising than it really is. Some binary options trading platforms may offer a bonus for opening or adding to an account. The bonus is a monetary amount added to the deposit under the condition that the investor subsequently makes a specific minimum amount of trades before withdrawing any funds.

Binary options are an all or nothing investment in which one side wins and the other side loses depending on a yes/no outcome at expiration . The payoff to a winning investment is a fixed monetary amount or an announced percentage of the initial investment Pocket Option Kivabe Kaj Kore . A losing outcome generally results in the total loss of the investment.

Binary options are legal and available to trade in the U.S. but they must be traded on a regulated U.S. exchange. These exchanges are Designated Contract Markets (DCMs). Some binary options are listed on registered exchanges or traded on DCMs that are subject to oversight by the CFTC or SEC. Here is a list of DCMs. This is only a small portion of the binary options market, though. There are currently only three DCMs offering binary options in the U.S.: Cantor Exchange, LP; Chicago Mercantile Exchange, Inc. (CME); and the North American Derivatives Exchange, Inc. (NADEX).

Many offshore companies engaged in commodity binary options transactions are not registered with the CFTC, however, and it is best to avoid them entirely. When companies operate offshore, investors have even fewer protections and are at greater risk of being targeted for fraud. Those featured on the RED List, for example, are companies operating without CFTC registration and are based offshore where they are not held up to the same standards as those based in the U.S.

To further complicate matters, market experts have seen a rise in the software platforms that tend to target over-the-counter binary options that are not CFTC-regulated. These require only a counterpart of the trade who is a broker or an option contract. An investor must be cautious when entering the binary options market and keep in mind the risk of fraud, manipulation, and abuse.

If you are suspicious of a binary option platform, ask:

• Where are they based, and do they have a U.S. location? If they say yes, verify that they are registered with the CFTC and National Futures Association.
• Is it legal for them to solicit customers in the United States?
• Are their customer funds held in segregated accounts in a major U.S. bank?
• Can you withdraw your funds at any time?
• Do they ever profit because a customer on the other side lost?

To more easily avoid scams and false promises, you should work with a CFTC-regulated exchange within the U.S.