How to choose right binary options broker

Best Binary Options Brokers 2020:
  • Binarium
    Binarium

    Top Binary Options Broker 2020!
    Best Choice For Beginners and Middle-Leveled Traders!
    Free Demo Account!
    Free Trading Education!
    Big Sign-Up Bonus!

  • Binomo
    Binomo

    Trustful Broker. Recommended Only For Experienced Traders!

Binary Options Brokers – How To Choose The Right Broker

Choosing the right broker is vital to your success as a trader.

However, in binary options this task can become very difficult, since you are essentially trading against the broker.

Unfortunately for the binary options market, it has been infected with scams and dishonest brokers that have used their unregulated position to steal money from customers.

There are many things a trader can do to improve, but unfortunately one of the things he can not influence and control, is his broker.

Brokers play a number of roles.

  • They provide operational trading platforms.
  • They store traders’ funds until they are withdrawn.
  • They control the available liquidity pool.
  • They process and sync all trading activity in the market.
  • They provide support to their clients (traders).

The role of brokers in the binary options market is too important to be taken lightly. This is why traders have to be very careful where they choose to deposit their money.

Brokers can also function as market makers, providing liquidity which enables traders with very small amounts of money to still have the chance at participating in the market.

Is the broker regulated?

Regulation in the binary options market is still an issue in many countries. At the moment, the US, UK, Japan, Australia, Cyprus and Malta can claim to have solid regulatory frameworks for the binary options brokers. In many countries, binary options is seen as a gaming activity or put under regulatory oversight of gaming commissions which have no rules on segregation of client funds.

If you want to trade binary options, you may start to look at the issue of regulation of brokers a lot more seriously than before.

You can no longer afford to keep your money in brokerages which are not regulated or which have no obligations as required by laws to segregate your money. Putting your funds in such brokerages is a very risky business.

Best Binary Options Brokers 2020:
  • Binarium
    Binarium

    Top Binary Options Broker 2020!
    Best Choice For Beginners and Middle-Leveled Traders!
    Free Demo Account!
    Free Trading Education!
    Big Sign-Up Bonus!

  • Binomo
    Binomo

    Trustful Broker. Recommended Only For Experienced Traders!

So when choosing a broker on the basis of regulation, you must get answers to these questions:

  • Does the broker have a license number issued from the country’s regulators. You must confirm this information from the regulators.
  • Does the broker actually segregate the funds of its traders, and do the regulators that oversee their operations enforce this function?
  • Can you be sure that the broker is actually based in the country where it claims to be domiciled?

Some brokers have been blacklisted recently for infractions bordering on these points. Do your due diligence and ensure you have accurate information in this regard.

Trading conditions

When it comes to trading binary options, the trading conditions matter immensely.

This has to do with the structure of the market and how brokers in this market actually make money.

Apart from the US where binary options are exchange-traded, in many other countries this is not the case.

Binary brokers do not make their money from commissions, but from losses of traders on the wrong side of the market.

Most binary options brokers are trade counter parties. Some of them skew their online platforms to increase profits. However, it is a lot harder for them to do this on medium and long term contract expiry times than on the short term trades.

Furthermore, there is talk about brokers having risk management teams that bookmark accounts of traders who make too much money at the broker’s expense. Some are more honest about this than others.

Customer service

Customer service departments came into existence to enable clients ask questions or get solutions to some issues bothering them about the service of the company.

In binary options, there will be lots of issues to talk to the customer service about.

You will therefore need a responsive customer support service from your broker, which can be reached at all times (at least on trading days) and also via Live Chat.

In addition to a quick response time the customer service should also be able to answer most of your questions about the broker’s conditions as well as the trading platform. Some brokers offer outstanding customer support and it is actually one of their biggest pull factors.

Certain issues need to be dealt with quickly and the best way to do that is by direct communication. Choose a broker with a responsive live chat.

Prompt withdrawal settlement

It is only good that when a trader makes money from the market, he is allowed to enjoy the proceeds of such an investment via prompt fulfilment of withdrawals from the broker. Many brokers for reasons best known to them have come up with all manner of obstacles to prevent this from happening. This is usually a fine line and many scam brokers do this because profits for traders mean losses for them.

How do scam brokers operate in this regard?

  • By putting unreasonable withdrawal caps,
  • by applying hefty charges on withdrawals,
  • by tying withdrawal ability to high trade volumes meant to cover a bonus.

You need to be very careful of brokers that change their withdrawal policies randomly, as this is one of the early signals that a broker is starting to have cash flow problems.

Policy on bonuses

Because online binary options brokers are often in direct competition, they will often offer promotions, perks, and bonuses to get more people interested in their service. Generally speaking, the perks they offer increase with the amount that you deposit, and you can find a number of promotions specifically for first-time traders. These special offers can greatly benefit you, particularly when you’re just starting out.

However, beware of brokers who place very heavy trade volumes as a prerequisite for making withdrawals on accounts which have been awarded bonuses.

Bonuses are a good thing, but they have been widely abused. It is simply not right for a broker to expect to make from a trader more than 100 times what has been awarded as a bonus.

Choose a broker with a responsible bonus policy.

Bonuses are supposed to work in a symbiosis, but where one party starts to profit heavily at the expense of the other, the arrangement loses its core values.

This is partly why Japanese regulators have issued laws regarding how bonuses are to be managed, and also why Australian regulator ASIC is planning to introduce regulation to have them stopped altogether.

Choice of contract types and assets

Use brokers who give a generous offer of the kinds of trade contracts which can be traded on their platform.

Some traders will find they are much better at trading certain options and markets than others. For such traders, choosing a broker with a lot of flexibility in how to trade assets, will be a major benefit.

All binary options brokers will offer different assets within the categories of stocks, commodities, currency pairs, and indices and some will also offer cruptocurrencies.

Expiry times offered

Because there are different trading strategies and risks associated with the various expiry times, it is important that you find a broker that has the right expiry times that will work for you. Even though who offer high speed training have different ideas of what high speed is.

Some have high speed expiry times of 60 seconds while others offer just 15 second expiry times for these trades. Some binary options brokers offer much longer expiry times of a month or more while others consider the end of the day to be a longer expiry time.

If you are new to binary options and don’t yet know which you prefer, it may be best to go with a broker that has a wider variety of expiry time options to choose from so you can find one that fits you best.

Ease of transactions

Many payment options have evolved over the years which give traders plenty of flexibility in how they can deposit and withdraw funds.

So unless your country is under a financial blacklist just as the US recently blacklisted Crimea, you should choose a binary options broker which offers you a variety of transaction methods such as credit/debit cards and various e-wallet options such as Skrill, CashU, Ukash, Sofort, etc.

Conclusion

In the EU today, binary option brokers can only open trading accounts to licensed and professional traders. In many countries binary options are classed as gambling, which is not necessarily a bad thing in itself. In some countries it is illegal to trade or operate binary option platforms.

Today, the best option for new or existing binary option traders is to trade with a regulated CFD and Forex broker.

Although it is important to take your time while choosing your broker, it is also vital to understand that brokers are not the only determining factor when it comes to making money in trading online.

The most important thing is to learn how to trade and manage your risk.

Many readers ask which brokers are the best. It is difficult to point to one specific broker because it’s often a matter of preference.

Due to new regulations many of the biggest and most known binary brokers have closed or modified their operation to fill a different market demand.

To trade safely and with a peace of mind, look for regulated brokers with the best user reviews and various international awards.

EasyMarkets is a good example of a fully regulated, time-tested, reliable broker. Over the years, it has won 37 international awards and gained a lot of loyal customers.

CFD vs Binary Options

When it comes to CFD vs. binary options, it can be difficult to choose the right type. You’ll want to weigh your options carefully before deciding on a trading instrument

When you are choosing between binary options vs. CFD, there are several things you will want to consider. That includes everything from payouts to costs of trading to losses. But you will also want to think about the right instrument for you — CFD vs. binary options. To do so, you will need to understand the difference between these two types of trading.

CFD stands for “contracts for difference.” This is an agreement between you and a broker to pay the difference in the start and closing price of the asset. A binary option is a simple guess on how an asset’s cost will end when the trade closes. Binary options vs. CFD are different but also have some similarities.

Read this guide about the critical aspects of each type of instrument to learn about their benefits and drawbacks. Knowing the pros and cons of binary options vs. CFD will help you choose the right one.

Payouts and Losses in Trading

With binary options, it is much easier to predict payouts and losses than with CFDs. The problem with a CFD is that it is impossible to predict the difference in the price in the entry point compared to the close. The price can rise or fall with nearly no limit. You also have a contract with the broker, or seller. With this option, you will buy the asset, and if its value rises, you will get paid. But if it falls, then you will owe them.

You could see the price go from 0 to 1,000, or the other way around. With one wrong move, you could have a large bill on your hands. A binary option lets you either win or lose. You can easily figure out the payouts before entering the trade. Whether the prices go up just a little bit or a large amount, you will win the same.

If you win, you will get back your initial investment, as well as what you won. However, if you lose, you will not get anything. If you lose a CFD trade, you will owe the broker a certain amount. The broker will calculate this cost during closing. With a CFD, you can get higher profits. However, a more experienced trader who is advanced will do better on this. It is better for you to choose a trader who is not opposed to the risks that CFDs can pose for you.

The Costs of CFD vs. Binary Options

Every time that you place a CFD trade, you will face various commissions and fees. You would not incur these fees with a binary option. No matter how much you win or lose with a binary option, you would only pay the fees in the amount that you trade. The commissions will be deducted at the source before your winnings have been calculated.

With all types of trading, you will have some fees with third-party providers of payments. You may also need to consider converting the currency. Of course, you will also face taxes on each type of instrument. The amount of taxes will depend on whether you choose binary options vs. CFD.

The country that you live in also will determine the taxes you pay. You will want to check the laws for your country first. For example, in the UK, money from CFDs are considered capital gains for taxation purposes. However, binary options are considered gambling, so your profits will not be taxed as capital gains or income. So, if you live in the UK, choosing binary options can give you an advantage since you will get to keep more of your profits.

Binary Options vs. CFD – Does Binary Options Suit You?

Of course, the trading option that you choose will depend on which one suits you the best. Each instrument of trade is a derivative. This means that no one person owns it. The price or the way the asset will finish can only be predicted when the trade closes. Binary options and CFDs both have a short expiry time. Predicting how well the asset will perform also involves a risk with both types. The type of trading that suits you will depend on how much control you want to have, your comfort zone, and your personal preference.

Neither type of tool offers much security. However, a binary option gives you a better perception of your exposure. A CFD only gives you security when you place a stop-loss order.

You will also want to consider time. For example, with a binary option, the expiry time is 60 seconds, allowing for quick trading. You also do not need to wait a long time to find out what the outcome or your success is. A CFD option requires more patience and time. However, if it is a success, then you will get a larger reward than with a binary option.

A binary option is good if you like less risk and want to go slow and steady. But if you want a higher reward and are willing to take risks, then CFDs are the way to go.

CFD vs Binary Options – Final Pros and Cons

When summing up CFDs and binary options, you will find that they are fairly evenly matched. Each one offers great benefits and some drawbacks. You will find that CFDs offer a larger range of tradable assets. This includes indices and bonds. Binary options do not offer quite as many.

As with any type of trading, you will want to consider how much money you stand to gain. Binary options only offer so much for each trade. But a CFD can give you higher potential winnings. You can also use the limits to increase the exposure. This can give you bigger winnings but also impact your losses.

Finally, with a binary option, you have a lower return than a loss. That means that your trades need to be winning more often than losing if you want to make a profit. Stop-loss orders will not limit your losses.

Choose the Right Binary Option Expiration Period

There are many benefits to binary options trading over traditional stocks or Forex trading. Binary options are unrivaled in their simplicity. They are easy to understand and execute, even for beginners. Some types of options even provide you with amazing opportunities you will find nowhere else. With Range trades for example, you can make money in flat markets.

But one area where binary options are not superior to traditional forms of trading is where expiry periods are concerned. This is something you will figure out quickly when you start trading. You are given a finite selection of trade opportunities and expiry periods. If you pick the wrong expiry time, even with a great trade setup, you will lose.

So, how do you choose the best expiration period for your trades? That is the subject we will explore in this article. But first, I will go over expiry basics with you just in case you are a complete newbie.

What Is a Binary Options Expiration Period?

Let’s take an example of a standard High/Low trade. With a High/Low trade, you are essentially being asked a question about a financial asset, which could be a commodity, currency, stock, or index. Let’s say the asset is GBP/JPY.

At (expiry time), will the price of GBP/JPY be higher or lower than (price)?

You answer that question by choosing High or Low (sometimes termed Call or Put).

If when the trade expires you were correct, and the asset is priced as you anticipated, you would win. Otherwise, you would lose.

So, if you picked High for GBP/JPY, and GBP/JPY was trading above the specified price when the trade expired, you would win. If it was trading below it, you would lose your investment.

How Is This Different from Traditional Forms of Trading?

Let’s consider how Forex works. Imagine we are again talking about GBP/JPY, and you still have reason to believe that its price is going to rise.

With a regular FX trade, you would use a market order to buy immediately, or a limit order to buy when price hits a certain level. You would then be in the trade.

You can then sit around in front of your computer and exit the trade manually whenever you want, or you can set up a and walk away to exit automatically at a certain level.

Limitations of Binary Trading Expiry Times

You should now start to see why the expiry time system used in binary trading is restrictive. With traditional forms of trading, you can exit your trade whenever you want. That means you can be entirely strategic about it. If necessary, you can do it on the spot.

But with binary options trading, that is not always possible. The expiry time you picked at the start of the trade is the one you are stuck with (there are some exceptions — see the section on early close below).

This can make it a challenge to profit for multiple reasons.

  • First of all, unless you are trading on an exchange, the broker is taking the opposite side of every trade you make. You are playing against the house. It is therefore not in your broker’s interest that you win. So, the entries and expiry times (exits) offered to you will play in your broker’s favor, not yours.
  • Some systems are reliant upon highly specific exit strategies. You may have a great system which is impossible to put into practice because none of the expiry times offered are a fit for the exit strategies you need to adopt to be profitable.
  • There are also systems that depend on your ability to close out your trades at a moment’s notice. If you cannot exercise this control, you cannot profit.
  • Backtesting can be confusing. After all, while you are testing trade ideas on historical charts, you have no way to know what expiry times would have been offered to you. So, you cannot say with certainty whether your system will work in real life.

So how can you tackle these choices and choose profitable expiry times? Following are four suggestions.

Start by Developing a Strategy

No matter what, the first thing you need is some kind of strategy to trade with. You need a system which gives you entry rules. With traditional FX, it could be said that your system needs to include exit rules as well, but as you do not have total control over your exit strategy with binary options, let’s say exit guidelines.

Taking an example, let’s say you are going with price action, and you will be trading pinbars and inside bars. You must start by learning how to recognize those formations. Then you need to come up with a rule for how and when you will enter trades.

Pick Expiry Times Appropriate for Your Timeframe

The next recommendation is that you go through and backtest your strategy as you would trade it for traditional FX. Go through old charts and note down trade entries you would take as well as the exits you would ideally make. If the results are profitable, you have a system that may potentially work for binary options as well.

Now you should have a pretty good idea what an ideal expiry time looks like for your typical trade. If you have a broker that allows you to set customized expiry times, use what you have learned to do so. Just think of it like setting a .

Most binary brokers do not allow this however. They will only offer you a certain selection of expiry times. It is up to you to pick the best one — or skip the trade. For example, the screenshot below (from IQ Option platform) demonstrates that the range of expiry periods is quite limited even with brokers that offer a rather flexible choice:

If there is an expiry time available near where you would set a , that is a great choice, and you should go with it.

If there is not one, think about timeframes. Is there an expiry time which may still be appropriate given your trade?

If you have been testing price action strategies on the 1-hour chart, for example, and most of your profitable trades during testing spanned several hours or longer, it makes no sense to pick an expiry time 20 minutes in the future, or several months from now. But if there is something within a few hours, that may be a viable choice.

Likewise, if you are a position trader banking on some kind of political event, it would make zero sense to pick an expiration period which is just a few hours or days ahead.

And if you are using a strategy for scalping, an expiry time of even 10 or 20 minutes might be too much. You may do better with 60-second trades.

A quick note about 60-second trades: If you can profit off of them, by all means, do so. But if you are a newbie, it is important to recognize that this timeframe is incredibly volatile.

So, if you are still in the stages of choosing a strategy, go with one that will naturally steer you in the direction of longer expiration periods. You will be dealing with less volatility. Less volatility means less uncertainty, which in turn means a reduction in risk.

Definitely Do Some Demo Testing

The next tip for choosing appropriate expiration periods is to make sure that you demo test before you go live. As was mentioned before, there are some questions about exiting trades which you cannot reliably answer while backtesting.

But with demo testing, you can find out whether your strategies will work in real life with data and trade opportunities.

Once you do start demo testing, you may discover one of several things.

Either your trades will work out as planned, because the expiry times you need are readily available…

Your plan will not work out at all, because the expiry periods you need are rarely or never available…

Your system will sort ofwork. The expiry times may not always be ideal, but you may discover with some tweaking that you can get the results you need.

You cannot overestimate the importance of this step. There is no other way for you to know whether the system you came up with during backtesting is viable when traded live with real money.

Use Early Close

One of the more insightful conversations I ever had with a binary options broker concerned the early close feature which some websites offer.

Early close allows you to exit a binary options trade you are in before it expires.

Different sites have different restrictions on this tool. A few sites allow you to use early close anytime. But most have some kind of limitations on it. For example:

  • You might only be able to early close while you are profitable (for a partial profit).
  • You might only be able to early close while you are unprofitable (for a partial loss).
  • You might not be able to exit a trade during the last 5 minutes before it expires (or some other length of time).

You will need to check your broker’s resources to find out how early close works on your trading site.

Coming back to the conversation I mentioned, the owner of a binary site once told me that the single biggest mistake that traders on her site made was not using the early close feature.

She told me the vast majority of her customers were losing money, and the few that were profitable made great use of early close to minimize and avoid losses.

So, if it makes sense with your exit strategy, do make use of this tool. Since you cannot customize your expiry times on most binary sites, early close is often indispensable when it comes to getting the exit time you need.

There is also a tool called rollover to extend a trade past the expiry time, but be advised to approach it with caution. Usually you are asked to increase your stake in order to extend your expiration time.

Conclusion

Exiting trades profitably with binary options is a challenge compared to the traditional forms of trading, but definitely not impossible. Now you know all about how expiry times work in binary options trading, and you are familiar with the obstacles involved with choosing profitable expiration periods. But with some testing and creativity, you should be able to pick binary options expiry periods that work for you.

Best Binary Options Brokers 2020:
  • Binarium
    Binarium

    Top Binary Options Broker 2020!
    Best Choice For Beginners and Middle-Leveled Traders!
    Free Demo Account!
    Free Trading Education!
    Big Sign-Up Bonus!

  • Binomo
    Binomo

    Trustful Broker. Recommended Only For Experienced Traders!

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