Binary options trading offer the trader a superb opportunity to make significant profits with a simple and accessible approach to trading. However, there are certain steps to be made in order to lay foundation for the successful venture. At the very base of achieving profitable trades is choosing the right broker to execute your trades. Selecting a binary options broker that will meet your needs is an important step in the trading career. This decision will have a significant influence over your overall trading success.
When researching options brokers available on the market, it is important to look at these seven fundamental elements:
- Markets available for trading
- Variety of trading instruments
- Payouts and bonuses
- Deposits and withdrawals
- Trading software
- Customer service
You can find out more by clicking on the toggles below. It really pays off to spend some time with familiarizing yourself with the terms and specifics for each category.
This is the easy one – you should only open your trading account with a regulated broker, period.
Proper regulation ensures that risks connected to shady practices by brokers are reduced to the bare minimum. For the binary options market, regulation ensures that your funds are safe and that you are paid your trading profits accordingly.
Always check before you deposit any funds to your trading account if your broker complies with the recent regulations. You can find the details about the license in the broker’s company website – license number and the name of the regulatory body who issued it.
Typically most of the brokers are regulated by the Cyprus Securities and Exchange Commission (CySEC). CySEC is the most widely recognized regulator of binary option brokers. Registration in Cyprus by CySEC allows the brokers to operate in all European union member countries under the provisions of the European Parliament’s Markets in Financial Instruments Directive (MiFID).
ASIC in Australia is now regulating binary option brokers for Australian traders.
Unfortunately, No CySEC regulated brokers are able to accept binary option traders from the United States.
Markets available for trading
You are looking for a decent range of markets and trading instruments to choose from. This is vital for the purpose of diversification – spreading your trades across non-correlated assets and markets to reduce the risk of sudden change in one market. You do not put all your eggs in one basket, right?
As far as the markets are concerned, you need to have a choice of:
- Foreign exchange (forex)
The most tradable currencies: EUR,USD, GBP, AUD, JPY, CHF, CAD
The most liquid and important commodities are: gold, silver, crude oil, corn, sugar, coffee, platinum
You want to get involved only with the most actively traded stocks, such as AMZN, GOOG, IBM, AAPL, FB, SCCO, EBAY, QQQ and such to ensure the smooth transactions and liquidity.
Indices enable you to gain exposure to the breadth of instruments making up the index in one trade.
Here belog Dow Jones Industrial Average (DJIA), S&P 500, NASDAQ, DAX
While it is great to be spoiled for a massive choice of different markets, you need to stick to those most liquid ones (where the best volume of trades is at the moment). This is to ensure the best prices are available and no slippage (difference between Ask and Bid) will eat to your profits. As a rule of thumb, you need to stay away from the exotic assets – for example small currencies (Turkish Lira, South African Rand and so on).
Types of options
There are a number of different types of binary options available for trading. This can seem a little confusing to a new trader and indeed some experienced traders.Traders can choose the method most suited to their trading needs. Experienced traders choose different methods depending on the current market conditions and how they expect the markets to react to external influences, announcements, results, trends or other conditions.
- High / Low option:
Decide whether the asset price will go UP or DOWN.
- One Touch option:
Decide whether the asset price will TOUCH or will NOT TOUCH the target price.
Decide whether the asset price will stay in a target price RANGE or not.
- Short Term:
Open 60 Second, 2 Minute or 5 Minute trades with the Short Term Option.
Payouts and bonuses
Binary options trading can be a very profitable form of investment and it can be even more profitable if you find a broker that offers higher returns and payouts. Returns usually range from 70% to around 80%. However, if you find a broker that offers higher payouts than this and who still complies with the regulation and the rest of your checklist, you will get a big advantage in term of the overall profitability.
It’s also important to check if the respective binary options broker offers high payout rates in case of one-touch and boundary options. In most cases like these, payout rates should be around 400%.
Bonuses are the additional factor that makes trading with binary options so profitable. The bonus you get with your deposit gives you the opportunity to test your strategy without the fear of losing your own money. It is a kind of a cushion that gives a layer of security for your trading account.
Why is the broker offering the bonus in the first place? It is one of the marketing tools brokers use to get people to sign up with them, The competition between brokers is fierce these days and the resulting war between them has a winner – the trader who is able to benefit from the bonus if he/she uses them smartly.
Deposits and withdrawals
In regards to deposits, the most important issue is that of the number of depositing tools provided. The most important payment tools that should be available at every financial trading broker are credit card deposit, wire transfer deposit and PayPal deposit.
Regarding withdrawals, the most important issue is the processing time related to payments. There are some brokers out there who will delay the withdrawal of the trader’s profits for no legitimate. This is a shady practice but fortunately internet provides an opportunity to do a background check on the broker beforehand. If there is a consistency in negative reviews for the particular broker, the best advice is to move your business elsewhere.
Being able to withdraw money from your account is always a priority, so be sure to check any specific details that the brokers define like processing and payment time frames as these can differ per payment method and broker.
The trading platform is your interface for placing trades and the market analysis. Therefore it must be reliable, easy to navigate and fast.
You do not want to get lost in too complicated software or get frequent re-quotes due to technical glitches on the server side. Good trading platform lets you execute your trader seamlessly and fast. It should be also well designed on the visual side – you will be looking at it a lot and you certainly do not want to stare at something that is a decade old design wise.
The platform is supposed to also provide traders with alternatives for trading on the go. With the world getting more and more mobile, the leading binary trading systems are those that have developed mobile trading platforms so their users can manage their trades from the convenience of their tablets and smart phones.
You should be choosing the brokers with a high-lever consumer support. The criteria to be considered here are:
- What are the business hours of the customer support? (preferably 24/7)
- How can you contact the customer services representative?
- What is the amount of languages offered by the trading platform?
- How quick are they to respond?
The level of the customer service is often a key indicator as to the quality of the company. You can test a broker before you open the account and deposit funds. Send them an email, and see how quickly they are to respond. Get on the live-chat and ask them a question about their trading accounts or welcome bonuses. From these interactions you can get an idea of how serious the broker is and how much they value their clients.