Yes, binary options brokers can manipulate prices — a fact well-documented by numerous past occurrences and supported by user reports detailing their experiences, including compelling evidence. Unfortunately, some incidents are as recent as this year. Our guide will show you how to stay safe while trading.
Good Things to Know about Broker Price Manipuation
- Binary options brokers have been known to manipulate prices, impacting traders’ profitability and trust in the market
- Understanding common manipulation tactics, such as execution delays and expiry price adjustments, can help traders protect themselves from potential losses
- Choosing a reputable broker with transparent practices and a strong track record in the binary options community is essential for safeguarding your investments
- Brokers may employ deceptive tactics like exaggerated ROI claims and manipulated trading signals, highlighting the importance of due diligence before choosing a trading platform
- Awareness of manipulation risks and informed decision-making can empower traders to navigate the binary options market safely and responsibly
How Binary Options Brokers Manipulate Prices
There’s a well-known saying in casinos that ‘the house always wins,’ which unfortunately applies to binary options brokers. Binary options brokers inherently have an “edge” over traders, with a payout structure that favors the broker (the house). This results in a lower probability of consistent long-term gains for traders.
Nevertheless, for some brokers, this inherent advantage is not enough. They resort to manipulative practices that further tilt the “odds” in their favor at the expense of the traders.
Here are three of the most common ways a Broker may manipulate prices:
1. Execution Manipulation
This first method creates a “slight” and often unnoticeable delay in executing your trades when you decide to bet on an asset’s movement. By delaying trade execution, a broker can execute the trade at a slightly different price than the one you witnessed when you placed the order.
While this difference may seem “insignificant” for one trade, it can immensely affect a trader’s long-term profitability as you unknowingly set your prices at less desirable price levels. This is particularly dangerous to beginners, who may not even realize this is ongoing until it is too late.
2. Expiry Price Manipulation
Second, another method is to manipulate the expiry price at the end of your set time frame. Many traders report witnessing a sudden adjustment to the expiry level of an option to ensure that the trade closes “out of the money,” thereby denying the trader its much-deserved profit. Note that this is especially prevalent in cases where the option is near the “boundary” between “in the money” and “out of the money,” as it is harder to notice even for experienced traders.
How to Protect Yourself against Binary Broker Manipulation:
The best way to protect yourself against these manipulation tactics is to choose a broker with a strong reputation in the binary options community. With this, here are three brokers known for their integrity and transparency:
- Welcomes international clients
- Offers high payouts: 90% – 97%+
- Professional-grade trading platform
- Swift deposit process
- Enables Social Trading
- Provides free bonus incentives
- Min. deposit $10
- $10,000 demo
- Professional platform
- High profit up to 95%
- Fast withdrawals
- Signals
- Supports automated trading
- Regulated trading
- Multiple platforms
- Different financial products
- MetaTrader 5
- High yield 90%+
- Welcomes international clients
- Offers high payouts: 90% – 97%+
- Professional-grade trading platform
- Swift deposit process
- Enables Social Trading
- Provides free bonus incentives
- Min. deposit $10
- $10,000 demo
- Professional platform
- High profit up to 95%
- Fast withdrawals
- Signals
- Supports automated trading
- Regulated trading
- Multiple platforms
- Different financial products
- MetaTrader 5
- High yield 90%+
1. Pocket Option
Well-known for its user-friendly platform, Pocket Option has established itself as a trusted name in the binary options community.
A broad regulatory framework, transparent pricing models, and quick and accurate trade executions ensure traders have the tools and a fair environment for successful binary options trading.
2. Quotex
Second, Quotex is recognized for prioritizing equitable trading conditions. Its platform is designed around transparency, providing traders with the most recent and accurate available data. This approach makes Quotex a trusted broker in the binary options community.
3. Deriv
Lastly, with over two decades of experience, Deriv distinguishes itself with advanced tools for precise and fair trade execution. Furthermore, it has ensured a transparent trading environment while providing robust support for its traders.
Other Manipulative Tactics of Binary Brokers
Besides execution and expiry price manipulations, some binary options brokers also employ niche deceptive tactics. Below are three of these documented tactics:
1. Return on Investment (ROI) Manipulation
First, some brokers advertise excessively high ROI that some traders have supposedly achieved on their platforms. This marketing tactic often targets the public, particularly impressionable beginners, with little understanding of binary options. It skews the perception of ‘risk’ and ‘reward’ by highlighting only the upside—an outlier or a completely fabricated figure—while ignoring the downside, including the reality that most binary options traders lose money. Consequently, it leads beginners to believe that making money in binary options is ‘easy’ and ‘quick,’ disregarding the need for proper trade management.
2. Trading Signals Manipulation
Second, trading signals are “recommendations” or “suggestions” that help traders decide when to buy or sell and which assets to trade. Some brokers propose these trading signals for a premium as a value-added service to “significantly” improve traders’ chances of making profitable trades.
Nevertheless, despite these signals’ supposed “help,” the broker’s integrity is often compromised. In some reported instances, brokers deliberately manipulate these signals to their benefit, especially when their revenue models benefit from traders’ losses — a clear conflict of interest.
Not to mention that these trading signals may also lead beginners to believe they can solely rely on these recommendations and that no due diligence and proper trade management are required.
3. Copy Trading Manipulation
Lastly, copy trading is a unique feature offered by binary options brokers that allow traders to automatically “replicate” the trades of others (often presumably successful and highly experienced traders). Unsurprisingly, this can be a highly desirable option for traders looking for a clear direction or even a passive strategy.
Yet, the authenticity of these “expert traders” is often in question. Some brokers have been known to create “fake trader profiles,” complete with inflated success or hit rates and falsified “exceptional” trading history.
Unfortunately, these fake profiles can entice traders into imitating strategies that are not only fabricated but also far from successful, leading to massive losses.
Conclusion
Having said all this, we can see how destructive these manipulative tactics are, which some binary options brokers utilize to gain an unfair advantage over their users (traders). Unfortunately, this is primarily due to the asymmetric regulations enforced on binary options brokers, allowing them to commit these deceitful acts without the usual safeguards in other markets (such as the stock market or Forex). Thus, it is crucial to pick a reputable broker to protect yourself from falling victim to these fraudulent activities.
(Risk warning: Your capital can be at risk)
Most asked questions about broker prices:
How can I protect myself from manipulation tactics employed by binary options brokers?
Choosing a reputable broker with a strong track record of integrity and transparency is the best defense against manipulation tactics. Look for brokers like Pocket Option, Quotex, or Deriv, which are known for their fair trading environments and transparent pricing models. Additionally, educating yourself about the risks and warning signs of manipulation can help you make informed decisions and safeguard your investments.
What are some common manipulation tactics used by binary options brokers?
Binary options brokers may employ various tactics to manipulate prices and deceive traders. Some common tactics include manipulation of execution, expiry price, return on investment (ROI), trading signals, and copy trading. Being aware of these tactics can help traders recognize and avoid potential scams.
How do brokers manipulate execution to their advantage?
Brokers can manipulate execution by introducing delays in executing trades, resulting in trades being executed at slightly different prices than expected. This can impact a trader’s profitability, especially if the trader is unaware of the manipulation. Beginners are particularly vulnerable to this tactic, as they may not recognize the subtle differences in trade execution.
What is copy trading, and how do brokers manipulate it?
Copy trading allows traders to automatically replicate others’ trades. Some brokers create fake trader profiles with inflated success rates and histories to entice traders to copy their strategies. This manipulation can lead to significant losses for unsuspecting traders who rely on fabricated or unsuccessful trading strategies.
Why is it crucial to choose a reputable broker in binary options trading?
Picking a reputable broker is essential to protecting yourself from fraudulent activities and manipulation tactics. Reputable brokers adhere to strict regulations, provide transparent trading environments, and prioritize their clients’ best interests. By selecting a trusted broker like Pocket Option, Quotex, or Deriv, traders can mitigate risks and trade confidently in a fair and secure marketplace.
