Binary Options Trading Guide for UK

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Contents

Binary Options Trading in the UK

Everything you need to trade binary options successfully.
Research. Find a broker. Trade.

For UK investors, trading with binary options is a tax free form of investment with very quick results – minutes rather than months or years. The word binary is used because there are just two possible outcomes – either the trade is successful, and the investor gains a significant return (usually between 75% to 95%) – or the trade is unsuccessful, and the full investment amount is lost.

During 2020 however, European regulators have prohibited the sale or promotion of binary and digital options to retail investors in the EEA. This includes the UK. Only professional clients or professional accounts are now permitted to trade binaries with regulated firms. A professional trader must meet 2 of these 3 criteria:

  1. Open at least 10 trades of ‘significant size’ per quarter (brokers define ‘significant’ differently)
  2. Own a portfolio or trading capital of €500k or more
  3. Have worked for 2 years in the financial industry, or have experience with complex trading instruments.

Unregulated firms may not adhere to the new ESMA rules, and will continue to accept UK traders. This does increase risk for the trader, and makes finding a trustworthy broker even more important. It is however, possible to find brokers regulated outside of the EU that will accept EU traders, and are still regulated by respected bodies.

So ‘binaries’ (or ‘digital options’) are a high risk form of investment, but that risk is offset by the potential for very high rewards with minimal waiting time. Most brokers are regulated, offering consumers the sort of protection they would expect while using financial instruments of this type. Returns from binary trading are also currently viewed as tax free by HMRC.

Top Brokers in the UK 2020

Min Deposit Min/Max Trade Payout Bonus Demo Regulated App
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£50 £5 – £1000 85% 30% Review » Visit

What Are Binary Options?

Binary option meaning – Binary options are a derivative, traded on any asset or market. For example a stock price (Twitter, AstraZeneca etc), indices (FTSE, DAX, Nikkei), commodity value (gold, crude oil) or foreign exchange rate (EUR/USD, GBP/USD). Even cryptocurrencies such as Bitcoin or Ethereum can be traded.

The main difference between more traditional stockbroker trades, and binaries, is the clear identification of risk and reward before the trade is made. An investor knows exactly how much is at risk, and crucially, also knows the exact value of any potential returns. No calculator, formula, or maths degree is needed to work out profit and loss on a binary option.

This structure of the trades is what has led to the terminology of “all or nothing” , or “cash or nothing” being widely used.

The only decision for a trader is if the value of the underlying asset will rise or fall. The degree of the price change is not important. The trader is purely speculating on whether the price will be higher or lower than the current price, at a specific time in the future.

Short term price movement can be triggered by news stories or headlines, quarterly statistics, buyout rumours or even global security fears.

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  • Binarium
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  • Binomo
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    Only for experienced traders!

Trading binary options offers a Yes/No proposition. Although there are variations on the High/Low option, this type of investment will always have a black and white, Yes/No, binary outcome. Where trades can be closed, redeemed or sold mid-trade, payouts have absolute figures of 0 and 100 and prices move between as the market dictates – until closure.

Expiry Times

Every binary option is offered with an expiry time. This is the point at which the trade will end. So the price at expiry is the one that will decide whether an option has won or lost (“in the money”, or “out of the money” in binary jargon). These expiry times can vary from just 30 seconds or 1 minute, (known as ‘turbos’), to a full day (‘end of day’), to even longer in some circumstances – rolling up to a full year.

Generally however, a binary option is used for short term trading – usually under 30 minutes (5 minutes are the most popular). Longer term expiries – and the element of fixed risk – does make them useful tools for hedging or diversifying other holdings.

Payouts change dependant on the asset and the expiry time. Differences can be significant so traders looking to use binary options long term, need to shop around to find the best payout for the asset class (or classes) they intend to trade.

Video Tutorial – Binary Trading Explained

Watch this video tutorial of the IQ Options platform, which shows how to place a binary trade:

Legitimate Investment

Although binary trading is in a period of growth, it remains a relatively unknown product. Over time, this is likely to change. As digital options (as they are also known) offer a very simple fiscal arrangement. They are a legitimate way to play the financial markets.

Binaries offer a clear trading choice, but they are also high risk / high reward. There is however, no leveraged exposure with a binary trade, so the risk and reward ratio is also simple to manage.

Are Binary Options Safe?

Binary options suffer from a poor reputation. This is basically a result of dishonest and irresponsible marketing and cyber crime, more than an issue with the product itself. With tighter regulation, and a better understanding by the wider public, these options can – and will – move into the financial mainstream. Which was where they originally developed.

While FCA regulated agents and businesses may still have their flaws and faults, they are not fraudsters. The angry emails we receive focus entirely on unregulated brokers promising “easy money”, or a route to “get rich quick”. Read our section on avoiding scam brokers below.

Advantages Of Binary Trading

Many of the advantages of using binaries are related or linked. Here we list some of the benefits to using this form of investment – not just for the retail investor, but also to the market makers or brokers:

Risk management

Managing risk when trading binary options is clear cut. The amount of the trade is the full amount that is at risk. This clarifies the risk not only for the trader, but for the broker too. Their pricing model reflects the accurate knowledge of their liability.

Trading Fees And Spreads

The certainty of risk provides a solid foundation for brokers to work within and manage. This leads to low trading feed, tighter spreads and higher payouts. To protect themselves further, they may use a liquidity provider or hedge their own positions. The expensive broker costs of clearing houses becomes unnecessary.

Leverage

Leverage, or gearing, is not generally available with binary trading. This benefits the broker again, as it means all trades must be funded in full. In other words, no trader can default on a trade. With leverage, if things go wrong, there is a real risk of the broker not being paid. This is a big difference vs spot forex or spread betting.

Trader Choice

Layers of complexity can be added to the standard fixed payout option. From a ladder option, to boundary trades or more advanced ‘nesting’ of options to create ‘strangles’ etc – binaries can be used in a huge variety of ways.

A binary trade offers the greatest level of flexibility. They even provide a mechanism to speculate on a market remaining flat, arbitrage, or to take a view on the trade volume of the underlying asset.

Robots and Auto Trading

Auto trading robots (‘bots’) often rely on signals and algorithms triggered by price graphs. Again, these robots attract many of the undesirable operators, and the automatic nature of the trades increasing risk further. New traders should be especially careful. A large amount of ‘due diligence’ is required when trying to find the right robot service.

An alternative approach is for traders to build their own robots using their own entry points. A growing number of brokers now offer traders the ability to put their own trading robot or program together, using simple tools. These hacks allow combinations of technical analysis settings, such as moving averages, Bollinger bands or RSI / MFI patterns, that then open trades when those criteria are met. It has made binary options ‘pro’ robots available to everyone.

Top Robots

Robot Name Info
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Scams

Binary trading itself is legitimate, and not a scam. There are however, brokers and signal providers that are untrustworthy and operate scams or frauds.

It is important not to write off the concept of binary trading, purely based on dishonest brokers. These fraudsters continue to drag down the image of this form of trading. Regulators, and rule makers are slowly starting to get to grips with these operations and the industry is being cleaned up. If you want to complain about an operator to our watchdog, please let us know via our Contact Us page.

Avoid scams with these simple checks

  • “Make money online” or “Get rich quick” marketing. This is a huge red flag. Binary options are a high risk / high reward investment vehicle – they are not a get rich quick scheme and should not be sold as such. A “no loss” system does not exist. Operators making such claims are being dishonest. A binary options millionaire is almost certainly fake. The Brit Method is one high profile example – swerve it.
  • Cold Calls. Reputable brokers will rarely make cold calls – they do not need to. Cold calls are from untrustworthy brokers. This could include email contact.
  • Bonus Terms and Conditions. If taking a bonus, read the terms and conditions. Some terms include tying in any initial deposit or capital until turnover requirements are met. The deposit is still the trader’s money – honest brokers will not lay claim to it before any trading has been done. The better brokers will also offer the option of cancelling a bonus if it does not suit the trader. CySec, the leading regulator, has recently banned the use of deposit match bonuses as they believe it leads to clients ‘over-trading’.
  • Account Managers. Be very wary of any account manager, tipster or ‘guru’ wishing to trade on behalf of clients. There is an obvious conflict of interest – they have jobs with the broker. These managed accounts generally encourage traders to trade with figures way beyond their means. This “upselling” is very harmful. The intensely risky Martingale system is a frequent tactic, and results in many quickly blown balances.
  • Celebrity Endorsement. Sporting legends or team sponsorship is usually fine – and verifiable. Where this backing should worry rookie investors, is where the name of a mega rich billionaire or credible source is ‘pushed’ as a selling point. Warren Buffet, Richard Branson and Martin Lewis have all been presented as backing certain propositions when they actually have zero involvement – other than to sue the perpetrators for damages via a lawsuit.
  • A trader must know their broker. Seems obvious – but some operators ‘funnel’ clients to a brokers of their choosing, not yours. If the merchant demands new clients sign up with a particular broker, or they pick the broker from a limited list – do not proceed. A trader should know the broker they are going to trade with!

Being aware of the above methods should help those new to binary trading to avoid the less responsible brands. Improved regulation and more awareness should hopefully reduce these types of complaints. This in turn can allow binaries to move forward.

Already fallen victim? The services of MyChargeBack.com might be of help.

The recent ban of binaries in the EU is ill-thought out, and could well end up pushing more traders towards scams.

Trading Strategy

Our strategy pages covers over 20 known systems, drawn from a range of forum and club chats, plus expert tips and advice. From high risk Martingale, to intricate systems like the Rainbow. We also cover more specialist subjects, like forex , technical analysis, the best price action indicators, trading signals and winning strategy. All this is aimed to help you gain an edge, and win.

Signals

Signals are an alert, sent to traders. They are designed as a trading tool, helping traders to spot opportunities. They can be communicated via a range of methods – email, SMS or from a live signal website or group. Much of the irresponsible marketing associated with binary scams is linked to signals – or auto trading robots utilising them. There are some very good providers out there too. However, in general, learning how to trade binaries is a safer route than using signals to compensate for a lack of trading knowledge.

Do signals work?

Sometimes, but rarely in isolation. Some providers deliver a combination of education alongside signals and that represents a good mix. Traders must be able to fully assess a signal before they can judge the quality of them. We also highlight some of the best providers on the signals page.

Brokers And Reviews

A binary option can be used in a number of ways, and across a huge array of commodities and markets. This means finding the best dealer, best account, or best trading platform, really depends on the needs of the individual investor.

For example, some brokers may focus on forex (foreign exchange) and trading the Japanese Yen, Euro or sterling. Others may be strong on commodities and only offer a handful of FX markets. Likewise, the returns (or payouts) may differ between asset classes, and with these varying by as much as 25%, it is easy to see the importance of making the right selection.

Payment Methods

White label platform providers such as SpotOption, Tradologic or TechFinancials also dictate what products the host site can offer, so a proprietary broker with a bespoke design might be preferable. Payment methods merit some thought – if traders want to use Skrill, Paypal, Neteller or Wire transfer, they need to check the broker delivers that.

Trading Apps

Mobile trading apps delivered by brokers or binary agents can vary in quality too. Some specifically program for the features of specific models, like iPad or iPhone. Others ensure cross platform compatibility, catering for android, blackberry and windows tablets and devices. Some traders may have tailored demands for any hand held app, others less so.

Trade size limits may point some investors either to, or away from, certain trading accounts. Some brokers offer minimum trades of just £1, while others cater for investors willing to invest £200,000 in a single trade. So every investor needs to consider their own trading style before deciding to open an account. Even working out the ‘cheapest’ broker is not as easy as it sounds.

How To Compare The Best Trading Platforms

Our comparison table delivers a quick summary of the key points when comparing brokers. Our detailed reviews then allow potential new users to assess some of the finer points that might confirm their decision. Here is a list of some of the vital comparison points for brokers;

  • Payouts
  • Over the counter or exchange traded options
  • Minimum deposit (Plus deposit and withdrawal methods)
  • Minimum trade / Maximum trade
  • Trading platform
  • News events feeds
  • Asset lists (Extended lists might include ETFs, bonds and trusts)
  • Charts / Charting tools (Graph types, forecasting tools)
  • Expiry times available
  • Regulation (FCA, CySec, CFTC etc)
  • Range of options available (Boundary, Ladder, High Yield etc)
  • Welcome Bonuses
  • Complaints / Customer feedback
  • Account Types and Benefits (VIP, Basic, Platinum)
  • Plugins and Integration. (E.g. MT4 / MetaTrader4 / MetaTrader 5)
  • Promo perks, Competitions, Leaderboards or Contest Prizes

Some points might be more important to certain traders than others. So finding the “best” will be an individual choice for each new client. A speculator taking a position on the monetary policy of the Bank of England or ECB might be best served by one broker, while the person looking to bet on growth in the Apple, Facebook or Vodafone share price might want another.

Demo Accounts

Most top brokers offer demo trading accounts. These allow new clients to try the services on offer. They can see if the range of markets and investment scales suit them and only proceed to a funded account when they are happy that the right trading account has been found.

Those brokers that do provide practise or virtual balances, have confidence in their trading platform. They are prepared to let new traders see it, and try it out, risk free. The review for each broker will include whether it offers a demo in the “Key Details” section.

Binary Options Trading

During the early days, Binary Options was a comparatively unregulated financial market that only catered to an elite group of investors. However, since 1971, the Chicago Board of Trade revolutionized the way binary options work by founding the Chicago Board Options Exchange, the world’s first and largest options trading platform. Slowly, binary options began to take prominence in the Euro zone and UK became a home to one of the largest binary options client base. The relative ease of rules and guidelines led to the growth and establishment of binary options in UK.

Binary options incorporate a wide variety of assets that include stocks, equities, indices, Forex, and Commodities. Over the years, the range of services provided by binary options markets evolved to include more assets, larger liquidity, and lower fees, which resulted in garnering a huge amount of interest within the general public. Binary options are more commonly associated with the currency markets, even though it includes a range of other options such as stocks, indices, and commodities.

At Binary Options Trading, our primary motive is to help traders bypass several pitfalls associated with investing in a risky and volatile market. There are several issues that a trader will face while dealing with binary options that include scam brokers, low-quality signals, lack of market knowledge, the psychological effect of trading, and more. Binary Options Trading is committed to enhancing your experience by offering a vast resource of online information that will help you to become an informed and successful trader.

Binary Options & The Financial Markets

Over the past few decades, the financial markets have seen numerous people making a fortune through price fluctuations while the market has also accomplished itself as one of the riskiest investment ventures of all time. There are two highly popular ways of trading the financial markets, by trading Binary Options, or through conventional trading such as stock trading and Forex trading. Both work on the same principle of making or losing money according to the price variation of an underlying asset, but the financial workings of the two types of investments are entirely different to one another.

Binary options trading rose to prominence by 2008 when major regulatory organizations started regulating binary options brokers due to the vast popularity of binary options. CySEC is considered to be at the forefront of revolutionizing binary options trading by being the first major regulatory agency to regulate modern day binary options brokers. Binary options are seen as one of the most attractive investment opportunities due to their open market attitude, as traders can calculate their risk and reward even before placing a trade.

Binary options trading does provide several undue advantages over traditional forms of investing such as Forex and equities, and some traders also find binary options to be much better in terms of excitement and profit factor. UK is one of the largest markets for binary options trading, and several binary options brokers in UK choose to base their operations in UK to cater to a global market.

Review

Broker Early Expire Average Return Min Deposit Min Trade Rating More
✔︎ 90% $ 10 $ 1 ★★★★★
× 85% $ 200 $ 20 ★★★★

Review

Broker Early Expire Average Return Min Deposit Min Trade Rating More
✔︎ 90% $ 10 $ 1 ★★★★★
× 85% $ 200 $ 20 ★★★★

Review

Broker Early Expire Average Return Min Deposit Min Trade Rating More
× 85% $ 200 $ 20 ★★★★
✔︎ 90% $ 10 $ 1 ★★★★★
Broker Early Expire Average Return Min Deposit Min Trade Rating More
× 85% $ 200 $ 20 ★★★★

Review

Broker Early Expire Average Return Min Deposit Min Trade Rating More
✔︎ 90% $ 10 $ 1 ★★★★★
× 85% $ 200 $ 20 ★★★★

Review

Broker Early Expire Average Return Min Deposit Min Trade Rating More
✔︎ 90% $ 10 $ 1 ★★★★★
× 85% $ 200 $ 20 ★★★★

Review

Broker Early Expire Average Return Min Deposit Min Trade Rating More
✔︎ 90% $ 10 $ 1 ★★★★★
× 85% $ 200 $ 20 ★★★★

Review

What Is The Fundamental Difference Between Binary Trading And Other Markets Such As Forex Trading?

Binary options work on the principle of betting on the movement of an underlying asset in any one direction. Binary option revolves around the binary system, which deals in 0s and 1s. Therefore, binary options can be considered as a platform that provides only two options for the trader; enter the market at a fixed price and expect the underlying asset to either go up or down.

To explain the fundamentals of the binary options in simple terms, let us consider the price of the most traded currency in the Forex market, the EUR/USD pair. Let us assume that the current price of the EUR/USD pair is 1.2500. A binary options trader is offered the chance to predict the movement of the currency (call or put) within a predetermined expiry time. The expiry period of options can vary from as low as 60 seconds to a day or a week, and is entirely dependent on the binary options broker. Once a trader chooses their direction, they will be required to bet an investment amount, which can range from $5 to $5,000, which is once again dependent on the broker.

After placing the bet, both the trader, as well as the broker, will wait for the expiry of the option, and the price at the expiry will be taken into consideration. If the price of the EUR/USD closes at 1.2501 or above, and the trader has bet on an upward movement, the trader wins a percentage return on his capital plus the investment amount. This should naturally be anywhere between 40% and 90%, but if the price of the currency pair drops to 1.2499 or below, the trader loses all of his investment. In some cases, a broker offers a maximum of 20% cash back on losing trades, but it is a rarity among brokers. If there is no change in the price, the broker returns the money back to the trader.

Is Binary Option Trading Riskier Than Forex Trading?

The currency market in its entirety is a risky business model for those who wish to invest their hard-earned money. Binary options trading has its set of advantages and disadvantages while Forex trading offers more control to the trader over their capital. Binary options trading ensure that the trader loses only a set amount of capital on each trade, which can help in minimizing risk. On the other hand, the losing potential for Forex trading is huge, as a trader can lose his entire money without a sound money management plan.

However, Binary options restrict the freedom to a trader, as it is impossible to get out of a trade if it goes the wrong way. Brokers do offer the option of extending the period of expiry, but will often ask you to increase your investment, which can work against you in losing trades. In Forex trading, the trader has the freedom to bail out of losing trades without making further losses, which reduces the risk for a seasoned and disciplined trader.

Therefore, both forms of trading have their distinctive risks and advantages, but a trader cannot consider one to be riskier than the other. Binary options can be considered as a more risk-averse solution to Forex trading for those who can predict the movement of the market, but are unable to accurately analyze the extent of the movement. In such a scenario, binary options allow the trader to have a predetermined idea of the potential gains and losses before entering a trade.

Yes, binary options are completely legal, and regulatory agencies such as the FCA, CySEC, and other organizations regulate binary options brokers to ensure that consumers’ funds are protected against financial fraud or consumer abuse. Some Forex traders may compare binary options to roulette or gambling in general due to the “all or nothing” nature of the investment, but binary options are suitable for those who like to invest in a relatively simple investment system without performing an extensive market analysis. Binary trading in UK has grown by leaps and bounds due to the incredible popularity of the market among traders from the region, and the presence of a regulatory organization such as the FCA has made it easier for traders to invest in a reliable UK binary options broker.

In several markets such as the US, binary options trading are still in the primitive stages. The CFTC and NFA are slowly warming up to the idea of regulating binary options brokers. They have regulated only a handful of brokers, who can offer binary options to investors in the US, but the market is heavily regulated, and there are several restrictions to trading.

How Do I Trade Binary Options Freely?

Although binary options are heavily regulated in countries such as the US, traders can enjoy more flexibility by depositing money into regulated brokers from Europe, Asia, and Australia. Binary options brokers in UK are considered to be the best in the industry due to their affiliation with the FCA and the significant amount of volume they deal with on a daily basis.

However, the only downfall is that traders using such brokers will not receive any support from their home country during disputes or if the broker siphons money away from consumers. But that shouldn’t spell disaster for potential investors, as most modern brokers regulated by agencies such as the FCA, ASIC and CySEC are thoroughly committed to upholding consumer interests.

What Are The Different Binary Options Broker Choices Available To A Trader?

A trader can choose from a wide variety of binary options brokers that are regulated by different regulatory agencies from around the world. Since binary options include the uncertainty of an outcome, profits and withdrawals should be a seamless process. Most regulatory agencies such as the FCA and CySEC put forward several regulatory guidelines to ensure that all brokers adhere to a strict framework of operations that manages to safeguard the interest of clients.

As a trader, your primary objective must be to choose a broker that is properly regulated by a recognized regulatory agency. It would also be a good idea to choose a broker that has a good reputation in the market, and new brokers should be carefully analyzed before depositing money with them. At Binary Options Trading, we constantly review leading binary options brokers in UK as well as around the world to ensure that the traders get unbiased opinions about performance and reliability of financial companies offering services in the industry.

What Is The Impact Of Binary Options Signals On Profitability?

Trading signals are crucial for traders who don’t have the requisite knowledge to become a profitable trader. It is essential for traders to have an immense market knowledge and excellent research capability to accurately predict the outcome of the markets. Signals can act as a double-edged sword, as it can not only provide assistance to a trader, it can also lead to his downfall.

There are several different signals providers in the market that offer an excellent portfolio of services to ensure that traders receive the best market analysis. However, there are also several signals providers whose main motive is to trick users into paying for low-quality services that will ultimately wipe out the entire investment capital. Therefore, it is essential for all traders to properly evaluate a binary options signals provider before paying for their services.

Signals providers can make the job of understanding the markets easier, but it also comes with several inherent risks. Traders only need to invest a small amount of time on researching the markets; however, it will not provide the sufficient market knowledge required for long-term profitability through effective risk management.

Getting daily signals from a third party service provider also does not guarantee profits in the long run, as several aspects of trading can play a major role in deciding the profitability of a trader. Trading signals providers cannot predict the markets with 100% accuracy all the time and most high-quality signals providers can only achieve 55-60% accuracy on an average, irrespective of what they claim with their performance reports. That number is way too low for an average trader, whose trading psychology can lead to more losses than gains. A trader should be prepared both technically as well as psychologically to deal with long periods of drawdowns that most signals providers face from time to time.

What Are The Advantages & Disadvantages Of Trading Binary Options?

There are several distinctive advantages and disadvantages of trading binary options, and at Binary Options Trading, we will make an attempt to cover the most comprehensive pros and cons that will affect most traders in the market. While these are not the only factors that affect the outcome of an average binary options trader, these pros and cons are mostly in line with what traders have experienced over the past few years.

Advantages:

Fixed High-Return Yields From A Small Capital

Traders have the ability to enjoy a maximum of 90% return per trade, which is certainly one of the most high-yielding investments of all time. 90% return is akin to almost doubling your investment over a short period, which is a strict impossibility in any other business model. Profit margins usually vary between 40% and 90%, but traders can expect to make well over 75% on all successful trades using binary options. The interesting fact is that traders can invest as low as $5 in the market without risking a great deal of capital, which is another great aspect of binary options trading.

Fixed Profit & Loss Per Trade

Immaterial of the outcome, a binary options trader can always set a predetermined amount of profit and loss before entering a trade. For example, a winning trade can provide an average of 75% loss while a losing trade will wipe out the invested amount completely. Therefore, every trade has a fixed outcome, which can be carefully selected by the trader before entering the market. While the fixed outcome can act as a hindrance for a select group of people, it should help most traders as they can choose their risk to reward ratio well in advance and avoid risking it all in the market.

Trades Are Over Within A Short Span Of Time

Most forms of trading in the financial markets involves spending countless hours in front of a trading terminal for market research, analysis, and tracking open trades. Some trades can run for a long period, including weeks or months. Therefore, the potential profits are distributed across a lengthy duration of time, which can affect the patience of even an accomplished trader.

Binary options trades, on the other hand, are over within seconds, minutes, or hours at the most. A trader has the option of choosing their desired timeframe, and the return is directly dependent on the timeframe chosen. A Trader can invest in binary options at any time of the day, and the ease of modern day trading apps allow traders to trade binary options from virtually anywhere in the world. This is another reason why binary options are highly popular among traders who lack the time and resources to spend a major share of their time in front of a dedicated trading terminal.

Traders Don’t Need A Huge Amount Of Market Knowledge

When compared to traditional forms of investing, a binary options trader can become profitable by making educated guesses most of the time. Successful binary trading is all about making the right calls consistently without experiencing large drawdowns. This can be accomplished by subscribing to a reliable and genuine binary options signals provider for timely market advice and signals.

Most binary option trading brokers in UK also provide free signals to their clients, which can be used to the perfect advantage of the trader. This helps in mitigating risks and should help to reduce the number of losses without spending a lot of time on market research. Although risks are part of the game, a trader can avoid making mistakes on his own by getting professional advice.

Access To An Impressive Array Of Financial Instruments

Binary options bring together a wide array of financial instruments that range from currencies and commodities to stocks and indices. Conventional financial brokers are restricted in their services when it comes to including all major financial instruments, as there are only a handful of brokers who offer all instruments under a single roof. On the contrary, binary options brokers offer a wide range of assets to provide better freedom to the trader to pick the instrument that they desire.

Access to a wide variety of instruments also gives more options to the trader to get exposure to popular assets that are traded across the globe. This also enables the trader to experience the thrills of having hands-on experience in dealing with markets worldwide.

Profitable For The Disciplined Trader

A disciplined trader who can strike the perfect balance between risk and reward can achieve immense success by trading binary options. To trade binary options, one should be able to control their emotions and read the market according to its merit. Therefore, binary option trading has proven to be successful for disciplined traders whose sole aim was to make consistent returns using the best tools available.

Trading Is Exciting

The fast pace of binary options is exciting and rewarding both monetarily as well as emotionally. The short duration of trades contribute to the excitement factor and is one of the reasons why most modern traders prefer binary options to other traditional forms of investing. The high-yield potential of binary options also makes it exciting for traders as they can witness their account growing to substantial amounts within a short period. The primary focus of every trader is to make money fast, which is what the core concept of binary options stands for.

Broker Early Expire Average Return Min Deposit Min Trade Rating More
× 85% $ 200 $ 20 ★★★★
✔︎ 90% $ 10 $ 1 ★★★★★
Other Trading Niches with Binary Options
Futures Trading Share Trading Stock Trading

Disadvantages:

No Freedom Over Trades Once Entered

It is a fact that most binary options brokers don’t offer the option of bailing out of trades once entered. This is in direct contradiction to traditional forms of investing, where the trader has the freedom to customize a trade according to their requirements. In Binary options, a trader will have to wait for the expiry of the option, irrespective of the outcome. Therefore, if a trader believes that he is going to lose a trade, he does not have any other alternative rather than to accept the loss and move on. Some brokers do offer a 20% cash-back on losing trades, but most brokers prefer to keep the entire amount to themselves.

However, a trader can extend the expiry period of the trade by adding on to the trade, but this will lead to cumulative losses if the market doesn’t favor the trader’s perspective. Therefore, if a trader is not disciplined in his approach, he stands to lose more than he gains.

Limited Profit Potential Than Stock Or Forex Trading Over Long Term

There is a cap on the maximum amount that can be invested per trade, which is in direct contradiction to conventional forms of trading. In binary options, a majority of brokers limit the amount per trade to $5000. Therefore, even if binary options are considered to be a high-yield investment, the gains are limited to a percentage of the initial trade amount, unlike other forms of trading, where the percentage of returns is directly related to the investment capital. Therefore, the long-term profitability is certainly lower for binary options when compared to Forex or equity trading.

Traders can only expect to make a steady stream of income through binary trading, and should not expect to build capital to the tune of millions. However, the volatility and high-risk nature of binary trading may also affect the overall success of a trader in the markets.

Considered As A Gambling Alternative

Irrespective of the consensus and the regulation of binary options brokers by financial regulatory agencies, many traders and institutional investors still consider binary options to be a form of gambling. Broker advertisements that claim huge returns over a few seconds also don’t help binary options to establish itself as a genuine financial market, as modern day traders are very cautious about scams, abuse, and financial fraud.

Binary options also work like a roulette table, as the trader is betting on either green or red (up or down). However, there is a bit more research involved in binary options, unlike gambling, which is dependent entirely on luck. Of course, successful gamblers always use statistics to even the odds in their favor, but binary options allow a trader to accurately predict the movement of a market through extensive market research and analysis.

Finding A Reliable And Regulated Broker Is Difficult

It is still early days for binary options when it comes to reliability of brokers, as several traders have had negative experiences with brokers. Regulation is playing a major role in ensuring that all regulated brokers adhere to a strict code of conduct to maintain the integrity of the markets, but traders are still wary of fraudulent brokers who are known to indulge in malicious activities. It would be safe to assume that a majority of binary options brokers in the UK are reliable and trustworthy when compared to competing brokers from around the world.

The Future For Binary Options

Binary Options still have a long way to go to acquire the market share that other financial markets enjoy. However, the popularity of binary options is certainly indicative of a positive trend that has traders interested in a non-conventional form of investing that not only promises excellent returns, but also offers an undue excitement over traditional trading strategies. Together with good regulatory guidelines, binary options have immense potential to become a large industry within a few years’ time.

Modern day investors are not patient in their financial goals and expect remarkable gains over a short period. This is especially true for the younger generation of traders who use modern trading concepts such as social media trading to take their trading to the next level. Most brokers are also creating new avenues to implement the modern concepts of trading into traditional platforms to ensure that they cater to the exact requirements of the new generation of traders. Binary options fit the bill perfectly, and are one of the most exciting new opportunities that the market has experienced in recent times.

British Traders Guide

Binary options trading in the UK has become very popular in recent times. In some countries like the US this type of trading is regulated but as yet the UK has not introduced the same kind of rules. Now while this makes it easy for many to trade without restriction, it does bring with it other threats and issues.

For those looking to invest in the EU, it is essential to check that your broker is at least regulated by the Cyprus Securities and Exchanges Commission (CySEC). This is the ultimate protection that can be achieved by brokers serving the UK market until such a time when local regulations are introduced.

We understand the need to feel comfortable and protected when trading online, which is why we work to provide transparent and clear recommendations and reviews of the best binary options brokers available. We have selected only the most trusted UK safe brokers to make finding a legal broker a simple process.

In this article, you will learn:

    The brokers best suited to your needs What local payment methods are accepted Taxes and fees that apply to UK residents

Traders in The UK

When it comes to binary trading, many UK investors prefer to trade options with a locally based broker. If you’re in the UK, most traders would expect to see an office based in London at a familiar address among all the other financial institutions. Being a small country geographically there is a sense that nothing is too far away in the event of an issue. While there are many reliable and reputable UK brokers, there are many international brokers that also have a lot to offer. How do you choose and what do you need to consider when making your choice?

Licensing And Regulation

UK regulation is highly regarded, but there are also many other hugely reputable licensing bodies. These include CySEC (Cyprus) MiFID (EU) and ASIC (Australia). Often the best brokers originate in Europe or Australia, and there are plenty to choose.

Mobile Trading Tools

Ease of use of the platform and whether it is mobile friendly is a huge consideration. You need to make sure that the platform is compatible with your phone or tablet and that you find it easy to navigate.

Demo Account Features

The demo account is a huge benefit for both new and experienced traders. If you are new to trading it allows you to get acquainted with the functionality, the various assets and trade types and the different charts, data etc. If you are more familiar with trading, it offers you the opportunity to try new things.

Bonuses And Incentives

Like a demo account, a bonus also gives you the chance to get better at trading. Whether it’s a no deposit bonus to get your first trades free or a deposit bonus to make your money go further, they will both save you money.

We have put together a list of recommended brokers based on our experience and knowledge of the UK binary options market. The tireless efforts of our experienced and skilled team will help you to make a more informed decision when it comes to choosing the right broker for you.

Trader Broker Asset Profit

Broker Fees And Tax

Like earnings in most countries when trading binary options, the UK government officials state profits gained are subject to income tax by HMRC. The level of tax that an individual is liable for will very much depend on the earnings of the individual but will range from 20% to 50% depending on the level of annual income.

If an individual pays their salary tax through PAYE, any additional income gets declared through self-assessment. Any profit will be subject to income tax if the earnings for that individual is above £11k per annum. It is the responsibility of the individual to self-assess and declare this income for the appropriate tax year.

Trading options are not subject to any fees. The amount of profit an individual makes gets calculated and rewarded to the individual as stated in their payout terms. The individual may encounter small fees if trading in a foreign currency and may incur the weakness of one currency converted to another.

If a trader is trading through a US broker and deposits currency in dollars the withdrawal may be subject to small fees from the broker or the bank on top of any changes in the conversion rate that mean they won’t earn as much as they might ordinarily.

Other fees are incurred for using a credit card that charge fees or any method of e-banking that charges a fee for deposits or withdrawals.

British Licencing

Currently, there are no specific financial regulations that apply to binary options trading in the United Kingdom. It has been expected for some time that regulation and legislation is imminent and that the United Kingdom would try and align with the rest of the European Union. A decision on this matter is expected in July 2020 however the EU referendum may have changed this, and it could be a longer wait than previously expected.

Now it would be reasonable to assume that the government will hand over regulation of brokers to the Financial Conduct Authority (FCA) but until this happens options trading is classed as gambling and comes under the control of the Gambling Commission. Once responsibility for UK binary options brokers is transferred over to the FCA one would expect to see suitability or wealth checks to ensure no miss-selling of products and a rigorous dispute resolution process amongst other legal stipulations.

These checks won’t necessarily make it harder to trade, but it will offer greater protection to the trader. While this won’t have an impact on those that operate from outside of the UK to UK citizens, it will increase the standards of brokers that are UK based. There may be regulations applied like those of the USA that make it illegal to solicit business from United Kingdom traders, however, at this time, it is still ok to trade without any stipulations or rules.

Binary options trading in the UK has become very popular in recent times.

How we Recommend Brokers

Our recommendations apply to regulated binary options brokers across the globe in countries like Australia, South Africa, Russia and Canada to name but a few. To ensure that we provide you with the best, up to date and accurate knowledge we are regularly reviewing the market place, ensuring we are at the forefront of any developments and familiarising ourselves with all the ins and outs wherever you are in the world.

We have a team of specialists who are very experienced in investing and trading and know the more delicate details of the market. We analyse every single broker to check what they offer and how it stacks up against the competition. When we investigate a broker, we are looking for the following:

    The licensing and regulation that they hold Welcome bonuses and incentives that they offer Ease of use and their mobile offering Customer support and how efficient it is Whether they provide a demo account Contests and tournaments Account types, trade types and assets available Payouts offered and any fees associated with trading

We give our best UK binary options brokers a star rating for each aspect of their service so that you can see, at a glance, if that broker offers what you need. We do this research to enable us to provide you with a comprehensive overview of what is available and how relevant it is to you and your trading requirements.

Frequently Asked Questions

Is binary trading in the UK legal and safe?

It is indeed legal to trade binary options. If you choose a reliable broker then other than the obvious risk of losing money your money will be safe.

Do I need to pay fees and taxes on my profits?

Yes, you do need to pay taxes on profits in the United Kingdom. If you get paid through PAYE, then it is your responsibility to self-assess and declare any earnings outside of your salary.

Can I test brokers before trading with real money?

The typical answer is yes. If you are new to trading, it is advisable to opt for a broker with a demo account facility so that you can trade with virtual money while you get used to dealing.

Is it easy to make deposits and withdrawals?

Just open an account and make the required deposit. Withdrawals happen to the same method that was used to make the initial deposit. Withdrawals can take anywhere up to 5 days.

Can I trade using my mobile or tablet device?

The best brokers now have a platform that works on all types of devices including mobiles and tablets. Their mobile offering is often a specially designed app available from the App Store or Google Play.

Jacob has been an author for us since our launch in 2020. He has over forty years’ experience in the financial sector and has held a variety of positions within financial services corporations and venture capitalist organisations.

Binary Options in the UK

When it comes to traders using Binary Options in the UK, it is not exactly quite clear as to the regulatory and broker landscape.

Indeed, it was always quite muddy when it came to brokers in the UK, Europe and how the rules from countries such as Cyprus applied to the UK. This was made even more complicated by the recent exit from the EU on the Brexit Vote.

Although Trading Binary options in the UK can be done and through a number of brokers, only certain brokers are legally allowed to be offering their services to UK clients.

As a UK based trading community, the Binary Trading club knows the ins and outs of the regulators environment.

Broker Regulator Minimum Deposit Max Return Total Assets Option Types Demo Account Jurisdiction Support Broker Site
VFSC $10 95% 500+
  • High/Low
  • One Touch
  • Dynamic
  • American
  • CFDs
Yes Global Email
Live Chat
Signup
CySec $250 88%* 65
  • High / Low
  • One Touch
  • No Touch
  • Boundaries
  • High Yield
Yes Cyprus Phone
Email
Live Chat
Signup

*Profit to be credited in case of correct prediction

UK Financial Regulations

The main regulator in the UK is the Financial Conduct Authority (FCA). They are involved with making and enforcing a number of the rules which dictate how financial services firms offer their services to clients in the UK.

The FCA currently regulates CFD and Forex brokers and these brokers would need to get a licence in order to be able to provide these services and claim compliance. The regulations are quite extensive for brokers including background checks on the directors, 500k in the bank account in reserve and a minimum number of staff. This is mainly as a result of the leveraged nature of those instruments.

Indeed, given how strict the FCA is when it comes to Forex and CFD providers, many of the largest online traders have decided that they would like to make the UK their base including IG and FXCM.

However, when it comes to Binary Options in the UK, the picture is slightly different.

UK Binary Options Regulations

The FCA currently does not provide regulations around Binary Options. They treat the instrument as an Over the Counter (OTC). Over the Counter is how Binary Options are traded by the big investment banks (self-regulating).

This of course leaves many Retail binary options brokers who offer their services to the UK client base wide open. However, given something called MiFid (Markets in Financial Instruments Directive), brokers regulated in Cyprus have been able to provide their services for Binary Options in the UK.

This is because the MiFid directive allows financial intuitions that are regulated by an authority in an EEA (European Economic Area) member state to provide their services in to the citizens of another member state. This is termed financial “passporting” and has been used by a number of financial institutions across the continent.

As a result of tax savings and the relatively low cost of doing business, a number of brokers have chosen to use Cyprus as their EU country of choice. This means that the broker would have been regulated by CySec (Cyprus Securities and Exchange Commission).

However, with the UK choosing to leave the EU in June of 2020, this has also thrown MiFid regulations into some level of uncertainty. This is because the MiFid agreement was only to be implemented in the EEA of which it is uncertain that the UK will remain a member.
There are, however, a number of different brokers who have decided that they would still like to have some UK based regulation of their services. The other route that is sometimes taken is for the UK Binary Options broker to obtain a gambling license.

If the broker is to choose this route, then they would be listed as a gaming product or “fixed odds betting” rather than a financial product. Some brokers don’t approve of this for two reasons. Firstly, listing as gambling product rather than a financial one could tarnish the reputation of the instrument. Secondly, in the UK gambling debts are debts of honour which means that the broker has no right of recourse in the event of client losses and debts.

How Will this Change?

The current status quo is indeed not really here to last. More and more traders are aware of the fact that an FCA license is a great competitive advantage. It shows that the broker has some of the most stringent regulations in place for client protections.

Hence, there are a number of UK Binary Options brokers who have decided that they would like to apply for the FCA license irrespective of current Europe wide regulations.

Indeed even the FCA has decided that they need to get on top of the Binary Options regulations in the UK and have even suggested in a recent announcement that they are consulting with a number of different industries stakeholders about potentially regulating Binary Options in the UK.

This could be a good outcome for the entire industry as it allows traders to get a better sense of who they are dealing with. It could also give brokers more guidance around what would be allowed in the UK Binary Options industry and what would not be allowed. This is more certainty for the broker which is always welcome in the industry.

UK Trader’s Tax Obligations

Even though the UK regulations around Binary Options are not entirely clear cut at this stage, the Trader’s obligations around taxes and fees are. Any profits that are generated on Binary Options trading are taxed according to the Income tax requirements of HMRC.

This tax rate of course varies according to the income tax bracket that the client is already in. This can range from 20-50%. On the flip side though, losses that the trader incurs while trading Binary Options are of course tax deductible.

For most traders who are not trading full time, they will usually have to pay taxes through PAYE schemes (Pay as You Earn). If they are earning additional income from another source such as trading then they will need to pay tax on that if the income is above the allowance of £11k per annum. If the profits are greater than this in the year then the trader will need to “self-assess” and declare these profits.

Funding an Account

For UK binary option traders who wanted to open an account with a broker, there are a number of ways in which they could fund the account. These include bank transfer, credit card, Neteller and Skrill. Skrill is a UK based payment processor and usually has strict merchant account regulations in place.

Some brokers may charge you fees for deposits and withdrawals (on top of the credit card charges). You will need to take the time to read their Terms & Conditions to make sure you understand all of the fees involved.
Most UK brokers will allow the trader to hold an account in GBP should they have funded in that currency.

Regulated brokers also have strict requirements in place from their payment providers with regards to money laundering and fraud regulations. This means that the trader will need to provide documentation such as proof of residency and identity. Traders may also not be able to fund the account or withdraw profits from a separate bank account.

Which UK Brokers to Choose

When it comes to choosing a Binary Options broker in the UK, you need to make certain that you have ticked the right boxes before you can comfortably trade with one. There have been a number of UK residents who have fallen victim to illicit brokers because they did not do the adequate due diligence before investing. It is also really important that you find the broker that is right for you and your trading style. Below are some steps you can take when selecting a broker.

  • Regulation: This is a stamp of approval that gives you certainty that the broker is indeed honest and that your funds are safe. It is also a way for you to filter out all of the binary option scams that are floating out on the internet. Make sure that you get the broker’s licence number and ask them to give you more information about the holding company. Cross reference this with a number of online sources to make sure that the broker’s claims are indeed honest.
  • Technology: The broker’s platform is your tool to trade. Hence, you need to make certain that you have found a broker that has a platform that works well for your skill level. Some brokers such as IQ Option have extremely functional and resourceful platforms. These allow for more strategies to be implemented and technical tools to be used. Other platforms such as ETX Binary are more simple and better suited for traders who want a plain vanilla offering.
  • Support: Lack of support is something that most traders find annoying. This could be in the form of customer support when it comes to admin questions or educational support for learning resources. Some brokers are better than others and you need to decide how important this is to you. Is it a deal breaker? Are you comfortable enough only having live chat or do you want a direct phone line in to the brokers?
  • Payoffs & Pricing: This is something that can directly impact on your trading returns. The higher the payoff the more likely your trades are to end up in the money and the more likely positive gains are in the long run. Generally, any payoff that is less than 75% should be avoided as the risk and return is not justified. This is something that should be clearly advertised on the brokers website.

Once you have found the broker that you would like to use then you can start off. It is probably wiser to use a binary options demo account to make sure that trading these instruments is indeed for you. These are free and allow you as much time and demo funds as you like. Only when you are fully comfortable with the broker’s platform and all the other levels of support then you can move onto opening a live account. Make sure that you only ever invest as much as you can afford and have an effective money management strategy in place.

Binary Options Trading in the UK

The United Kingdom is one of the few countries around the world that embraces financial betting. Due to the exposure that most of the residents in the UK have to the gaming industry, binary options trading is merely seen as an extension of spread betting and so quickly became extremely popular. However the problem most UK binary traders face is the legitimacy of the binary brokers that they are trading with. How does a trader in UK discern a reliable binary broker from that of a scam? To help our readers in making the right choice, we have come up with a list of recommended platform providers in the UK that traders can open an account and start dealing with. These firms are shortlisted based on certain traits and qualities such as:

  • Good Customer Service
  • Reputable and Regulated
  • Wide range of tradable assets and high payouts

Best Brokers in the UK

To avoid being scammed, binary traders should always trade with regulated platform providers. But because of the UK’s stand towards binary options, traders in the UK have a choice of trading with an operator that is regulated by the UK’s Gaming Commission or with one regulated by CySEC. To help our readers in the UK decide on their choice of broker, we have come with a list of recommended companies that have been closely vetted by us.

Review

Review

Regulations

In the UK, trading of binaries is legal and regulated by the UK regulatory authorities not as a financial derivatives but rather it is classified under gaming legislation as “fixed odds betting” and hence regulated by the UK’s gaming commission. However the kind of legal protection accorded to binary traders under the gaming commission is entirely different from those offered by the financial regulators such the UK’s Financial Conduct Authority (FCA). This is due to the fact that gaming contracts are not legally enforceable in UK’s courts. In addition, the UK’s Gaming Commission lacks the resources to regulate binary operators in the UK effectively.

Nevertheless, there are also no legal restrictions that will prevent traders in UK from signing up with brokerage firms from other countries in the European Union such as Cyprus. In Cyprus, binary options trading activities are regulated as a financial derivative by the Cyprus Securities Exchange Commission (CySEC). Because the UK is still part of the European Union (just about), under the MiFID (passed by the European Parliament), Cyprus based brokers can “passport” their licenses and legally operate in other states within the Eurozone. In other words, firms from Cyprus are legally allowed to offer their services to traders based in the UK. The benefit of trading with a CySEC regulated broker is the fact that UK traders can now rest assured that their brokers are held to a higher standard of accountability. In addition, they will also have access to compensation under the Investors Compensation Scheme should their broker becomes unable to fulfill its contractual obligations due to insolvency.

It should be noted that the binary regulatory landscape is constantly evolving. There have been recent calls to the Financial Conduct Authority to take steps to regulate this type of trading under financial laws rather than gaming laws in order to give better protection to UK’s traders. While CySEC regulations do improve the standard of accountability among s brokerage firms, it is felt that the UK’s Financial Conduct Authority is able to offer far more superior regulatory oversight over online providers operating from within the UK.

Reducing Fraud among UK’s Binary Brokers

Obviously for traders in UK, it is more beneficial to them if their provider is regulated by the FCA as opposed to CySEC since the brokers are subjected to closer monitoring. A well regulated market is in turn less likely to face rampant fraudulent activities, as the brokerage firms are normally required to report their operational activities on a regular basis to the authorities. This leaves less room for the brokers to scam their clients. In addition with tighter regulatory oversight, binary options traders in the UK will have more confidence in their broker hence enabling them to divert their attention more towards trading rather than constantly worrying if their broker will run off with their money.

Deposit Methods Available In UK

With London as the financial center of Europe, traders in the UK have access to a wide selection of payment methods which they can use to deposit funds into their trading account. The most convenient method is by Credit/Debit cards since the funds deposited will be posted immediately to their trading accounts. Another alternative method which is popular among traders in the UK is depositing funds through eWallets. It should be noted that Skrill MoneyBookers’ headquarter is located in London hence providing traders in the UK an extra layer of confidence in getting their deposits funneled through eWallets processed quickly. With UK’s banking industry being well established, UK’s traders are also able to deposit funds through bank wire transfer, although this method is costlier than credit card or eWallet transfer.

  • Is it legal to trade binaries in the UK?

Yes. It is legal to trade binaries in the UK.

  • Are binaries regulated in the UK?

Yes. This trading type is regulated in the UK, either through the UK’s Gaming Commission or through CySEC authorized binary brokers.

  • How to trade binaries in the UK?

To start trading in the UK, British residents can either choose to open a trading account that is incorporated in the UK or with a broker that is based in Cyprus.

Best Binary Options Brokers 2020:
  • Binarium
    Binarium

    Best Binary Broker!
    Perfect for beginners!
    Free Demo Account! Free Trading Education!

  • Binomo
    Binomo

    Only for experienced traders!

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