Best Binary Options Brokers
(Last updated: January 10, 2017.)
|Stern Options||Pending EU-regulation||Available – Ask your account manager||BinaBot||$250|
|Nadex||US (Not available outside of the US.)||Free||N/A||$250|
Binary option trading lets you generate potentially significant profits from the comfort of your home. The way it works is quite simple. You sign up with a binary options broker (for a list of legit binary brokers, see below) and deposit money. Then, you place trades. If you win a trade, you make around 80% of what you invested. If you lose a trade, you lose your investment amount.
Unlike Forex, in binary options you can never lose more than your investment. Today many signal services are available to allow even complete beginners to trade profitably.
Unfortunately, there are two main dangers in the world of binary options. The first danger involves scam brokers, secondly, there are fraudulent signal services.
- Scam binary brokers operate in various ways, such as stealing money, denying withdrawals and manipulating trading data to cause losses.
- Fraudulent signal services simply provide bad signals.
If you’re reading this page, you are lucky! Especially if you didn’t yet sign up with any binary options signal service or broker. On this page, I will provide an outline of the safest way to go about binary options trading. I promise that if you follow my guidance, you will be making money in no time!
So let’s start trading binary options!
How to choose a binary options signal service
I would like to start not at the beginning but at the end. As I mentioned, after selecting a broker, you will need to place trades. Of course, you can learn how to become a trader, but this page is oriented toward newbies who are interested in making easy money and not becoming professional traders. So basically, you’re going to need to sign up with a trustworthy signal service. There are a few signal software and paid signal services which are not bad, but if you ask me, your best option is to go with Mike’s manual signals group on Facebook. Why?
- First of all, it is free. Not even a broker registration is required so if you already have a broker account, you won’t be expected to open a new one. The donation Mike “requires” is not really a requirement, but a suggestion.
- Secondly, signals are provided around the clock, 24 hours per day, 5 days a week.
- Educational webinars are available (for an extra charge, paid directly to the signal providers.) These are not at all mandatory and are only recommended for people who are interested to learn how to become traders.
Opening a Facebook account is free and if you’re worried about privacy, you can even open an anonymous FB account.
Now that you have a signal service, all that is left is to sign up with a legit broker. One that will honor your withdrawal requests and that will not manipulate your trading results. To make sure you sign up with a trustworthy broker, you should prefer a broker which is regulated in your country. This way, if you have any problems, you can always contact the regulator or at least warn your account manager that you will file a complaint with the regulator. In reality, regulated binary brokers will usually not risk losing their licenses, which cost a lot of money and take a long time to procure.
How to Choose Binary Brokers
Here’s an easy guide for choosing a binary broker based on your location and other factors. If you’re new to binary options, after signing up with a broker, please contact me via Facebook to receive personal, one-on-one training from me.
I’m in the US and I want to trade on a US-regulated real exchange
I’m in Australia, Canada, Belgium, France or the US
Many countries do not yet offer regulation for binary options. Finpari would be an excellent choice for anyone who lives in such countries and cannot sign up with a regulated broker. Read my Finpari review. They also offer a demo account and are accessible from anywhere, except the US.
Binary Mate is run by the same people, but the platform is proprietary and provides video chat support. It’s available in all countries, including the US.
I’m interested in trading binary options on a real EU-regulated exchange, but I’m not in the US, OR I would like to trade Forex
IG would be your best choice if you’re interested in trading either binary options or Forex. Here’s our IG review.
I would like to start with a FREE demo account or I can not afford a $250 deposit
I suggest that if your location allows, sign up with IQ Option since they offer a FREE demo account before opening and funding a regular account. Minimum deposit $10. For more information about IQ Option, check out our IQ Option review. IQ Option does not provide service in Canada, Australia, USA, Japan, Belgium, France, Russia and a few other countries.
If none of the above options are applicable to you, please send me an email (ObjectiveBO@gmail.com) and I’ll find you a solution as soon as possible.
Now that you have decided which broker you would like to register with, please make sure to read the below section on how to deal with binary options. This is very important reading which will protect you from getting scammed, or just sign up for a really bad deal.
Guidelines for Dealing with Binary Options Brokers
Despite a clear direction towards regulation and overall fairness, the binary options trading industry is still a bit of a Wild West. There are scores of unregulated binary options brokers and some of the regulated ones push aggressive sales tactics and bonus deals, designed to make it impossible for traders to cash out. In order to understand why these things happen, you need to understand what sort of business models there are from the brokers’ perspective and what these different business models mean for you, the trader.
Brokers regulated by CySEC, by various European authorities as well as regulatory bodies based on various Caribbean islands, work the single market-maker approach. What this means is that the broker is the only market maker in the equation: the entity making the pricing on all the tradable underlying assets. Essentially, the trader is going up against “the house,” which controls all the variables of the game. The fundamental conflict of interest is obvious here. Furthermore, the unhealthy nature of this setup is also evident in the fact that when they win, traders win money from the broker. When they lose, they lose money to the broker. Brokers simply cannot afford to have too many successful traders, because that will drive them to bankruptcy.
Although currently more or less accepted, this business model isn’t one embraced by the ESMA, the authority over all national EU-based regulators. There are several EU member states the financial authorities of which have embarked on a virtual crusade against what’s known in the industry as the “CySEC” model. For now, the ESMA has come out swinging against the bonus-based promotional model, which is most often quite openly abusive. Not only do the terms associated with the bonuses encourage traders to trade and to deposit more, they may also make it downright impossible for them to earn out the bonuses and thus to cash out.
The mathematically more viable binary option business model is the US one, which is exchange-based. US binary option trading works just like an exchange. Traders trade against each other, which means that they’re the ones who do the pricing, through the time-honored dynamic of supply and demand. US binary options trading is a zero-sum game: whenever a trader wins something, he wins it from another trader. The broker brings traders together and it makes its money off commissions and fees.
In this model, there’s no conflict of interest, and there’s no possibility of abuse pricing-wise. It is indeed a sustainable model, the only one that can ever hope to gain the stamp of approval of US regulatory authorities.
US binary option trading, represented by operators like Nadex and CX (Cantor Exchange), is a range-bound business too. The value of options is always between $0 and $100. They start out somewhere between these two values, set by supply and demand, which is in turn shaped by the odds regarding the possible outcome of the option. As the expiry of the option draws near, its value varies, only to end up worth either $0 (out of the money) or $100 (in the money).
Guidelines for Dealing with Binary Option Brokers
Now that you know everything that truly matters about binary option trading, let’s take a look at what else you should pay attention to, when looking for a broker.
Signing up with a regulated broker is always the way to go. While we would love to preach a zero-tolerance policy in this respect, sometimes the best path to success may indeed lead through an unlicensed broker. If you stick to the following guidelines though, you should be OK anyway.
Binary Options Managed Accounts
Managed Accounts are among the nastiest practices the binary option industry currently fosters. One should always steer well clear of them, because by making use of the services of an account manager, one will give up the last semblance of control he/she has over the trading process. One should never lose sight of the fact that the account manager works for the broker, is paid by the broker, and therefore has the best interest of the broker as his/her top priority. As described above, those interests are radically opposed to the traders’. Account managers won’t shy away from various pressure-techniques to get traders to deposit more money and to trade more. In the end though, managed accounts will end up emptied.
The best way to handle trading is to find a good binary options signal service or to just trade on your own. Just tell the pushy account manager that you do not need his/her services and that you want to trade on your own, with the money you’ve already deposited.
Sometimes, account managers will push their traders to take up loans and to borrow money from their friends. Never do that. Always only trade with money you can actually afford to lose. Set aside a sum for this purpose and deposit that. Never let anyone strong-arm you into pushing any more in the middle. When starting out, you’re best off sticking with one or two brokers and the minimum required deposits. In order to make do with these minimums, you’ll need to exercise proper capital management. In this respect, never risking more than 5-10% of your balance, is the way to go.
There are very few legitimate auto traders out there. Even those are semi-automated and are only appropriate for experienced traders, never for newbies. Make sure you properly research any entity offering such services. The vast majority of auto traders out there are nothing but scammers, who peddle software built on a couple of technical indicators and a losing money-management module. Moreover, the marketing tactics used by such shady operators include various wild promises and obviously abusive tactics, punctuated by amateurish acting. Don’t fall for such offers.
You should never accept bonuses. As specified above, almost every one of the bonus deals offered by regulated and unregulated binary options brokers is abusive, aiming to lock up one’s funds and to make it impossible to cash out. Good brokers will always allow their traders to cancel their bonuses at a whim. Better yet: they won’t offer any bonus deals at all, in compliance with the ESMA’s latest demands in this regard.
The Bottom Line
Keep things as simple as possible, regulated if possible and do not allow anyone to “assist” you. If you need help, look to proven 3rd party signal providers. Do not fall for any deals that look too good to be true.
Binary Options Brokers Reviews
Check out our Binary Options Broker Complaints Center, especially if you’ve been scammed and would like to warn others.
Here are the binary options brokers we have reviewed:
Let us know if you want us to review any specific binary options brokers.