What you need to know when choosing a binary option broker

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  • Binarium

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  • Binomo

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What you need to know when choosing a binary option broker

In the binary market, many potential investors and novice traders face the problem of choosing a trading partner. Often it is difficult to quickly and correctly assess the professional level of the brokerage company and the effectiveness of cooperation with it. In addition, in the market, there are more companies that want to deceive traders and lead them to a loss of finances. Against this background, we offer a list of practical recommendations that will make it possible to make a choice in the direction of the most effective trading platform.

So, in order not to get on a fraudulent resource and start trading on a professional and secure platform with the best technical and financial conditions, it is necessary to pay attention to certain parameters of the broker’s work.

Regulator license

This is the main parameter for the security of your investment vehicles. First, the regulator is the arbitrator for resolving trade disputes between the trader and the broker of binary options. Secondly, the regulator monitors the transparency of the platform and the financial calculations of the broker. The availability of a marketing license at the broker completely excludes deception and allows traders to work in the mode of maximum financial security.

Efficiency of the terminal for trading

To effectively deal with options trading, any trader needs professional service. The problem is that most brokers still use obsolete and technically restricted trading terminals. Yes, at the dawn of the appearance of options, their functionality satisfied investors, but today with such terminals you will not earn much. Therefore, we choose a broker with a professional platform, preferably own development. Such services often have the most cool tools for market analysis and trading operations. For example, most of them offer their partners a terminal, which was developed by their own specialists. On a high-quality trading platform, traders can access these technical services and trading conditions:

– a set of technical indicators;

– graphical analysis services;

– a schedule with the widest and most functional list of settings;

– options in the mode of turbo and classic contracts;

– 80 financial assets of different directions of the financial market;

– non-stop trading mode;

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  • Binarium

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

  • Binomo

    Only for experienced traders!

– profitability of trade contracts to 87%;

– a wide range of analytical and ancillary services;

– Demo mode for using the terminal.

Using the services of such platforms, traders can work on any technical strategy and get the maximum possible amounts of profit from trading options.

Trading start conditions on the market

Safe platforms and professional brokers will not require large starting deposits from customers, because they are interested not in the investor’s capital, but in the trader’s turnover from which they receive their income. In addition, a quality broker will offer an optimal balance between the level of the initial capital and the starting value of the option, which will allow to correctly manage risks and capital. For example, most brokers set the level of initial capital at the level of 10 USD, and the starting cost of options is 1 USD. These indicators allow you to effectively and with relatively minimal risks start trading in the options market.

Reputation of the company in the environment of traders

Scammers are often successfully camouflaged for professional platforms, but their activities can not be hidden from a huge army of traders who share their opinions on special forums and sites. When choosing a broker, pay attention to customer testimonials. So you can determine the list of possible problems in the work of the company and be able to create an impression on the basis of the opinions of traders about the future trading partner.

Approaching the choice of the trading platform responsibly, you can become a professional trader in the binary market and achieve good results as quickly as possible!

“General Risk Warning: Binary options trading carry a high level of risk and can result in the loss of all your funds.”

Binary Option

What is a Binary Option?

A binary option is a financial product where the buyer receives a payout or loses their investment, based on if the option expires in the money. Binary options depend on the outcome of a “yes or no” proposition, hence the name “binary.” Binary options have an expiry date and/or time. At the time of expiry, the price of the underlying asset must be on the correct side of the strike price (based on the trade taken) for the trader to make a profit.

A binary option automatically exercises, meaning the gain or loss on the trade is automatically credited or debited to the trader’s account when the option expires.

Binary Options Outside the US

Basics of a Binary Option

A binary option may be as simple as whether the share price of ABC will be above $25 on April 22, 2020, at 10:45 a.m. The trader makes a decision, either yes (it will be higher) or no (it will be lower).

Let’s say the trader thinks the price will be trading above $25, on that date and time, and is willing to bet $100 on it. If ABC shares trade above $25 at that date and time, the trader receives a payout per the terms agreed. For example, if the payout was 70%, the binary broker credits the trader’s account with $70.

If the price trades below $25 at that date and time, the trader was wrong and loses their $100 investment in the trade.

Key Takeaways

  • Binary options depend on the outcome of a “yes or no” proposition.
  • Traders receive a payout if the binary option expires in the money and incur a loss if it expires out of the money.
  • Binary options set a fixed payout and loss amount.
  • Binary options don’t allow traders to take a position in the underlying security.
  • Most binary options trading occurs outside the United States.

Difference Between Binary and Vanilla Options

A vanilla American option gives the holder the right to buy or sell an underlying asset at a specified price before the expiration date of the option. A European option is the same, except traders can only exercise that right on the expiration date. Vanilla options, or just “options,” provide the buyer with potential ownership of the underlying asset. When buying these options, traders have fixed risk, but profits vary depending on how far the price of the underlying asset moves.

Binary options differ in that they don’t provide the possibility of taking a position in the underlying asset. Binary options typically specify a fixed maximum payout, while maximum risk is limited to the amount invested in the option. Movement in the underlying asset doesn’t affect the payout received or loss incurred.

The profit or loss depends on whether the price of the underlying is on the correct side of the strike price. Some binary options can be closed before expiration, although this typically reduces the payout received (if the option is in the money).

Binary Options and Regulation

Binary options occasionally trade on platforms regulated by the Securities and Exchange Commission (SEC) and other regulatory agencies, but most binary options trading occurs outside the United States and may not be regulated. Unregulated binary options brokers don’t have to meet a particular standard; therefore, investors should be wary of the potential for fraud. Conversely, vanilla options trade on regulated U.S. exchanges and are subject to greater oversight.

Real World Binary Options Example

Nadex is a regulated binary options exchange in the United States. Nadex binary options are based on a “yes or no” proposition and allow traders to exit before expiry. The binary option’s entry price indicates the potential profit or loss, with all options expiring worth $100 or $0.

Let’s assume stock Colgate-Palmolive Co. (CL) is currently trading at $64.75. A binary option has a strike price of $65 and expires tomorrow at 12 p.m. The trader can buy the option for $40. If the price of the stock finishes above $65, the option expires in the money and is worth $100. The trader makes $60 ($100 – $40).

If the option expires and the price of the Colgate is below $65 (out of the money), the trader loses the $40 they put into the option. The potential profit and loss, combined, always equals $100 with a Nadex binary option.

If the trader wanted to make a more significant investment, he or she could change the number of options traded. For example, selecting three contracts, in this case, would up the risk to $120, and increase the profit potential to $180.

Non-Nadex binary options are similar, except they typically aren’t regulated in the United States, often can’t be exited before expiry, usually have fixed percentage payout for wins (whereas Nadex payouts fluctuate based on the price paid for the option) and may not trade in $100 increments.

Six Things to Look at When Choosing a Broker

January 9, 2020 2:37 pm

If you’re looking for a new binary options broker, you probably have questions about which one is the best. This is a valid question. Having the best broker on your side drastically reduces the amount of risk that you will have, and it ensures that your money is doing what you intend it to do. A good broker won’t necessarily make you a profitable trader, but it will go a long way toward ensuring that you aren’t losing money needlessly. All traders have different needs, so it’s important that when you are looking for a new broker, you don’t just choose the one that everyone else says is great. You really need to look at your individual situation.

With that said, here is our list of the top things that you should look for when choosing the best binary options broker for you.

  • Legality. Is the broker that you are looking at legally allowed to operate where you live? Because of the internet, you can access websites from all around the world, but that doesn’t mean that you can just choose to work with any broker you want. Before you decide which broker is best, make sure that they are allowed to accept traders from where you live, and that your country of residence allows you to trade at their site. For example, traders in the United States cannot legally use a CySEC regulated broker, but need to stick with Nadex since they are regulated within the U.S.
  • Reputation. Some brokers have better reputations than others. You don’t want to deposit money with a broker that has a reputation for poor quality financial transactions, for example. Even if you never experience a problem on this front, working with a broker that drags its feet when it comes to processing withdrawal requests is a dangerous thing to do. Also, not all broker uphold the high standards that you deserve from your binary broker. You want a broker that is fully regulated by a high quality regulatory body. For example, ASIC in Australia, CySEC is Europe, or the CFTC in the United States are all considered to be the best regulatory bodies in their respective regions. An unregulated broker might have pure intentions, but there is a much higher risk to your cash when you work with one.
  • Ease of Use. The broker that you decide to use should be easy to navigate. They should have a platform that you can use with ease and not make careless mistakes. If you can, you should definitely try out the free demo account that your binary options broker offers. If you’ve never used a site before, there’s a chance that user error might come into play, and you could make a mistake. Testing out the site in a risk free setting with a no risk demo account using fake money alleviates the chances of this happening. Also, all transactions with the site should fit your needs. We hinted at the need for smooth financial transactions earlier, but this is a must. Your broker should make it easy to put money in and get money out of your trading account. The broker does need to follow the law when it comes to financial transactions, and you should not expect them to bend the rules for you, so knowing the regulations and what you need to do on your end to make transactions smoother will be an easy way to make this experience even more pleasant. Also, broker that have an auto trading robot, may help you get started as well. Remember to ask customer service when you open the account.
  • Returns. Some brokers return more than others. Even the difference of a few percentage points here or there can make a big difference over the course of time. Let’s say Broker A offers 78 percent on the asset you like to trade most, while Broker B offers 80 percent. With all other things being equal, choosing the larger number can mean thousands of extra dollars in profits. If you risk $50 per trade and make 1,000 trades in a year (less than 3 per day), you are potentially gaining $1,000 extra in profits over the course of time by going with the better return. Most traders make many more trades than this per year.
  • Educational Material. When your broker offers you free resources to help you become a better trader, you know that they are more likely to be on your side. These come in a lot of different forms: free eBooks, webinars, strategy videos, economic calendars, blogs, and news feeds are some of the more popular resources. All of these things are available for free around the web, but having a broker supply them for you can make your life a lot easier so that you don’t need to search around and find the tools you need to improve.
  • Bonuses. Some brokers offer you a bonus when you make your first deposit. Although this can be helpful, it’s really the last thing that you should consider when choosing your broker. But why? Isn’t free money a good thing? Yes, free money is nice, but that’s not quite what a bonus is. In fact, brokers want you to think of a bonus as free money to you because it is good business for them if you do so. Why wouldn’t you want an extra $500? However, because most bonuses are so hard to unlock, most traders never actually get to see their bonus cash. Brokers require you to trade at least 30 times the bonus amount if you want to see your bonus returned to you. So, if you received a $500 bonus, you would need to trade $15,000 worth of trades before you could unlock your bonus. Some brokers even put a time requirement on this, after which the bonus cash disappears. A new trader without experience is very unlikely to receive this bonus because they will lose their money long before they ever reach that threshold. A bonus can be nice, but make sure that it is not a priority when choosing your broker. Otherwise, you are just falling for a marketing gimmick. Be sure to check each of the steps listed above before you think about getting a bonus.


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Best Binary Options Brokers 2020:
  • Binarium

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

  • Binomo

    Only for experienced traders!

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How To Choose Binary Options Broker
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