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Binary Options Brokers – How To Choose The Right Broker
Choosing the right broker is vital to your success as a trader.
However, in binary options this task can become very difficult, since you are essentially trading against the broker.
Unfortunately for the binary options market, it has been infected with scams and dishonest brokers that have used their unregulated position to steal money from customers.
There are many things a trader can do to improve, but unfortunately one of the things he can not influence and control, is his broker.
Brokers play a number of roles.
- They provide operational trading platforms.
- They store traders’ funds until they are withdrawn.
- They control the available liquidity pool.
- They process and sync all trading activity in the market.
- They provide support to their clients (traders).
The role of brokers in the binary options market is too important to be taken lightly. This is why traders have to be very careful where they choose to deposit their money.
Brokers can also function as market makers, providing liquidity which enables traders with very small amounts of money to still have the chance at participating in the market.
Is the broker regulated?
Regulation in the binary options market is still an issue in many countries. At the moment, the US, UK, Japan, Australia, Cyprus and Malta can claim to have solid regulatory frameworks for the binary options brokers. In many countries, binary options is seen as a gaming activity or put under regulatory oversight of gaming commissions which have no rules on segregation of client funds.
If you want to trade binary options, you may start to look at the issue of regulation of brokers a lot more seriously than before.
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You can no longer afford to keep your money in brokerages which are not regulated or which have no obligations as required by laws to segregate your money. Putting your funds in such brokerages is a very risky business.
So when choosing a broker on the basis of regulation, you must get answers to these questions:
- Does the broker have a license number issued from the country’s regulators. You must confirm this information from the regulators.
- Does the broker actually segregate the funds of its traders, and do the regulators that oversee their operations enforce this function?
- Can you be sure that the broker is actually based in the country where it claims to be domiciled?
Some brokers have been blacklisted recently for infractions bordering on these points. Do your due diligence and ensure you have accurate information in this regard.
When it comes to trading binary options, the trading conditions matter immensely.
This has to do with the structure of the market and how brokers in this market actually make money.
Apart from the US where binary options are exchange-traded, in many other countries this is not the case.
Binary brokers do not make their money from commissions, but from losses of traders on the wrong side of the market.
Most binary options brokers are trade counter parties. Some of them skew their online platforms to increase profits. However, it is a lot harder for them to do this on medium and long term contract expiry times than on the short term trades.
Furthermore, there is talk about brokers having risk management teams that bookmark accounts of traders who make too much money at the broker’s expense. Some are more honest about this than others.
Customer service departments came into existence to enable clients ask questions or get solutions to some issues bothering them about the service of the company.
In binary options, there will be lots of issues to talk to the customer service about.
You will therefore need a responsive customer support service from your broker, which can be reached at all times (at least on trading days) and also via Live Chat.
In addition to a quick response time the customer service should also be able to answer most of your questions about the broker’s conditions as well as the trading platform. Some brokers offer outstanding customer support and it is actually one of their biggest pull factors.
Certain issues need to be dealt with quickly and the best way to do that is by direct communication. Choose a broker with a responsive live chat.
Prompt withdrawal settlement
It is only good that when a trader makes money from the market, he is allowed to enjoy the proceeds of such an investment via prompt fulfilment of withdrawals from the broker. Many brokers for reasons best known to them have come up with all manner of obstacles to prevent this from happening. This is usually a fine line and many scam brokers do this because profits for traders mean losses for them.
How do scam brokers operate in this regard?
- By putting unreasonable withdrawal caps,
- by applying hefty charges on withdrawals,
- by tying withdrawal ability to high trade volumes meant to cover a bonus.
You need to be very careful of brokers that change their withdrawal policies randomly, as this is one of the early signals that a broker is starting to have cash flow problems.
Policy on bonuses
Because online binary options brokers are often in direct competition, they will often offer promotions, perks, and bonuses to get more people interested in their service. Generally speaking, the perks they offer increase with the amount that you deposit, and you can find a number of promotions specifically for first-time traders. These special offers can greatly benefit you, particularly when you’re just starting out.
However, beware of brokers who place very heavy trade volumes as a prerequisite for making withdrawals on accounts which have been awarded bonuses.
Bonuses are a good thing, but they have been widely abused. It is simply not right for a broker to expect to make from a trader more than 100 times what has been awarded as a bonus.
Choose a broker with a responsible bonus policy.
Bonuses are supposed to work in a symbiosis, but where one party starts to profit heavily at the expense of the other, the arrangement loses its core values.
This is partly why Japanese regulators have issued laws regarding how bonuses are to be managed, and also why Australian regulator ASIC is planning to introduce regulation to have them stopped altogether.
Choice of contract types and assets
Use brokers who give a generous offer of the kinds of trade contracts which can be traded on their platform.
Some traders will find they are much better at trading certain options and markets than others. For such traders, choosing a broker with a lot of flexibility in how to trade assets, will be a major benefit.
All binary options brokers will offer different assets within the categories of stocks, commodities, currency pairs, and indices and some will also offer cruptocurrencies.
Expiry times offered
Because there are different trading strategies and risks associated with the various expiry times, it is important that you find a broker that has the right expiry times that will work for you. Even though who offer high speed training have different ideas of what high speed is.
Some have high speed expiry times of 60 seconds while others offer just 15 second expiry times for these trades. Some binary options brokers offer much longer expiry times of a month or more while others consider the end of the day to be a longer expiry time.
If you are new to binary options and don’t yet know which you prefer, it may be best to go with a broker that has a wider variety of expiry time options to choose from so you can find one that fits you best.
Ease of transactions
Many payment options have evolved over the years which give traders plenty of flexibility in how they can deposit and withdraw funds.
So unless your country is under a financial blacklist just as the US recently blacklisted Crimea, you should choose a binary options broker which offers you a variety of transaction methods such as credit/debit cards and various e-wallet options such as Skrill, CashU, Ukash, Sofort, etc.
In the EU today, binary option brokers can only open trading accounts to licensed and professional traders. In many countries binary options are classed as gambling, which is not necessarily a bad thing in itself. In some countries it is illegal to trade or operate binary option platforms.
Today, the best option for new or existing binary option traders is to trade with a regulated CFD and Forex broker.
Although it is important to take your time while choosing your broker, it is also vital to understand that brokers are not the only determining factor when it comes to making money in trading online.
The most important thing is to learn how to trade and manage your risk.
Most popular brokers
Many readers ask which brokers are the best. It is difficult to point to one specific broker because it’s often a matter of preference.
Due to new regulations many of the biggest and most known binary brokers have closed or modified their operation to fill a different market demand.
To trade safely and with a peace of mind, look for regulated brokers with the best user reviews and various international awards.
EasyMarkets is a good example of a fully regulated, time-tested, reliable broker. Over the years, it has won 37 international awards and gained a lot of loyal customers.
Binary Options Trading in the UK
Everything you need to trade binary options successfully.
Research. Find a broker. Trade.
For UK investors, trading with binary options is a tax free form of investment with very quick results – minutes rather than months or years. The word binary is used because there are just two possible outcomes – either the trade is successful, and the investor gains a significant return (usually between 75% to 95%) – or the trade is unsuccessful, and the full investment amount is lost.
During 2020 however, European regulators have prohibited the sale or promotion of binary and digital options to retail investors in the EEA. This includes the UK. Only professional clients or professional accounts are now permitted to trade binaries with regulated firms. A professional trader must meet 2 of these 3 criteria:
- Open at least 10 trades of ‘significant size’ per quarter (brokers define ‘significant’ differently)
- Own a portfolio or trading capital of €500k or more
- Have worked for 2 years in the financial industry, or have experience with complex trading instruments.
Unregulated firms may not adhere to the new ESMA rules, and will continue to accept UK traders. This does increase risk for the trader, and makes finding a trustworthy broker even more important. It is however, possible to find brokers regulated outside of the EU that will accept EU traders, and are still regulated by respected bodies.
So ‘binaries’ (or ‘digital options’) are a high risk form of investment, but that risk is offset by the potential for very high rewards with minimal waiting time. Most brokers are regulated, offering consumers the sort of protection they would expect while using financial instruments of this type. Returns from binary trading are also currently viewed as tax free by HMRC.
Top Brokers in the UK 2020
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What Are Binary Options?
Binary option meaning – Binary options are a derivative, traded on any asset or market. For example a stock price (Twitter, AstraZeneca etc), indices (FTSE, DAX, Nikkei), commodity value (gold, crude oil) or foreign exchange rate (EUR/USD, GBP/USD). Even cryptocurrencies such as Bitcoin or Ethereum can be traded.
The main difference between more traditional stockbroker trades, and binaries, is the clear identification of risk and reward before the trade is made. An investor knows exactly how much is at risk, and crucially, also knows the exact value of any potential returns. No calculator, formula, or maths degree is needed to work out profit and loss on a binary option.
This structure of the trades is what has led to the terminology of “all or nothing” , or “cash or nothing” being widely used.
The only decision for a trader is if the value of the underlying asset will rise or fall. The degree of the price change is not important. The trader is purely speculating on whether the price will be higher or lower than the current price, at a specific time in the future.
Short term price movement can be triggered by news stories or headlines, quarterly statistics, buyout rumours or even global security fears.
Trading binary options offers a Yes/No proposition. Although there are variations on the High/Low option, this type of investment will always have a black and white, Yes/No, binary outcome. Where trades can be closed, redeemed or sold mid-trade, payouts have absolute figures of 0 and 100 and prices move between as the market dictates – until closure.
Every binary option is offered with an expiry time. This is the point at which the trade will end. So the price at expiry is the one that will decide whether an option has won or lost (“in the money”, or “out of the money” in binary jargon). These expiry times can vary from just 30 seconds or 1 minute, (known as ‘turbos’), to a full day (‘end of day’), to even longer in some circumstances – rolling up to a full year.
Generally however, a binary option is used for short term trading – usually under 30 minutes (5 minutes are the most popular). Longer term expiries – and the element of fixed risk – does make them useful tools for hedging or diversifying other holdings.
Payouts change dependant on the asset and the expiry time. Differences can be significant so traders looking to use binary options long term, need to shop around to find the best payout for the asset class (or classes) they intend to trade.
Video Tutorial – Binary Trading Explained
Watch this video tutorial of the IQ Options platform, which shows how to place a binary trade:
Although binary trading is in a period of growth, it remains a relatively unknown product. Over time, this is likely to change. As digital options (as they are also known) offer a very simple fiscal arrangement. They are a legitimate way to play the financial markets.
Binaries offer a clear trading choice, but they are also high risk / high reward. There is however, no leveraged exposure with a binary trade, so the risk and reward ratio is also simple to manage.
Are Binary Options Safe?
Binary options suffer from a poor reputation. This is basically a result of dishonest and irresponsible marketing and cyber crime, more than an issue with the product itself. With tighter regulation, and a better understanding by the wider public, these options can – and will – move into the financial mainstream. Which was where they originally developed.
While FCA regulated agents and businesses may still have their flaws and faults, they are not fraudsters. The angry emails we receive focus entirely on unregulated brokers promising “easy money”, or a route to “get rich quick”. Read our section on avoiding scam brokers below.
Advantages Of Binary Trading
Many of the advantages of using binaries are related or linked. Here we list some of the benefits to using this form of investment – not just for the retail investor, but also to the market makers or brokers:
Managing risk when trading binary options is clear cut. The amount of the trade is the full amount that is at risk. This clarifies the risk not only for the trader, but for the broker too. Their pricing model reflects the accurate knowledge of their liability.
Trading Fees And Spreads
The certainty of risk provides a solid foundation for brokers to work within and manage. This leads to low trading feed, tighter spreads and higher payouts. To protect themselves further, they may use a liquidity provider or hedge their own positions. The expensive broker costs of clearing houses becomes unnecessary.
Leverage, or gearing, is not generally available with binary trading. This benefits the broker again, as it means all trades must be funded in full. In other words, no trader can default on a trade. With leverage, if things go wrong, there is a real risk of the broker not being paid. This is a big difference vs spot forex or spread betting.
Layers of complexity can be added to the standard fixed payout option. From a ladder option, to boundary trades or more advanced ‘nesting’ of options to create ‘strangles’ etc – binaries can be used in a huge variety of ways.
A binary trade offers the greatest level of flexibility. They even provide a mechanism to speculate on a market remaining flat, arbitrage, or to take a view on the trade volume of the underlying asset.
Robots and Auto Trading
Auto trading robots (‘bots’) often rely on signals and algorithms triggered by price graphs. Again, these robots attract many of the undesirable operators, and the automatic nature of the trades increasing risk further. New traders should be especially careful. A large amount of ‘due diligence’ is required when trying to find the right robot service.
An alternative approach is for traders to build their own robots using their own entry points. A growing number of brokers now offer traders the ability to put their own trading robot or program together, using simple tools. These hacks allow combinations of technical analysis settings, such as moving averages, Bollinger bands or RSI / MFI patterns, that then open trades when those criteria are met. It has made binary options ‘pro’ robots available to everyone.
|Robot Name||Info||Choose from 20 pre-built robots and compare past performance. Activate automated trades in 3 steps.||» Visit||Regulated broker. Self build robot tool offering huge range of features.||» Visit||Free to join. Flexible settings including indicators, expiry and methods.||» Visit||Free Demo Account. Choice of money management and algorithms.||» Visit|
Binary trading itself is legitimate, and not a scam. There are however, brokers and signal providers that are untrustworthy and operate scams or frauds.
It is important not to write off the concept of binary trading, purely based on dishonest brokers. These fraudsters continue to drag down the image of this form of trading. Regulators, and rule makers are slowly starting to get to grips with these operations and the industry is being cleaned up. If you want to complain about an operator to our watchdog, please let us know via our Contact Us page.
Avoid scams with these simple checks
- “Make money online” or “Get rich quick” marketing. This is a huge red flag. Binary options are a high risk / high reward investment vehicle – they are not a get rich quick scheme and should not be sold as such. A “no loss” system does not exist. Operators making such claims are being dishonest. A binary options millionaire is almost certainly fake. The Brit Method is one high profile example – swerve it.
- Cold Calls. Reputable brokers will rarely make cold calls – they do not need to. Cold calls are from untrustworthy brokers. This could include email contact.
- Bonus Terms and Conditions. If taking a bonus, read the terms and conditions. Some terms include tying in any initial deposit or capital until turnover requirements are met. The deposit is still the trader’s money – honest brokers will not lay claim to it before any trading has been done. The better brokers will also offer the option of cancelling a bonus if it does not suit the trader. CySec, the leading regulator, has recently banned the use of deposit match bonuses as they believe it leads to clients ‘over-trading’.
- Account Managers. Be very wary of any account manager, tipster or ‘guru’ wishing to trade on behalf of clients. There is an obvious conflict of interest – they have jobs with the broker. These managed accounts generally encourage traders to trade with figures way beyond their means. This “upselling” is very harmful. The intensely risky Martingale system is a frequent tactic, and results in many quickly blown balances.
- Celebrity Endorsement. Sporting legends or team sponsorship is usually fine – and verifiable. Where this backing should worry rookie investors, is where the name of a mega rich billionaire or credible source is ‘pushed’ as a selling point. Warren Buffet, Richard Branson and Martin Lewis have all been presented as backing certain propositions when they actually have zero involvement – other than to sue the perpetrators for damages via a lawsuit.
- A trader must know their broker. Seems obvious – but some operators ‘funnel’ clients to a brokers of their choosing, not yours. If the merchant demands new clients sign up with a particular broker, or they pick the broker from a limited list – do not proceed. A trader should know the broker they are going to trade with!
Being aware of the above methods should help those new to binary trading to avoid the less responsible brands. Improved regulation and more awareness should hopefully reduce these types of complaints. This in turn can allow binaries to move forward.
Already fallen victim? The services of MyChargeBack.com might be of help.
The recent ban of binaries in the EU is ill-thought out, and could well end up pushing more traders towards scams.
Our strategy pages covers over 20 known systems, drawn from a range of forum and club chats, plus expert tips and advice. From high risk Martingale, to intricate systems like the Rainbow. We also cover more specialist subjects, like forex , technical analysis, the best price action indicators, trading signals and winning strategy. All this is aimed to help you gain an edge, and win.
Signals are an alert, sent to traders. They are designed as a trading tool, helping traders to spot opportunities. They can be communicated via a range of methods – email, SMS or from a live signal website or group. Much of the irresponsible marketing associated with binary scams is linked to signals – or auto trading robots utilising them. There are some very good providers out there too. However, in general, learning how to trade binaries is a safer route than using signals to compensate for a lack of trading knowledge.
Do signals work?
Sometimes, but rarely in isolation. Some providers deliver a combination of education alongside signals and that represents a good mix. Traders must be able to fully assess a signal before they can judge the quality of them. We also highlight some of the best providers on the signals page.
Brokers And Reviews
A binary option can be used in a number of ways, and across a huge array of commodities and markets. This means finding the best dealer, best account, or best trading platform, really depends on the needs of the individual investor.
For example, some brokers may focus on forex (foreign exchange) and trading the Japanese Yen, Euro or sterling. Others may be strong on commodities and only offer a handful of FX markets. Likewise, the returns (or payouts) may differ between asset classes, and with these varying by as much as 25%, it is easy to see the importance of making the right selection.
White label platform providers such as SpotOption, Tradologic or TechFinancials also dictate what products the host site can offer, so a proprietary broker with a bespoke design might be preferable. Payment methods merit some thought – if traders want to use Skrill, Paypal, Neteller or Wire transfer, they need to check the broker delivers that.
Mobile trading apps delivered by brokers or binary agents can vary in quality too. Some specifically program for the features of specific models, like iPad or iPhone. Others ensure cross platform compatibility, catering for android, blackberry and windows tablets and devices. Some traders may have tailored demands for any hand held app, others less so.
Trade size limits may point some investors either to, or away from, certain trading accounts. Some brokers offer minimum trades of just £1, while others cater for investors willing to invest £200,000 in a single trade. So every investor needs to consider their own trading style before deciding to open an account. Even working out the ‘cheapest’ broker is not as easy as it sounds.
How To Compare The Best Trading Platforms
Our comparison table delivers a quick summary of the key points when comparing brokers. Our detailed reviews then allow potential new users to assess some of the finer points that might confirm their decision. Here is a list of some of the vital comparison points for brokers;
- Over the counter or exchange traded options
- Minimum deposit (Plus deposit and withdrawal methods)
- Minimum trade / Maximum trade
- Trading platform
- News events feeds
- Asset lists (Extended lists might include ETFs, bonds and trusts)
- Charts / Charting tools (Graph types, forecasting tools)
- Expiry times available
- Regulation (FCA, CySec, CFTC etc)
- Range of options available (Boundary, Ladder, High Yield etc)
- Welcome Bonuses
- Complaints / Customer feedback
- Account Types and Benefits (VIP, Basic, Platinum)
- Plugins and Integration. (E.g. MT4 / MetaTrader4 / MetaTrader 5)
- Promo perks, Competitions, Leaderboards or Contest Prizes
Some points might be more important to certain traders than others. So finding the “best” will be an individual choice for each new client. A speculator taking a position on the monetary policy of the Bank of England or ECB might be best served by one broker, while the person looking to bet on growth in the Apple, Facebook or Vodafone share price might want another.
Most top brokers offer demo trading accounts. These allow new clients to try the services on offer. They can see if the range of markets and investment scales suit them and only proceed to a funded account when they are happy that the right trading account has been found.
Those brokers that do provide practise or virtual balances, have confidence in their trading platform. They are prepared to let new traders see it, and try it out, risk free. The review for each broker will include whether it offers a demo in the “Key Details” section.
Binary Options Trading in the USA
The hysteria as to trading with binaries on the USA financial market keeps increasing, because more and more people based in the States are showing an interest in this field. With such growth in popularity, many new binary options trading platform have appeared on the market, but, still, people tend to have doubts about them. The fact that there are so many doubts as to binary options USA brokers so, we have decided to make this subject clearer and to provide some helpful information. By reading it, you can finally decide for yourself whether to trade with binary options brokers based in USA, or not. And to make this reading more interesting for you, we will tell you now – you can trust these trading websites and you should not have any concerns about them.
The History Behind Binary Options Brokers USA
The very first thing we need to tell you that in the beginning, trading with binary options, while being based in USA, was indeed illegal. USA financial authorities used to ban this field of having fun and earning extra cash. The reason was that the old American laws pointed trading with binaries as a form of gambling and you must be already aware that games of chance was strictly forbidden and even punished. However, over the last few years, the American laws have passed through several changes and currently, it is not illegal to trade in binaries with USA brokers. What you have to look for, though, is a good and reliable website that has an official license for operating on the market and that has found an agency to cover its security. Thankfully, after the changes we have mentioned, there are now official controlling bodies in USA, which are in charge of the binary options USA brokers.
Who Is In Charge of Binary Options USA Trading Websites?
The following two agencies are currently responsible for the safety regulation in binary options trading brokers. Find out more about these authorities in order to get more confident as to trading with binaries in USA:
|Broker||Early Expire||Average Return||Min Deposit||Min Trade||Rating||More|
|✔||90%||$ 10||$ 1||★★★★★|
|✔||95%||$ 10||$ 1||★★★★★|
|×||95%||$ 250||$ 1||★★★★★|
|×||85%||$ 10||$ 1||★★★|