Binary Options Brokers – Top 10 Comparison 2016

We have compared the best binary options brokers and platforms, and created our top list here. Every broker and platform has been reviewed by us, and to help you find the best binary options platform, our comparison list shows which brokers came out on top.

You can sort the list using payout, minimum deposit, bonus offers or if the brand is regulated or not. You can also read full reviews of each broker, helping you make the best choice. Below the list of brokers is some advice on how to pick the best trading platform for you, as this will often come down to your personal requirements and needs.

Binary Options Brokers in the United States United States

How to Compare Brokers

In order to trade binary options, you need to engage the services of a binary options broker that accepts clients from the United States. Here at binaryoptions.net we have provided a list with all the best comparison factors that will help you select which trading broker to open an account with. We have also looked at our most frequently asked questions, and have noted that these are important factors when traders are comparing different brokers:

      1. What is the Minimum Deposit?
      2. Are they regulated and with what regulator?
      3. Where can I open a Demo Account?
      4. Is there a signals service, and is it free?
      5. Can I trade on my mobile phone and is there an app?
      6. Is there a  Bonus  available for new trader accounts? What are the Terms and
        conditions ?
      7. Who has the best binary trading platform?
      8. Which broker has the best asset lists?
      9. Which broker has the largest range of expiry times (60 second, end of day, long term?
      10. How much is the minimum trade?
      11. What types of options are available? (Touch, Ladder, Boundary, Pairs etc)

We cover as many of these comparison factors as possible in our list above, but we go into much more depth within each review.

Regulated Binary Options Brokers

Regulation is a key factor when judging the best broker. Unregulated brokers are not always scams, or untrustworthy, but it does mean a trader must do more ‘due diligence’ before trading with them.
Leading regulatory bodies include:

  • CySec – The Cyprus Securities and Exchange Commission (Cyprus and the EU)
  • FCA – Financial Conduct Authority (UK)
  • CFTC – Commodity Futures Trading Commission (US)
  • FSB – Financial Services Board (South Africa)

There are other regulators in addition to the above, and in some cases, brokers will be regulated by more than one organisation. This is becoming more common in Europe where binary options are coming under increased scrutiny.

Regulation is there to protect traders, to ensure their money is correctly held and to give them a path to take in the event of a dispute. It should therefore be an important consideration when choosing a trading partner.

Bonuses

Both sign up bonuses and demo accounts are used to attract new clients. Bonuses are often a deposit match, a one-off payment or risk free trade . Whatever the form of bonus, there are terms and conditions that need to be read. It is worth taking the time to understand those terms before signing up. If the terms are not to your liking then the bonus loses any attraction and that broker may not be the best choice. Some bonus terms tie in your initial deposit too. It is worth reading T&Cs before agreeing to any bonus, and worth noting that many brokers will give you the option to ‘opt out’ of taking a bonus.

Using a bonus effectively is harder than it sounds. If considering taking up one of these offers, think about whether, and how, it might affect your trading. One common issue is that turnover requirements within the terms, often cause traders to ‘over trade’. If the bonus does not suit you, turn it down.

Demo Accounts

Binary options demo accounts  are the best way to try both binary options trading, and specific brokers, without needing to risk any money. You can get demo accounts at more than one broker, try them out and only deposit real money at the one you find best. It is also possible that it is useful to have accounts at more than broker. For example, payouts for two different assets might be best at different brokers. You can shop around, and use whichever account has the best payout for that asset. Demo accounts offer the best way to try out a brand, risk free.

Low Minimum Deposits

If you are looking to get involved with binary options for the first time, low minimum deposit requirements may be of interest. For traders just looking to try binary options, a low minimum deposit broker might be best. A small initial deposit keeps risks low. Minimum deposits start at just $5 and there are a growing number of brokers offering low minimum deposits – “low” would be any minimum  under $50.

Likewise, all brokers will have a minimum trade requirement too. These can vary greatly.  Minimum trade figures range from $1 to $25  – which is a large difference if a trader plans to trade frequently. For some traders, this might be less of a factor in terms of finding the best broker for them, but for others it will be very important.

Payouts

One element many traders use to find the best binary options trading account, is the payout percentage on offer. This is not always a simple comparison however. Payouts will change based on the asset being traded, and the expiry time of the option. In addition, payouts will change as the broker manages their own risk. So if one broker was originally the best price, things may then revert and mean that another now has the top payout.

So the most an investor can do, is to check the payouts for assets, and expiry times  they are most likely to make, and judge which brand offers the best terms most often. Demo accounts are good when researching payouts on specific assets and trades.

Exchange traded and over the counter brokers will have different payouts – and they will not be easy to compare. In general, exchange traded options offer superior value. Nadex are one example of an exchange.

So as you can see, finding the best trading account and broker is not always easy – but it is worth noting that you are free to move between brokers whenever you like. So even if an account turns out to be poor, it is easy to up sticks and find a new trading firm. Likewise, a trader could have multiple accounts, and open trades at the broker with the best terms for that particular trade.

US Regulated Brokers

In the US, the Commodity Futures Trading Commission (CFTC) have only licensed two operators - Nadex and CBOE - to provide binary options trading to clients in the USA.

Brokers based in Europe will not generally accept US residents as clients, as doing so can result in large fines. Some off-shore providers will accept US citizens as their regulatory status permits them, but the CFTC may ultimately step in if they deem it necessary.

CFTC regulated brokers:

Which is the Best Binary Trading Platform?

Naming the best trading platform is not easy, simply because trading platforms are normally a question of personal taste. One user might like a simple layout, while others might need a lot of data on screen all the time.

However, platforms do have different levels of quality, both in terms of ease of use, and features. Broadly speaking, brands which offer  Contracts for Difference  in addition to binary options, deliver a more feature-rich trading platform.

So the likes of  Nadex and ETX Capital, will deliver a very professional trading platform. MetaTrader integration is also normally provided at the more professional brokers. This difference in quality is evidence of the maturity of binary options as a product, but binary brands will catch up very quickly.

How do Binary Options Brokers Make Money?

Binary options brokers make money via one of two business models:

  1. As a counter-party, ensuring an ‘over round’ via payout percentages. Known as ‘Over the counter’ (OTC)
  2. Via a spread or commission on an exchange traded model

People who have experience of other forms of trading, and are now approaching over-the-counter (OTC) binary options brokers for the first time may find themselves asking the question: “Where is the commission?”.

With OTC binaries however, there is no commission. In theory, the term ‘brokers’, is not correct. Binary firms are not arranging a deal or acting as a middleman; What they are, is the counter-party to each of their customers’ positions. So there is no fee or commission for the trade. Instead, each customer is essentially betting against the house. Where brokers have both sides of a trade covered, they have a handsome margin. Where they do not, the payout still gives them a level of protection. In certain circumstances, the broker will also hedge it’s own position to mitigate risk.

Those companies (Nadex, for instance) that trade binary options via an exchange operate much more like a ‘broker’. Unlike the OTC market where the platform is the counter party, with exchange traded options, the broker is the middleman – matching buyers with sellers and charging a commission. There is far less risk involved for the broker, and therefore generally better returns per trade for the trader.

Who Regulates Brokers?

There are a number of regulatory bodies that monitor binary options:

  • CySec – The Cyprus Securities and Exchange Commission
  • MGA – Malta Gaming Authority
  • FCA – Financial Conduct Authority
  • CFTC – Commodity Futures Trading Commission

In Europe, CySec regulation can be used to ‘passport’ around Europe. So a CySec regulated firm can operate in the UK, Germany or Spain for example. There are however, moves for domestic regulators in each each country to take greater control of their own affairs.

Around the globe, regulation is normally organised within the specific country, so CFTC in the US or the FSB (Financial Service Board) in South Africa for example. This offers consumers the best level of protection.

Regulators are now taking a much harder line on binary options firms that break financial rules or operate dishonest schemes. The landscape will change quickly over the coming months, and the industry will be treated in a similar fashion to other investments.

Should You Use Multiple Brokers?

There are some very good arguments for having more than one binary trading account:

  • Brokers suit certain trades. Different brokers will suit different trading styles, or trade types. So one broker might be excellent for shorter term trade types, and have great payouts on forex pairs. But that same brand may be slightly less good when it comes to offering boundary trades or indices payouts. If a rival had a full set of long term expiries with great payouts, and lots of choice of boundary trades – it makes sense to have accounts with both, and place trades with the broker that offered the best deal for each trade.
  • Demo accounts. Multiple demo accounts makes perfect sense – you want to try as many brokers and trading platforms as possible before deciding where to trade.
  • Reduce risk. Accounts at more than one broker protects you from any issues with a particular firm. From issues as serious as insolvency, to smaller things, like website downtime or a market being closed – multiple accounts reduces your risk of being affected by any hardship a broker might face.
  • Multiple offers. Each sign up can mean a new bonus, so it might be worthwhile taking up more than one account to receive all the offers. As ever, read the terms – and also note that on occasion, larger deposits might mean larger bonuses – so splitting them may not be the best choice.
  • Spread winnings. Some brokers may look for winning traders on their books, with a view to restricting their trading, perhaps limiting trade size – or worse. While this threat is thankfully small, multiple accounts means spreading the winnings out. Most brokers will search for “winners” based on total profit rather than strike rate, so hiding the volume across broker accounts can help you stay below their radar.

Exchange versus OTC (Over the Counter) Brokers

Exchange Brokers

A broker that offers an exchange is much closer to a traditional ‘broker’ than OTC brokers. An exchange performs the job of ‘middleman’. They will match a seller of an asset, with a buyer of the same asset, and charge a commission for putting the deal together. The market itself will decide the prices – if there are more sellers than buyers, the price will drift down until demand rises. If there are more buyers than those willing to sell, the option price will rise.

A broker operating an exchange does not mind who wins and who loses. They take no risk on the trade themselves (unless the traders are trading on credit). The broker will make their commission on the trade regardless of the outcome.

Due to this reduced risk for the broker, the returns for a winning trader are generally larger. Commissions are usually small relative to the size of the trade, meaning they do not impact the payout too much. Other benefits include the fact that stop losses can be applied, and also that trades can be closed at any time (to take a profit or reduce losses).

The complications with exchanges, comes from the structure. An exchange traded binary option will “trade” somewhere between 0 and 100. Where 0 is the figure used where an event did not occur, and 100 where it did. If the current price is currently 30, a ‘buyer’ would risk 30 times his trade size, to potentially win 70. A ‘seller’ therefore, would risk 70 to win 30. While not a complicated equation, it is slightly more complex than the straight forward over the counter option.

OTC (Over The Counter) Brokers

The most common type of binary options broker is the Over the counter (OTC) broker. This type of firm is not really a ‘broker’ at all. They are the counter-party to one side of the trade. So where a trader opens a position, the broker will win or lose money, based on whether the trade wins or loses. Only where the broker has another trader who has made the exact opposite trade, will they have assured profits.

Due to this increased risk, the brokers will offer a lower payout which mitigates some of the risk they are taking. It is therefore likely to be lower than an exchange traded broker. Some firms will also have built in ‘hedging’ mechanisms to reduce risk further. In some cases, one side of trade might be made unavailable if liabilities get too large.

The simplicity of binary options is retained with OTC brokers. They have also made great strides in competing with exchanges by offering ‘cash out’ values for options, allowing traders to close positions early, and set up stop losses. Once those features become common the gap between OTC and exchanges will get smaller. For now, traders are better off trading on an exchange – but might be advised to learn the differences via demo account.

Have you had a problem with your binary options broker? Submit a complaint

Payment Methods

If you are looking for brokers that support a specific payment method:

All of the factors covered above will ultimately affect the way a trader plays the market, and therefore, their profitability. The ideal situation is to get a binary options broker that offers:

  • Several financial assets spread across several markets
  • Offers a reasonable bonus with a good payout approaching 90%
  • Offers flexible expiration dates without boxing traders into very long expirations.

For more information you can watch this video which outlines some tips on how to open an account and deal with a binary options broker:

 

Binary trading will only be enjoyable, and profitable, if you are trading with a reputable binary options broker. You also need to choose onw that suits your trading style best – only you will know what that is. Read the above binary options broker reviews carefully before making that crucial trading decision, but remember you are not tied in to any single broker, and can pick and choose.