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Choose Binary option brokers | forexing24

Binary option broker

Choose Binary option broker

Before starting Binary option trading, you must choose the right Binary option broker for you! There are some good brokers out there in Forex market but you will also find some frauds and scammers! Therefore, you must know how to separate the good ones from the bad ones.

Here are the checklist you must go through before starting Binary option trading:

  • Ease of Transactions
  • Customer Service
  • Transparency of the Trading Process
  • Regulation
  • Safety of Funds
  • Trade Conditions
  • Settlement of Claims
  • Trading Platforms
  • Secured Trading Environment
  • Financial Assets
  • Trading Instruments
  • Expiry Times
  • Payouts

Ease of Transactions

Long gone are the days when the only means of transacting on a binary options platform was via the exclusive use of bank wires. There are now options to use credit/debit cards as well as other electronic payment e-wallets such as Skrill and CashU. Skrill is one of the best methods of transacting with a binary options broker because this payment solutions provider gives a trader access to several other payment options. Skrill integrates several payment solutions and puts them all in one place. So for today’s traders who want fast deposits and fast withdrawals, it is possible to actually get a broker who will provide such flexibility as opposed to boxing you into a box with just one payment option.

Customer Service

No matter what you do online if its buying products, using services or trading binary options you will want to know that there are competent, knowledgeable staff accessible when you need them. The top brokers know that customer support should be second to none and will offer a variety of ways to contact them including Live Chat, Phone, Skype, Call Back and Email. Having a choice of your contact options means that you can feel comfortable talking to someone however you want. The level of support does differ between brokers so be sure to make this one on your checklist when deciding on your preferred binary options broker.

 Transparency of the Trading Process

Unfortunately, there is no way of knowing if a broker provides transparent trading conditions before you actually get into the trade. Even when a broker provides a demo account (which in the binary options market is the exception rather than the norm), there is still no way of fully gauging what the trading conditions are. The only way of truly finding out is by visiting online binary options review pages. Now we are not talking about the promotional review pages, but online forums which are independent and accept views of traders without restrictions. This is where the true picture of the trading conditions of several brokers is exposed for the world to see.

What are the common issues with transparency when it comes to the trading process?

  • Price of assets suddenly changing so that bets become more expensive. This is akin to the phenomenon of slippage in forex.
  • Assets suddenly becoming non-available for trading at a time when there is increased volatility and a better chance of a bet being won.
  • 60 second bets which get tipped into negative territory when at breakeven point with one second to go.

When dealing with binary options brokers who are market makers, there is really no way to avoid these issues. When dealing with a Level II broker such as a major bank, traders do get better deals but using these services are more expensive in terms of account opening capital and commissions to be paid. So for traders, it is all about getting a broker that will enable you strike a fine balance between the two extremes.

Cost of Operations

For traders, it may just come down to a choice between using:

  1. A high-end broker such as a major bank which charges more money in commissions and requires at least $10,000 in account trading capital, but which provides the most ideal trading conditions such as transparent pricing.
  2. Choosing a lower end broker with a market maker model. Cheaper to use, requires lower capital but may not deliver the best in terms of transparent pricing.
    If a trader does not have up to $10,000 to trade, then his choices are restricted and he may have to settle for the best of the market maker brokers.

Regulation

The field of Binary Options is relatively breached, both since it’s quite fresh and the different definitions of binary options trading in different countries. In the U.K. for example, Binary Options falls into the “gaming” category (however, new FCA sets of rules will be soon implemented and by mid-2016 binary options are likely to be officially considered “financial instruments” – article coming soon) while in other countries Binary options trading is “gambling”. Same goes to Forex, before regulation. The reason for that is that different states have different definitions, legal definitions, for the same industry. That’s why Binary Options is not available in all countries. In the U.S, which is stricter than other countries when it comes to people’s money, not all assets are available to trade. Some brokers don’t even allow U.S traders to deposit. On the other hand, both Europe and the U.K do allow all traders to trade all assets. Asian markets are even less strict.

The first countries to issue legal statues to Binary Options platforms and Brokers where, as always, the tax shelters countries: BVI and Cyprus. Many internet gambling and trading website companies are located in those countries, mostly in Cyprus due to its physical and legal linkage to Europe. That’s the reason why most Binary Options brokers are also located in those countries, and of course, the low to zero taxes. Moreover, most regulation processed in Cyprus effects European citizens also. The Cypriot regulators have already began processing binary options brokers appeals to regulation, inside information told me that it’s only a matter of a couple of months before the first brokers would be officially regulated by the Cypriot regulators. *Update: Now after more than three years, we can safely say the CySEC is the main regulator of the binary options industry and that other regulators across the globe are also working towards a safer trading environment. Some of the most important authorities are the Italian Commissione Nazionale per le Società e la Borsa (CONSOB) and the French Autorité des Marchés Financiers (AMF) but of course, others are starting to participate actively. As for the U.S. – it’ll take time, but some steps are being taken by the Financial Industry Regulatory Authority (FINRA). E.U regulation is only good for Europe, regulated brokers would have problems working with American customers. Hopefully the U.S. would follow the European footsteps soon, so that trading will be safer and available to anyone. We’re working on a comprehensive guide to U.S. regulation so stay tuned if you want to know how Binary Options are evolving and changing in order to enter the U.S. market through the front door.

When a broker is not regulated, it doesn’t mean it’s a scam!

The main reason why regulation is an advantage (and of course should be the main goal of the binary options industry in the end) is because when a broker is regulated it means the deposited money in kept in a safe account and monitored by a third party to ensure fair-play. Since the Binary Options industry is quite fresh (the first brokers only opened for business on 2008), most brokers don’t have the longed regulation. Nowadays, we can see many countries, From Northern America to the Far East and Australia and back to Europe, beginning to understand the risks for the growing number of traders and benefits for their own economy and therefore allowing slowly but with caution some regulation. The way I see it, Australia is currently the most advanced country in terms of regulation, but sadly those regulations do not apply in the US also, for example.

Each and every country have their own laws and restrictions, for example, many tax shelter countries with an increasing economic growth (especially in the financial markets) such as Cyprus or British Virgin Islands are now allowing regulation for some binary options brokers under their own restrictions which also applies to other countries.

Full regulation all around the world still has some way to go, meanwhile, we advice our readers to stick with the popular under regulation or on process binary options brokers since they’re considered by most experts as safer and better trusted brokers.

Regulators across the Globe

Cyprus:

Cyprus Securities and Exchange Commission (CySEC).

United Kingdom:

Financial Conduct Authority (FCA).

United States:

Financial Industry Regulatory Authority (FINRA). Commodity Futures Trading Commission (CFTC)

National Futures Association (NFA).

France:

Autorité des Marchés Financiers (AMF).

Banque de France ACPR

Italy:

Commissione Nazionale per le Società e la Borsa (CONSOB).

Australia:

Australian Securities & Investments Commission (ASIC)

Canada:

British Columbia Securities Commission,

Ontario Securities Commission(OSC)

Investment Industry Regulatory Organization of Canada (IIROC).

Germany:

Bundesanstalt für Finanzdienstleistungsaufsicht (Federal Financial Supervisory Authority) – BAFIN

Sweden:

Swedish Financial Supervisory Authority (Finansinspektionen)

Japan:

Financial Services Agency (FSA)

Safety of Funds

This is paramount when venturing into any trading business. Mechanisms exist to ensure that the broker you intend using is not a briefcase broker or a fly-by-night broker. Registration with regulatory authorities is one of such mechanisms. To get registered with a regulatory body, a broker must have an office with qualified staff, and must have a certain capital requirement to ensure that they can effect prompt settlement of traders’ claims. There are other regulatory requirements. The key thing is: use a regulated broker.

Trade Conditions

Trade conditions include but are not limited to the following:

  • Number of assets available for trading: The best brokers are those who offer assets traded on various exchanges with a wide geographical spread. For instance, a trader living in the Middle East will be more conversant with assets listed on an exchange like the Tadawul, a trader living in Russia will be more conversant trading securities like Sukol or Gazprom as opposed to trading Barclays, accompany he knows next to nothing about. You may be surprised to know that many traders in some obscure regions of the world probably heard of Barclays for the first time as a result of the Libor scandal.
  • Flexibility in expiry times: There are brokers who have their own preset expiry times which a trader must choose for a trade. This sort of rigidity will not work well for many traders. It is usually better to choose a broker that offers some flexibility in choosing trade expiry dates and times.
  • Availability of assets for trading: Beware of brokers who constantly freeze out assets and make them unavailable for trading when it looks like a market move is about to occur. Binary options trades are based on market moves, so if a trader cannot trade an asset’s move, what is the essence of the whole thing in the first place?

Settlement of Claims

If a broker cannot pay a trader profits when withdrawal claims are made, it is a clear sign of financial insolvency and you should not touch such a broker with a totem pole. TraderXP is one such broker that as at May 2012, was having such issues and yet they kept bombarding people with emails, desperately trying to get new money. Was it to settle outstanding claims? This is why it is necessary to search for broker reviews as this is the only authentic way to ensure that your money will not be used to settle outstanding claims of traders already trapped.

Funding and Withdrawal Flexibility

A good binary options broker should be able to offer a wide array of options for traders to fund their accounts and withdraw profits. However, this should not take pre-eminence over the ability of a broker to settle claims.

By the time a trader has taken the time to use these parameters in sifting out bad brokers, he will end up with a competent one that can handle his business.

Trading Platforms

There are many types of trading platforms on the market. With binary options most of them seem to be web-based. A lot of them are white labels of other companies platforms where they have taken their own branding such as logos and placed it on the platform ie. SpotOption and Tradologic platforms. That’s ok it just means they don’t have their own proprietary platform.

So let’s break it down.

Web Based or Non Web Based Platform

So what is the main difference between a Web Based Platform and a Non Web Based Platform? A web based platform is totally independent of the computer which a trader is using to trade with. Non Web Based Platform normally requires users to download a piece of software before they can start trading. What this mean is that a trader will need to trade from that specific computer. If the computer that a trader is using is a desktop, this would mean that the trader cannot trade from anywhere in the world. In other words, he is not mobile.

Mobile trading

some of the better brokers are even offering mobile trading types where you can open their platform from youriPhone or SmartPhone using a downloadable app.Your account opens so you can keep an eye on your open positions, execute a trade and even deposit funds.

Secured Trading Environment

By secured trading environment, we are talking about how safe is it for you to be conducting your trading on the internet. This security issue is not just specific to binary options trading but affects all forms of web based transactions. To be as secured as possible, you should make sure that your trading platform isֲ encrypted with a 128 bit SSL encryption key. If your transactions are not encrypted, you will subject yourself to hackers can steal your financial data.

By the way you can do searches on forums to discover people’s reactions to the security and safety of certain brokers, but overall you should take this with a pinch of salt. Often traders that lose their money can cry to try to get their funds back. Other times competitor binary brokers can leave bad comments, or scam findings. It’s not nice, but it does happen.

Financial Assets

All brokers offer a different set of tradable assets. Whether they be commodities (gold, cotton, wheat), currency pairs (EUR/USD, USD/GBP, USD/JPY), indices (FTSE-100, DOW Jones) or stocks (Apple Inc, Google Inc, BP). Making sure that the broker you choose has the assets you want to trade in is an important factor.  All brokers will have an ‘Asset Index’ on their site where you can find this information and if you can’t find them there be sure to check our binary options broker reviews as we have listed them so you can quickly and easily compare between them.

Trading Instruments

Many brokers will have the same set of trading instruments but then there are a few that like to showcase a few different ones. You get the standard Call/Put binary options as well as One Touch and Boundary across many but then there’s Pair Options, which are becoming more widely adopted across the industry. Finding the right ways for you to make your bets is essential to making sure that you reduce your risk and increase your potential for making profits.

Expiry Times

Most binary options brokers offer the regular 15min, 30min, 1hr, 24hr and weekly option expiry times. Some have chosen to get on board with 60 seconds trading. Depending on your experience it is probably best to stick to around 30 min to 1hr trading and leave the 60 seconds trading to the more advanced trader. Knowledge of the assets and financial markets you are trading in is always beneficial.

Payouts

Payouts are varied in the binary options market. Some brokers even provide what is known as “variable” options, which allow a trader to exit a profitable binary options trade even before the expiration date. Some brokers also provide payouts as much as 80% per trade. The fact is that we are in the business of trading to make money, and if you can find a broker whose conditions make it more favorable for you to do so, then you need to grab the opportunity with both hands.

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Binary Option Kindergarten

All Lessons in Part 2: Parties Involved in Binary Option

Lesson 1: Choose Binary option brokers
Lesson 2: Binary Options Bonus
Lesson 3: Binary options trading signals
Lesson 4: Binary option robots and software

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David Richard

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