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How to choose a binary options broker
As we see more and more binary options brokers soliciting customers, for a trader who wishes to trade binary options, it can get difficult and confusing in choosing a binary options broker. A quick look at various online forums and websites gives out conflicting reviews and opinions which only tend to add to the confusion. So how does a trader go about choosing a binary options broker? Read this article to help you choose a binary options broker.
Just like with choosing a forex broker, the task of researching into various binary options brokers before you blindly sign up and deposit your funds is essential. While there are many legit brokers, there are equally dodgy and shady binary options brokers. This is one of the main reasons why there are so many complaints about various binary options brokers. In most cases, the trader has not done their research into the broker and only realizes that they have been scammed when it comes to withdrawing their funds. In some cases, traders have lost as much as $1000 for failing to research for the right and legit binary options broker. You can spare a couple of minutes to read through this article, or you could risk giving your money to a shady binary options broker.
Choosing a binary options broker – What to look for
When it comes to selecting a binary options broker, any trader should first look into the following checklist criteria which we briefly explain.
Start by reading the About Us Section
One of the easiest way to filter out dodgy binary options brokers is to simply read the ‘About Us’ section. It is very simple to identify how legit a binary options broker is by simply reading the contents of this page. A legit binary options broker tends to give out as much of details as possible. Traders should specifically look for the following:
The broker’s company details including registration number, country of domicile, number of years in the business.
Validate the address of the broker
Look for the address of the broker. Now-a-days more and more brokers conveniently set up a virtual office in places like London just to make their company look fancy. Doing a search of the company can instantly reveal if the company is indeed legitimate or just has a virtual office. Stay away from binary options brokers that have a virtual office. If the broker is hesitant to give out their details, there is no guarantee that you can trust them with your money.
Read the Terms & Conditions
The terms and conditions although lengthy and complicated as they might seem is in fact a very good place to get all the finer details. It is essential for traders to read through the terms and conditions as it makes for a legal document. Pay attention to the sections dealing with deposit and withdrawal of funds, look for any restrictions or any fees that may be charged and so on. You would be surprised to know that of the many traders who feel they were cheated, simply did not pay attention to the terms and conditions. Again, it pays to spend some time reading through the binary options broker’s website rather than deposit your funds and then have difficulties during withdrawal.
Best Binary Options Broker 2020!
Good Choice for Beginners!
Free Trading Education, Free Demo Account!
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2nd in our ranking!
Check for Regulation
Regulation is a grossly misunderstood area for traders. Just because a binary options broker is regulated doesn’t mean that they are legit. Regulation from CySec in Cyprus is one of the most common licenses held by binary options brokers. Yet, despite the broker being licensed, there have been instances when traders were cheated out of their money. Having a license does not guarantee anything and there have been no documented evidence of a financial regulation authority intervening to help out a trader. However, when a binary options broker is regulated, it does mean that they are subject to fair and transparent business practices which make it a little bit better to trust the broker.
Number of years in business
Logically, the longer a binary options broker has been in business, the less likely that they will cheat their customers. Always check when the binary options broker’s business was established in order to learn how long they have been in business. For a new binary options broker, it is much easier to disappear with funds overnight or to cause problems with withdrawals than it is for a broker that has been in business.
This is also the reason why you get to see big bonuses being offered mostly by new binary options brokers rather than the established ones. See here List of best bonuses from BinaryOptions brokers
Check their customer support (Chat/Email and Phone)
The next step is to contact the binary options broker’s customer support via Phone/Email and Chat. This will help you know how professional and helpful the support staff is while at the same time allows you to get an idea about the broker’s operations.
To conclude, despite doing the above research, there is no guarantee that the broker who meets all the above criteria is legit. There are many cases of well established business going bust and thus taking their customer’s money with them as well. However, by sticking to the above criteria, a trader has a better chance of choosing the right binary options broker.
How To Choose Binary Options Broker
Reads Normally 9 Minutes
Choosing the right broker can be a fateful step that will determine your success in binary options trading. There are some specifications that differ binary option brokers’ quality from forex brokers’ characteristics. Here are some points to take into account when you want to pick a binary options broker.
Choosing the right broker can be a fateful step that will determine your success in binary options trading. The increasing popularity of binary options among online traders have caused the emergence of many binary options brokers, as well as the addition of binary options trading in some forex brokers’ features. It is a common knowledge that the more choices we have, the more difficult it is to find the best ones, as each of them has its own services with different quality and regulation.
There are some specifications that differ binary option brokers’ quality from forex brokers’ characteristics. In choosing forex brokers, traders need to consider hidden fees emerged from things like requotes and slippages, while binary options traders have to think over payouts and option types offered by brokers. However, problems in deciding the best binary options brokers also arise from general matters, such as regulation, deposit and withdrawal process, and customer service.
Thus, choosing a binary options broker can be a difficult beginning if you do not know what should be considered in each broker’s features. Here are some points to take into account when you want to pick a binary options broker.
To guarantee a safe and secure binary options trading, regulation is the first aspect to look for when reading a review of binary options broker. You need to acquire a good understanding in regulations that are able to provide assurance for your trading prospect. You cannot just believe in what is stated by the broker. In fact, you need to search for more information concerning with regulations, since binary options itself is not yet regulated officially in some countries.
The dilemma with binary options is that it is basically a derivative of financial trading derivative, which makes many call it betting rather than trading. Still, despite of the regulation problem, some countries provide binary options license for brokers. Regulators like Cyprus’ CySEC, France’s AMF, Italy’s CONSOB, and Germany’s BaFin are some instances that issue bonafide licenses for binary options brokers.
Deposit and Withdrawal
A broker’s quality can be easily discovered by its deposit system. Simplicity is what matters most in this area. If you have difficulties in depositing your trading capital, there is no guarantee for you to withdraw your money safely.
A good binary options broker should provide an easy, safe, and low cost withdrawal system for its traders. It also needs to have a trusted termination facility that warrants safe withdrawal process when traders decide to close their trading accounts. A broker’s initial purpose is to keep the traders’ money, not to manage it in their own will. Hence, it should be able to provide a safe and easy withdrawal process when traders want to withdraw their money whenever they would like to. If you meet troubles in withdrawing your money, then it is safe to say that your broker is irresponsible in managing your money.
Choices in how to deposit and withdrawal can be a good point too in deciding a decent broker. Here, you should be provided with various ways to deposit and withdraw your money as in wire transfer, by credit card, or even e-payment. With many choices of different methods to choose, you will have a bigger chance to deposit and withdraw your money in the most convenient way.
With a good trading software, you can analyze market movements and place your option with ease. If sometimes you have troubles in your trading platform that do not come from your gadget’s internal problem, then it is better for you to seek other brokers with better trading software. Being able to watch the latest price movements, applying indicators, and placing options with certain expiry times are the most crucial parts in binary options trading. Your trading will not end successfully if your broker’s software cannot give proper support to your trading.
Other than software quality, the accessibility of platforms through various gadgets also need to be considered, for technology advancements in this era has allowed traders to trade anywhen and anywhere. A broker with platform available in smartphones and other gadgets will be a better choice than those that only provide desktop platform.
Brokers usually offer various different payouts, depending on what the instruments and trading types used by the traders. Most brokers give fixed payouts in each area, but there are also those that give choices to traders in determining their desired payouts.
Different instruments have different payouts. The same thing goes with the trading types. For instance, EUR/USD has payout as much as 83% in high/low options, while oil’s payout is only 73%. Those instruments will have different payouts when traded in other trading types. Brokers usually do not offer refunds for out-of-the-money options. Thus, it is a real all-or-nothing kind of trade when dealing with these types of brokers.
On the other hand, there is also a kind of broker that gives you choices to pick your own payouts. Although ranges also differ for each instrument and trading type, you can choose the amount of profit and refund in your option. Here, the bigger the profit is, the lower the refund you will get. For example, if you choose a profit of 80%, you will obtain the minimum level of refund, which is 5%. But if you pick a small percentage of profit like 10%, your amount of refund will be as high as 25%. This kind of payout can support your money management by either keeping your loss at a minimum risk, or by taking the highest profit in one option trading.
Trading binary options does not mean that you will forever stuck with choosing the right price movement by high/low options. There are also other kind of options like deciding a certain level in touch/no touch options, or determining a price range that is made possible by in/out of boundary options.
In this matter, you should be provided by a wide variety of trading types. Brokers with small numbers of trading types can limit your possibilities to gain profit through various ways. Furthermore, you also need to learn brokers’ policy in each trading types. The transparency in providing the rules is also important before picking a certain binary options broker.
Bonuses and Comissions
It is no wonder that the terms “bonus” or “comission” can attract traders’ interest in ways that are far more promising than other advertising tools. It is normal since traders always look for profits and will not waste a single chance that will probably allow them to earn more. The catch is, brokers sometimes give bonuses which eventually inflict bigger loss than what the traders will lose when trading with no bonus attached.
It is certainly not wrong to make use of brokers’ bonuses if they are realistic about it. You need to always remember that brokers always look for benefits. There is no way they give large numbers of bonuses without asserting certain conditions that will end up doing more harm than good to your balance. Therefore, it is strongly suggested for you to not easily be attracted by unbelievably high bonuses. You can always make benefit of bonuses that offer normal comissions and usual conditions that do not burden you with more risks. In this case. you can take an example from deposit bonus. As a rule of thumb, the bonus should stay lower than 40% for it to be considered normal. Brokers that offer deposit bonuses higher than that will have rules that will eventually make you suffer more losses.
Brokers with proper system should be supported by good customer service. You can check their quality by calling their service center and see how they manage questions and complaints. It really makes a difference when you trade in a broker that is supported by a very informative, amiable, and communicative customer service. Aside from helping you with the troubles you may find when trading with a broker, a nice customer service also signifies broker’s transparency level. A decent broker surely needs to be very transparent as it will keep your money for you to manage by trading. Low transparency can indicate a scam broker.
Though seems trivial if compared with payouts and trading types, customer service is one feature that determines the real quality of a broker. The availability of service supports in other systems like e-mail and live chat can be a good point to consider when judging a broker’s customer service.
The aforementioned points are meant to be parameters for you to consider before choosing a binary options broker. You can read broker reviews or perform a complete analysis on brokers’ specifications before deciding to pick the right one. Browsing through several sources can help you to compare information about certain brokers. It is also suggested for you to surf comments from your brokers’ clients. Information in sites can be fabricated, but real users’ opinions will express their real experience with the broker. This way, you will be well-equipped with enough sources and methods to choose the right broker before beginning to trade in binary options.
Binary Options Brokers and Platforms – Reviews and Comparison
We have compared the best regulated binary options brokers and platforms in April 2020 and created this top list. Every broker and platform has been personally reviewed by us to help you find the best binary options platform for both beginners and experts. The sortable broker comparison list below shows which binary trading sites came out on top based on different criteria.
You can sort the list using payout (maximum returns), minimum deposit, bonus offers or if the operator is regulated or not. You can also read full reviews of each broker, helping you make the best choice. Below the comparison list is some advice on how to pick the best trading platform for you, as this will often come down to your personal requirements and needs.
|Nadex Exchange||$250||100%||» Visit|
|RaceOption||$250||90%||100% Deposit match bonus||» Visit|
|BinaryCent||$100||85%||100% Bonus on ANY 1st Deposit||» Visit|
How to Compare Brokers and Platforms
In order to trade binary options, you need to engage the services of a binary options broker. Here at binaryoptions.net we have provided a list with all the best comparison factors that will help you select which trading broker to open an account with. We have also looked at our most popular or frequently asked questions, and have noted that these are important factors when traders are comparing different brokers:
- What is the Minimum Deposit? (These range from $5 or $10 up to $250)
- Are they regulated or licensed, and with which regulator?
- Can I open a Demo Account?
- Is there a signals service, and is it free?
- Can I trade on my mobile phone and is there a mobile app?
- Is there a Bonus available for new trader accounts? What are the Terms and
- Who has the best binary trading platform? Do you need high detail charts with technical analysis indicators?
- Which broker has the best asset lists? Do they offer forex, cryptocurrency, commodities, indices and stocks – and how many of each?
- Which broker has the largest range of expiry times (30 seconds, 60 seconds, end of day, long term etc?)
- How much is the minimum trade size or amount?
- What types of options are available? (Touch, Ladder, Boundary, Pairs etc)
- Additional Tools – Like Early closure or Metatrader 4 (Mt4) plugin or integration
- Do they operate a Robot or offer automated trading software?
- What is the Customer Support like? Do they offer telephone, email and live chat support – and in which countries? Do they list direct contact details?
- Who has the best payouts or maximum returns? Check the markets you will trade.
We cover as many of these comparison factors as possible in our list above, but we go into much more depth within each review.
Regulated Binary Brokers
Regulation and licensing is a key factor when judging the best broker. Unregulated brokers are not always scams, or untrustworthy, but it does mean a trader must do more ‘due diligence’ before trading with them. A regulated broker is the safest option.
|Binary.com||Malta GA||BO, CFD|
|IQ Option||CySEC||BO, CFD, Crypto, Forex|
|BDSwiss||CySec||BO, CFD, Crypto, Forex|
|24Option||CySEC||BO, CFD, Crypto, Forex|
|Nadex Exchange||CFTC||BO, Forex|
Leading regulatory bodies include:
- CySec – The Cyprus Securities and Exchange Commission (Cyprus and the EU)
- FCA – Financial Conduct Authority (UK)
- CFTC – Commodity Futures Trading Commission (US)
- FSB – Financial Services Board (South Africa)
- ASIC – Australia Securities and Investment Commission
There are other regulators in addition to the above, and in some cases, brokers will be regulated by more than one organisation. This is becoming more common in Europe where binary options are coming under increased scrutiny. Reputable, premier brands will have regulation of some sort.
Regulation is there to protect traders, to ensure their money is correctly held and to give them a path to take in the event of a dispute. It should therefore be an important consideration when choosing a trading partner.
Both sign up bonuses and demo accounts are used to attract new clients. Bonuses are often a deposit match, a one-off payment or risk free trade . Whatever the form of bonus, there are terms and conditions that need to be read.
It is worth taking the time to understand those terms before signing up or clicking accept on a bonus offer. If the terms are not to your liking then the bonus loses any attraction and that broker may not be the best choice. Some bonus terms tie in your initial deposit too. It is worth reading T&Cs before agreeing to any bonus, and worth noting that many brokers will give you the option to ‘opt out’ of taking a bonus.
Using a bonus effectively is harder than it sounds. If considering taking up one of these offers, think about whether, and how, it might affect your trading. One common issue is that turnover requirements within the terms, often cause traders to ‘over trade’. If the bonus does not suit you, turn it down.
Binary options demo accounts are the best way to try both binary options trading, and specific brokers’ software and platforms – without needing to risk any money.
You can get demo accounts at more than one broker, try them out and only deposit real money at the one you find best. It can also be useful to have accounts at more than one broker. For example, payouts for two different assets might be best at different brokers. You can shop around, and use whichever account has the best payout for that asset.
Demo accounts offer the best way to try out a brand, risk free. Likewise if we recommend a brand, you can try it first, before risking anything.
Low Minimum Deposits
If you are looking to get involved with binary options for the first time, low minimum deposit requirements may be of interest. For traders just looking to try binary options, a low minimum deposit broker might be best. A small initial deposit keeps risks low. Minimum deposits start at just $5 and there are a growing number of brokers offering low minimum deposits – “low” would be any minimum under $50.
Likewise, all brokers will have a minimum trade requirement or trade amount too. These can vary greatly between platforms. Minimum trade figures range from $1 to $25 – which is a large difference if a trader plans to trade frequently. For some traders, this might be less of a factor in terms of finding the best broker for them, but for others it will be very important. Practice accounts are a zero risk way of learning to trade.
One element many traders use to find the best binary options trading account, is the payout percentage on offer. This is not always a simple comparison however. Payouts will change based on the underlying asset being traded, and the expiry time of the option. In addition, payouts will change as the broker manages their own risk. So if one broker was originally the best price, things may then revert and mean that another now has the top payout.
So the most an investor can do, is to check the payouts for assets, and expiry times they are most likely to make, and judge which brand offers the best terms most often. Demo accounts are good when researching payouts on specific assets and trades.
Exchange traded and over the counter brokers will have different payouts – and they will not be easy to compare. In general, exchange traded options offer superior value. Nadex are one example of an exchange.
So as you can see, finding the best trading account and broker is not always easy – but it is worth noting that you are free to move between brokers whenever you like. So even if an account turns out to be poor, it is easy to up sticks and find a new trading firm. Likewise, a trader could have multiple accounts, and open trades at the broker with the best terms for that particular trade.
US Regulated Brokers
In the US, the Commodity Futures Trading Commission (CFTC) have only licensed two operators – Nadex and CBOE – to provide binary options trading to clients in the USA.
Brokers based in Europe will not generally accept US residents as clients, as doing so can result in large fines. Some off-shore providers will accept US citizens as their regulatory status permits them, but the CFTC may ultimately step in if they deem it necessary.
CFTC regulated brokers:
Which is the Best Binary Trading Platform?
Naming the best trading platform is not easy, simply because trading platforms and proprietary (bespoke) software are normally a question of personal taste. One user might like a simple layout, while others might need a lot of data on screen all the time.
However, platforms do have different levels of quality, both in terms of ease of use, and features. Broadly speaking, brands which offer Contracts for Difference (CFDs) in addition to binary options, deliver a more feature-rich trading platform or advanced software.
So the likes of Nadex and IQ, will deliver a very professional trading platform. MetaTrader integration is also normally provided at the more professional brokers (Some use both mt4 and mt5 functionality) . This difference in quality is evidence of the maturity of binary options as a product, but binary brands will catch up very quickly.
Intro To The IQ Option Platform
How do Brokers Make Money?
Binary options brokers make money via one of two business models:
- As a counter-party, ensuring an ‘over round’ via payout percentages. Known as ‘Over the counter’ (OTC)
- Via a spread or commission on an exchange traded model
People who have experience of other forms of trading, and are now approaching over-the-counter (OTC) brokers for the first time may find themselves asking the question: “Where is the commission?”.
With OTC binaries however, there is no commission. In theory, the term ‘brokers’, is not correct. Binary firms are not arranging a deal or acting as a middleman, or as a market maker; What they are, is the counter-party to each of their customers’ positions. So there is no fee or commission for the trade. Instead, each customer is essentially betting against the house. Where brokers have both sides of a trade covered, they have a handsome margin. Where they do not, the payout still gives them a level of protection. In certain circumstances, the broker will also hedge it’s own position to mitigate risk.
Those companies (Nadex, for instance) that trade binary options via an exchange operate much more like a ‘broker’. Unlike the OTC market where the platform is the counter party, with exchange traded options, the broker is the middleman – matching buyers with sellers and charging a commission. This charge is normally hidden within the spread, rather than an explicit cost. There is far less risk involved for the broker, and therefore generally better returns per trade for the trader. Brokers can be actively compared using the spread – the tighter the spread (difference between buy and sell prices) the cheaper it is to trade.
Brokers using the spread model often also offer leverage, or trading on ‘margin’ via their software. This increases the trade size for the trader – and profit for the platform.
Should You Use Multiple Brokers?
There are some very good arguments for having more than one binary trading account:
- Brokers suit certain trades. Different brokers will suit different trading styles, or trade types. So one broker might be excellent for shorter term trade types, and have great payouts on forex pairs. But that same brand may be slightly less good when it comes to offering boundary trades or indices payouts. If a rival had a full set of long term expiries with great payouts, and lots of choice of boundary trades – it makes sense to have accounts with both platforms, and place trades with the broker that offered the best deal for each trade.
- Demo accounts. Multiple demo accounts makes perfect sense – you want to try as many brokers and trading platforms as possible before deciding where to trade.
- Reduce risk. Accounts at more than one broker protects you from any issues with a particular firm. From issues as serious as insolvency, to smaller things, like website downtime, software issues or a market being closed – multiple accounts reduces your risk of being affected by any hardship a broker might face.
- Multiple offers. Each sign up can mean a new bonus, so it might be worthwhile taking up more than one account to receive all the offers. As ever, read the terms – and also note that on occasion, larger deposits might mean larger bonuses – so splitting them may not be the best choice.
- Spread winnings. Some brokers may look for winning traders on their books, with a view to restricting their trading, perhaps limiting trade size – or worse. While this threat is thankfully small, multiple accounts means spreading the winnings out. Most brokers will search for “winners” based on total profit rather than strike rate, so hiding the volume across broker accounts can help you stay below their radar.
Exchange versus OTC (Over the Counter) Brokers
A broker that offers an exchange is much closer to a traditional ‘broker’ than OTC brokers. An exchange performs the job of ‘middleman’. They will match a seller of an asset, with a buyer of the same asset, and charge a commission for putting the deal together. The market itself will decide the prices – if there are more sellers than buyers, the price will drift down until demand rises. If there are more buyers than those willing to sell, the option price will rise.
A broker operating an exchange does not mind who wins and who loses. They take no risk on the trade themselves (unless the traders are trading on credit). The broker will make their commission on the trade regardless of the outcome.
Due to this reduced risk for the broker, the returns for a winning trader are generally larger. Commissions are usually small relative to the size of the trade, meaning they do not impact the payout too much. Other benefits include the fact that stop losses can be applied, and also that trades can be closed at any time (to take a profit or reduce losses).
The complications with exchanges, comes from the structure. An exchange traded binary option will “trade” somewhere between 0 and 100. Where 0 is the figure used where an event did not occur, and 100 where it did. If the current price is currently 30, a ‘buyer’ would risk 30 times his trade size, to potentially win 70. A ‘seller’ therefore, would risk 70 to win 30. While not a complicated equation, it is slightly more complex than the straight forward over the counter option.
OTC (Over The Counter) Brokers
The most common type is the Over the counter (OTC) broker, but this type of firm is not really a ‘broker’ at all strictly speaking. They are the counter-party to one side of the trade. So where a trader opens a position, the broker will win or lose money, based on whether the trade wins or loses. Only where the broker has another trader who has made the exact opposite trade, will they have assured profits.
Due to this increased risk, the brokers will offer a lower payout which mitigates some of the risk they are taking. It is therefore likely to be lower than an exchange traded broker. Some firms will also have built in ‘hedging’ mechanisms to reduce risk further. In some cases, one side of trade might be made unavailable if liabilities get too large.
The simplicity of binary options is retained with OTC brokers. They have also made great strides in competing with exchanges by offering ‘cash out’ values for options, allowing traders to close positions early, and set up stop losses. Once those features become common the gap between OTC and exchanges will get smaller. For now, traders are better off trading on an exchange – but might be advised to learn the differences via demo account.
Have you had a problem with your broker? Submit a complaint
Deposit and withdrawal options do vary at each brokerage. Each of our reviews will explain which each firm offer, but below is a list of the most common options.
If you are looking for brokers that support a specific payment method:
- Wire Transfer
- Credit cards / Debit cards
All of the factors covered above will ultimately affect the way a trader plays the market, and therefore, their profitability. The ideal situation is to get a binary broker that offers:
- Several financial assets spread across several markets
- Offers a reasonable bonus with a good payout approaching 90%
- Offers flexible expiration dates without boxing traders into very long expirations.
Trading using a broker’s platform will only be enjoyable, and profitable, if you are using a reputable operator. You also need to choose one that suits your trading style best – only you will know what that is. Read the above binary broker reviews carefully before making that crucial trading decision, but remember you are not tied in to any single broker, and can pick and choose.
Best Binary Options Broker 2020!
Good Choice for Beginners!
Free Trading Education, Free Demo Account!
Get a Sign-Up Bonus Now!
2nd in our ranking!