Choosing the right binary option broker to start your trading career can be an overwhelming task. There is an almost endless amount of brokers and especially newcomers to the trading scene find it hard to know which criteria are important.
Our how-to guide will help you make a good decision.
When you register with a broker you trust them with your money. Over the time of a trading career, this can potentially be a lot of money. Therefore, you should think twice whom to invest you trust in. When a broker goes bankrupt, you can lose all the money you deposited with that broker, just like you can lose the money you deposited in the bank.
Luckily, there is a way to avoid this risk: EU Government regulation. When you register with a broker that is regulated by the European Union, your money is safe. EU regulated brokers have to run separate accounts where they keep enough cash to pay out all their customers in case the broker should go bankrupt.
There are plenty of EU regulated brokers out there. If this point is important to you, it should be easy to find one. There are, however, trustworthy brokers that are not EU regulated. To make your decision easier, we created a list of trustworthy brokers.
Before you register with a broker, make sure that the broker offers high payouts for the binary option type you want to trade. Many traders fail to understand the huge impact even an additional 1% or 2% payout makes over the period of one month or half a year.
When we assume an average of 6 trades per day, 20 trading days per month, and a winning percentage of 70%, an additional 2% payout result in an additional gain of 2,160,163%. That is more than 2 million percent of additional money without improving you strategy, simply by using the power of compound interest.
Since you probably plan on staying with a broker for longer than 6 months, more likely 6 years, you can imagine how much an impact a high payout will make over this long period of time. Even if you don’t make 6 trades per day, the difference will be somewhere in the billion percent.
When you choose a broker, you should therefore closely check the payout the broker offers. It is easy to dismiss the difference between an average 75% payout and an average 78% payout on high / low options as a marginal note, but, as we have seen in our example, these 3% make all the difference in the world over the time of a trading career.
Binary option traders live in countries all over the world. As a result, their trading times differ greatly. Brokers from Asia, Europe, and America will trade the market at vastly different times of the day.
It is important to choose a broker that offers tradable assets for your preferred trading time. Every asset can only be traded when its home market is open for trading. For currencies, that is not a problem – they are traded on every major market in the world. One of these major markets is always open for trading.
For stocks, on the other hand, this is a bigger problem. Most stock exchanges are only open for trading for 8 to 12 hours during the day. Depending on where you live, this might be the time you are in bed.
Traders from Asia, for example, should carefully consider signing with a broker that specializes in American stocks. Trading American stocks would require this trader to pull night shift after night shift. If that is what you want – great. But for most traders this would be a no-go. They need a broker that offers assets from Asia or Europe, which they can trade during more comfortable times of the day.