Choosing A Binary Options Broker
Choosing a binary options broker is one of the most important decisions they will make. How to choose a binary options broker can be a daunting task. Pick wrong and the trader may wind up losing far more than they every intended to deposit, pick right and years of fun, happy and profitable trading lay ahead. This article is a look at what we think are the most important characteristics of a good, no great, broker and how this may affect your choices.
- Our list of top recommended binary options brokers.
The first thing any trader should take a look at is regulation. The binary options industry has a sketchy regulatory framework that varies from country to country, if it exists at all. Binary options may or may not be legal to trade in your country, brokers from other countries may not be allowed or, in best cases, you live in a place with a healthy and well regulated trading scene. Places with good regulation include the EU(CySEC/MiFID), the US (FOMC), Australia (ASIC) and Japan (FSA). If you live in one of these places then we recommend only using a broker regulated to operated in your country. If you live somewhere else there is still hope. Many EU regulated brokers will accept clients from many locations outside of the EU. Same for ASIC regulation. If you can’t get access to a regulated broker there are still some decent unregulated brokers out there. When going for one of them be sure to research the broker thoroughly and go to our forum for reviews from real customers.
The next thing to consider is the platform for trading. There are dozens of different binary options trading platforms and they are not all the same. Most will have some variety of the high/low or over/under options which is the industry standard. The differences between the styles is subtle in most cases and best differentiated by the expiry available. Some brokers focus on only short term trading with expiry ranging from 30 seconds to 15 minutes, 30 minutes or an hour. Others include mid range expiry like end of day, end of tomorrow, or end of week. Top brokers will also include longer term options like end of month, next month or end of quarter etc. Traders need to be sure that the available expiry match their style of trading and that they understand how they work. Sometimes an expiry may be a set time like 11:15 AM, other times it could be 15 minutes from purchase.
Features and exotic options are another consideration. Not every body wants to trade high/low and there are other types of binaries out there. Range In/Out, also called Boundary Options, are popular because they tend to have higher payouts making it easier to get profitable. One Touch is another choice that comes with much higher risk but also much higher payouts, as much as 500% or more in some cases. Another type of trading, available on the SpotOption platform, is called Ladders. Ladders are an over/under style of trading with a “ladder” of set strikes that produces payouts in a range of 50% to 700% or more. Sell Now and Early Out features are also a plus, these allow traders to close positions before expiry in order to lock in profits or cut losses.
Read the terms&conditions, all of it, to make sure you are OK with the terms of trading. This is important to protect yourself, even with a regulated broker. The most important part about the terms is the bonus. Some brokers will give a bonus automatically, others you have to ask for it, in either case will impair your ability to withdraw money. For the most part terms for bonus money are a trading turnover of 20 to 30X the deposit amount, sometimes the deposit and bonus combined. Some brokers will only pay the bonus AFTER you clear a minimum volume, these are the best as they are a reward for trading and maintaining a balance rather than an incentive to deposit. Taking a bonus is up to you, there are arguments for and against them. On the one hand it’s free money and you were going to trade anyway, on the other are problems with shady brokers and turnover requirements. If you choose to take one keep track of all details, amounts and your turnover and do not take a second bonus until the first is cleared or you may never be able to withdraw.
Deposit and withdrawal methods are the final element in choosing a good binary options broker. All brokers will allow wire transfers and credit cards, the best will also use ewalets like Skrill, MoneyBookers, PayPal and many others. Wire transfers are the worst way to deposit and withdraw, it takes a long time and will cost you fees. A wire may not clear the account, in both directions, by a week or more and will cost at least $35 each direction. Credit cards are much easier but have their own problems. Deposits will be near instant, great if you can’t wait to start trading, but withdrawals may take longer, usually about 10 days. The real burden with credit cards is that you can only withdraw to a card the amount you first deposited because in the eyes of the card company you’re getting a refund, not a payment. After that you will have to use wires or some other form which brings us to the ewallets. Ewallets are the best choice because deposits are near instant, withdrawals may come in a matter of days if not same day, and there are few limits to size, frequency or total amounts transferred. We also recommend making regular withdrawals of your profits, even with a regulated broker, to help keep them honest.
- Our list of top recommended binary options brokers.
There are a few other things a broker may offer such as education, videos, signals, webinars and account managers but those are topics for another day.