Since binary options have become the hottest new trading trend, binary brokers are in high demand. But what exactly do binary brokers do and how can you find a good broker? In our guide to binary brokers, we will answer these questions and more.
In detail, we will answer these questions:
With the answers to these questions, you will have a much better picture about different binary brokers, whether you should sign up with a binary broker, and where to find the ideal binary options broker for you.
Binary brokers are trading services that enable you to trade binary options. Binary options are a relatively new type of financial trading that is much more user-friendly than traditional forms of financial trading. In their simplest form, binary options allow you to predict whether an asset’s price will rise or fall over a given period of time. The binary trader never buys a certain asset but predicts the price movement – this is the main difference between binary trading and traditional stocks trading.
Binary brokers are brokers that offer predictions in which you can invest. Each binary option is a prediction about what will happen to the price of an asset, and your broker decides which predictions you can trade and which payouts you get for each prediction if you are right.
There are two basic types of binary brokers:
Let’s take a closer look at these two types of brokers.
Most binary brokers offer their binary options directly to you. The binary broker defines which predictions it is willing to offer to you and with what payout. You decide which binary options are acceptable to you and trade them.
In this system, you trade directly with your binary broker. This type of broker is also often referred to as the “European type” broker, as many brokers who offer this type of trading are regulated in Europe, usually by CySEC.
Binary options exchanges are also known as ‘US-type’ of the binary broker. In the United States, the government has passed a law that forbids brokers from offering their binary options directly to traders. As a result, one of the few U.S. based binary options exchange, Nadex, has created a new interesting business model.
Binary options exchanges are a place where the trade is placed, just like in traditional stock exchange trading. Binary exchanges are mere platforms, and traders trade with each other. When one trader wants to sell, and another wants to buy, the exchange brings both of them together and helps them make a deal that is in the best interest of both parties. Nadex, US regulated binary exchange, is one of the most famous binary exchanges in the world.
Nadex, just like other binary options exchanges, connects traders. When one trade wants to invest in rising prices, Nadex connects them to another trader that wants to invest in falling prices. Both traders trade against each other and Nadex gets a small cut. This is the basic principle of all binary options exchanges that is valid with most of them.
For American traders, this is an easy decision: there are no traditional binary options brokers regulated in the USA, so they have to make their choice between several binary options exchanges. Nadex is one of the few binary exchanges who is legally allowed to offer binary options to U.S. citizens. Any broker that is willing to accept U.S. traders without the permission of the government does so illegally and should not be trusted. Please make sure to check the status of the binary broker you are interested in, before making a deposit.
Traders from all other parts of the world can decide for themselves which type of broker they want to use or if they want to use an exchange. You can always try both alternatives and stick with the one you like best.
Many binary options beginners find it difficult to tell whether or not they can trust binary brokers. Luckily, there is an easy way to separate the trustworthy binary options brokers from those that you should stay away from. This way is government regulation.
The countries of the European Union and the United States both have created regulatory agencies that monitor financial entities, and countries all over the world have their specific regulatory frameworks. Binary brokers that accept regulation from either authority have to abide by a set of standards. If they don’t do so, they can expect hefty fines and lose their license. Even though trading with regulated binary brokers also carries a certain level of risk
The most significant difference between regulated and unregulated brokers is how these brokers handle your money and you as a customer. Unregulated brokers can simply mismanage your money or disappear with it as they like as they are not obliged to follow any rules or regulations.
To prevent such a horror scenario, the EU and the USA both require binary brokers to keep their customer’s money in a separate account. Even if the broker should have to file for bankruptcy, this system protects your money.
Of course, government regulation has more security advantages.
Why should you trade only with regulated binary brokers? Because this simple step makes binary trading safer. You will have a fully functioning legal system watching over the binary broker that is providing you binary options trading service. And while there are no guarantees in life, regulated brokers usually provide a higher level of customer care and clear terms and conditions. Many of them also ask for additional test and documents to make sure you are suitable for binary options trading.
While this approach can make many traders feel like it is unnecessary, it is for your own safety.
A regulated broker has to obey strict rules when it comes to publishing the details of their business and their financial results. The results help you to understand whether your broker is still in good financial condition or whether you should start looking for a new broker.
Also, having all important company information about your binary broker can be of highest importance if something goes wrong and you want to file a complaint.
All in all, the easiest way to find a trustworthy broker is to choose a broker that is regulated by the United States or by the European Union. Watch for the seals of the CySEC, the Cyprian Securities and Exchange Commission, that regulates most binary brokers that operate in Europe and the CFTC, the Commodity Futures Trading Commission, that regulates US binary options brokers and exchanges.
Finding a trustworthy broker is only one part of the job. The other part is making sure that your broker is trustworthy and good. Of course, the first step would be to find a small selection of regulated binary options brokers that sound appealing and then start from there.
When it comes to binary brokers, quality is subjective and objective. The objective part of quality is finding a broker that is regulated and offers you interesting binary options types on a solid and technically advanced platform. Such things can be measured objectively, and leave little to no space to speculations.
The subjective part of quality is much harder to address because it is based on personal preferences, goals and wishes that are different for every single binary options trader. Subjective quality describes that a broker must offer the assets you want to trade and the binary options types that you want to trade. Some traders prefer communication via email, and others want to know everything the same second so they rely on live chat. There are traders who prefer the smaller selection of expiry times, and traders who use advanced combinatorics in their trading plans.
That is why on BinaryOptionsStrategy.net you will find only reliable brokers, as we long to provide not only the best and most accurate information but also brokers that have a status suitable for safe trading. you can also read reviews about brokers that are not recommended (Rbinary, EmpireOption, TropicalTrade, Finpari , Tradorax , Topoption, OptionFair, uBinary, uTrader, PorterFinance, OptionWeb, BossCapital, Redwood Options, TRbinary, MagnumOptions).
Of course, some brokers close down because they didn’t have a good business plan, and not because they are bad brokers. Such brokers are: PrestigeOption, Daweda Exchange, BloombexOptions, CherryTrade, GOptions, GTOptions, StockPair, Banc De Binary, AnyOption. Some brokers decided to offer only CFDs and Forex trading, like 24option.
To find a broker that is individually right for you, make sure to check these aspects of their service:
Does the broker offer the right binary options types for you? If you want to trade high/low options, the broker has to offer high/low options. If you want to trade one touch options or 60 seconds options, make sure the broker has these option types in its arsenal.
Does the broker offer the right assets for the binary options types you want to trade? Make sure to check the assets your broker offers for the binary options type you want to trade. Many binary brokers offer a large selection of assets for high/low options but limit their selection for all other option types. If you want to trade one touch options, for example, make sure to check whether the assets you are looking for are available for one touch options, too.
Read this nifty document before you make a deposit, or even better before you create a trading account. Terms and conditions are very important part of binary options as they define all important aspects of your relationship with the broker. This document provides a great insight into your rights and obligations and defines broker’s behavior as well.
The best way of trying a binary broker is by using its demo. After trading with a demo for a while, you will know whether this broker works well for you. Demo accounts are a great feature as they allow binary traders to place their trades risk-free, as there is no money invested in them. All money on demo accounts is virtual, and so are the losses (and the profits). You can test the platform, upgrade your strategies and find out what trading looks like before making a final choice on your trade.
Some binary options demo accounts are conditioned by the deposit, but there are also demo accounts that are completely free. IQ option is one of the very few brokers that offers free binary options demo without deposit!
Of course, there are much more characteristics to a binary options broker, whether the broker offers an education center or daily market updates, for example. These characteristics are important, but their significance is mostly determined by the trader.
Knowing that government-regulated brokers are trustworthy is great. But where can traders find government-regulated brokers? Well, the easiest and quickest way to find the best selection of binary brokers our top list of binary options brokers.
We have tested all relevant binary brokers and listed the most popular brokers on our top list of the best binary brokers.
For each broker, we have listed the most important characteristics such as binary options types available, software information, and the minimum deposit. This information allows you to get a first impression of the type of broker you are dealing with. To learn more, you can follow one of our links to the broker’s website, but we suggest you to read our in-depth review on each individual broker first.
Pick the broker with which you feel the most comfortable, and get started. Keep in mind that US traders can trade only with – NADEX Exchange. NADEX is US regulated binary options exchange that will deliver somewhat different trading experience than most of the European brokers.
Having the wrong binary broker can cost you a lot of money. Sometimes, what seems to be the right broker turns into the wrong broker without traders noticing it. To avoid this problem, here’s what you have to know.
Before we address this issue it is important to understand how binary trading results are not depending on the broker only, but also on the market volatility, market trends, the trader and his stress levels , the overall trading environment as well as the additional tools and products the trader is using. Such products are binary trading software and binary trading signals.
Here are the signs that broker should be replaced with a better solution.
Of course, it is completely understandable that every withdrawal takes some time. Usually, we are talking about 7 days, depending on the binary broker. However, if you find it extremely difficult to even discuss with customer support about this matter, once you get your money, find a different broker.
There are some procedures that have to be respected in order to get a withdrawal, but also there is a certain time frame that can be considered reasonable.
Traders should always keep an eye on their trading history and know what trades they really placed. Scam brokers sometimes place trades instead of the trader and that way cause significant losses. Whether you are using binary trading software, binary signals only a broker, keep in mind that you are the one in charge of the trades.
Check your trading history frequently to make sure everything is as it should be and never accept anyone to trade instead of you. Your decision is the one that matters as it is your money.
Many binary brokers offer special managers who take care of customers. That is completely fine. But if you notice your manager is forcing you to trade, making threats and is even mad at you when you don’t want to make additional deposit – run as fast as you can! These red flags should not be ignored. IF you feel uncomfortable, trust your guts and change your binary options broker before it is too late.
These practices are often used by scam brokers who are promising high returns with no real evidence for their claims. Traders are easily deceived and put their money in the wrong hands. It is highly recommended to research all broekrs first, and then open an account and deposit. This way, you wil avoid scams in the very beginning of your career.
The key to success, in general, is anticipation combined with preparation. Smart traders therefore always know the second best broker for them. As soon as the best broker, the broker they are currently investing with gets worse, they can switch brokers quickly and without any trouble. The number one reason people stay with declining brokers is laziness. They try to avoid the trouble of finding a new broker.
Ideally, you would set aside one hour per week, or at least one hour per month, to inform yourself about new developments and changes in the broker landscape. If you find a binary broker that offers you a better service than your current broker, do not be reluctant to switch brokers. Since binary options are a relatively new investment form, new developments often happen quickly.
Avoid any false sense of attachment to a broker. Your first and only responsibility as a binary trader is to make enough money to provide for yourself and your family. If your broker gets in the way of that, get rid of it.