Choosing the right binary options broker is a key factor that will determine your success as a trader. If you don’t trust the broker and you are not comfortable with the trading platform, you will most probably fail to meet your potential.
Before you register at a binary broker, we recommend seriously researching the company and trading platform.
Contrary to what you might have read online, with so many articles talking about the best binary options broker, the truth is that choosing the right broker depends a lot on the trader himself or herself and not only on the broker.
This is one of the biggest mistakes traders often end up making: ultimately settling for a binary options broker that fails to live up to their expectations. Although regulators have toughened up the industry, there are still a lot of binary companies that continue to operate under the radar.
Therefore, it is in the trader’s best interest to conduct proper research before settling for a broker to trade with.
So, what are the factors a trader must research when choosing a binary broker? Here are some of the most important things to consider, as well as why they matter.
A binary options broker must be regulated. The concept of financial regulation is often misunderstood. First and foremost, a regulated company must adhere to the guidelines laid out by the financial regulator or the watchdog.
These guidelines can be a number of things, but they are broadly classified into certain practices in conducting the business, ensuring that the company behind the broker is well capitalized, opening the books to audits by the financial watchdog and so on.
While most of these do not impact you directly, the guidelines ensure the broker business is transparent with checks in place to prevent, or at the very least minimize, fraud.
For binary traders, a regulated company gives you the additional benefit of trading with a broker that you can trust in which the financial watchdog pays close attention to ensure no unfair business practices are conducted.
As a general rule of thumb, traders who sign up with a firm that is regulated in their own jurisdiction can expect more benefits, such as compensation for fraud and so on.
Focusing on the trading software the broker uses can play an important role. After all, you certainly don’t want your trading platform freezing before expiry and slowing in navigation between features.
Some binary brokers use a white label trading software, but many focus on building their own trading software from scratch. No matter what kind of software is used, make sure that you spend time on the platform to see whether it is the right fit for you.
In our opinion, the trading platform should be well-designed, offering candlestick charts on wide screens with some basic indicators at least. The speed is also important; the contracts must be executed in split seconds without any delay.
The expiry time should be flexible and include both short term and daily options. The ideal minimum trade amount is $1 up to $10; a $25 minimum trade can easily destroy your strategy when you are beginner.
Using a demo trading account from the broker can be a great way to test drive the trading software to become acquainted with it. You can also test the mobile app versions to check whether all features are included.
The trading payouts are another factor that traders should focus on. Most binary brokers pay around 80% and higher. Some other brokers advertise abnormally high returns of 300% and even more. Instead of blindly falling prey, traders should investigate the claims further.
In most cases, the high returns are offered on very risky exotic binary options, such as the High yield options, while payouts on the regular contracts are in the normal range of 80% or more. At the end of the day, you are mostly interested in the High/Low options return and not so much in exotic contracts.
You can find good brokers with 90% payouts or even higher, and we believe this a fair yield. Brokers with 70% payouts wouldn’t be included in our top selection.
The customer support should be always available to you via live chat or ticket messages, and must provide replies in up to one hour. The support shouldn’t hide any information related to your account and must always reply politely.
If you do not understand English or feel more comfortable using another language, then make sure your broker has a support team that is multi-lingual and speaks your language. Most binary brokers have German, Russian, Spanish, French, Italian and Arabic speaking support personnel in addition to English.
You should also check on the different ways you can reach the broker’s representative; email, phone and live chat are must haves, so you can quickly contact the support team if you have any trouble.
Speaking with representatives before you register an account at a broker and asking all the information you need is recommended. Thus, you will check the speed of replies and whether they are trying to hide information or trick you.
Deposits & Withdrawals
Minimum deposit and withdrawal amounts also need their due attention. If you are comfortable depositing just $100, then it is better to look for a broker that allows you this amount, rather than choosing a broker that requires a higher minimum deposit.
Traders should focus not just on deposits but also on withdrawals because most of the fees are applied to withdrawals. Thus, take your time to go through the details and to determine whether there are any additional withdrawal fees and so on.
The withdrawal process shouldn’t take more than an hour when you are using an e-wallet or credit card. If your broker asks you to wait 3 to 5 business days for approval, think twice on whether this is your best option.
Which is the best broker?
When you are choosing a binary options broker, always make sure to take your time and do your due diligence. There are enough documented cases about fraud, and despite the fact that financial regulators have become tougher on the brokers and the type of advertising they can do, there are still many dodgy firms you need to steer clear of.
Most importantly, traders should understand there is no best broker, and traders should focus on the aspects or features that matter to them the most and decide on a trading platform, rather than simply opening an account with a broker because that broker claims to be the best.
Remember, at the end of the day, it is all about how well you research the broker. If you are a serious and long-term trader, having the right broker can go a long way in determining your success as a binary options trader.