Binary options brokers are your connection to the financial markets. Still, there are many significant differences between each broker you have to account for when selecting your binary options broker.
Differences of binary options brokers
With binary options, selecting the right broker is infinitely more important than for regular investors. Regular investors buy and sell stocks. Therefore, their brokers are merely mediators between them and the markets. That limits the difference between brokers: They all provide the same assets; they only differ slightly in the price they charge you for buying or selling an asset.
Binary options brokers, however, do not connect you to the markets. While the market price for an asset is the basis for each binary option you can invest in, the properties of that option can vary widely from broker to broker.
Here is a checklist with the most important points you have to consider before you choose a broker:
1) Asset types
Each broker offers a limited selection of assets you can invest in. Before you subscribe to a broker, you therefore have to make sure the broker offers the kind of asset you want to invest in. Some binary options trading strategies work only with a certain kind of asset. Some only work with stocks, other only work with currencies. Before you choose a broker, make sure he offers the right kind of assets for your trading strategy.
Just like a good strategy specializes in one kind of asset, most good brokers do, too. Since consistently updating payouts means a lot of work, the amount of assets each broker can offer is limited.
If a broker spreads the limited number of assets he offers over many different asset types, he might just offer one or two assets that are a good fit for your type of trading strategy. Therefore, it makes great sense to use a broker that focuses on the kind of asset you want to trade.
2) Option types
Again: Constantly updating payouts results in a lot of work. Therefore, most brokers focus on a certain type of option, too. They might constantly offer high / low options for all of their assets, but rarely offer touch / no touch options. As a trader that specializes in touch / no touch options, this might not be a good broker for you.
Make sure to check which assets your broker offers, and do not shy away from using offers like free trials, demo accounts, or money back guarantees to test the frequency with which your broker offers the option type you want to invest in.
Even if a broker offers an option type, this does not guarantee you a good investment opportunity you like. The payout can vary significantly between brokers. One broker can offer you a binary option with a payout of 70 percent, while another broker offers you exactly the same binary option with a payout of merely 60 percent. These 10 percent might be the difference between you making money by the end and losing money.
Often, estimating the payout a broker will offer you in daily trading is hard. Most brokers promote their maximum payout, which can be a number they reach once a year. Once again, you need to test these promise under real trading conditions, using a free trial, a demo account, or a money back guarantee.