Given the large number of binary options brokers offering services to individual investors, finding the right one for your unique budget, experience level, expertise level and interests is not an easy task. In order to help you make up your mind about the best options broker for you, we have prepared a list of things for you to consider in your evaluation.
1. Is the broker regulated?
Regulation is important because only with regulated entities can you be confident that your funds are safe and looked after in separate accounts. Although it varies depending on the authority in question, regulators typically require brokers to not tamper with 100% of the funds deposited by individual traders. Those without regulatory approval are not obligated to keep deposited funds separate and therefore impose additional risks on your capital. For example, if the unregulated entity goes bankrupt there are no guarantees that you will be able to access your deposits. Regulated entities provide investors with greater assurance with respect to asset protection.
2. What assets can I trade?
Brokers vary widely in the number and type of assets that they offer to their clients as underlying assets. Some brokers offer more than 350 assets that span commodities, currencies, indices and stocks. Others, however, offer a far more limited set of underlying assets on which you can trade. Before making a final decision, make sure the entity that you are about to make a deposit with supports trading in a variety of underlying assets, especially those assets that are of special interest to you.
3. What educational tools can I access?
The educational tools on offer by different brokers vary widely. Some offer a few articles and videos, some offer nothing at all, and others offer a rich content library coupled with one-on-one live training sessions. The sophistication of educational tools required will depend a lot depending on your level of experience. Those traders who are looking to get started should seek offerings where a rich content library is available, and those who are looking to craft their own custom strategies should make sure they can get access to live one-on-one training services.
4. What option types can I trade?
Trading platforms vary a great deal in terms of the types of contracts that can be entered into by end users. Some offer ‘vanilla’ CALL/PUT contracts, which are fine but tend to limit the degree of control that traders have over their positions. Others offer a much richer set of contract possibilities, including things like “Long-Term Equity Anticipation Securities (LEAPS),” ladders,” “60 second options,” and other such contracts which enable individual investors to craft a broader range of speculative positions. For some traders a simple ‘vanilla’ offering will be sufficient, but traders who are getting into intermediate and advanced territory should definitely make sure that their service provider can support a greater variety of contract types.
In this article we have addressed four of the key questions that every individual trader should ask before making a deposit with a service provider. Of course there are many other things to consider, but answering these questions will enable you filter out some of the less suitable service providers from the long list of service providers out there, and will put you well on your way to finding a provider that is ideally suited to your experience, budget and investment objectives.
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4 thoughts on “4 Questions to Ask When Selecting a Binary Options Broker”
My question to myself would be, wait, I’m trading options now?
Cheapmom, options can be used as a way to hedge a long-term portfolio. They can be very practical if used correctly and don’t necessarily need to be lumped together with the dirty word of “trading.”
To check if the broker is regulated, is very important. I can already see the scandals of the sites that are not regulated, just like it was the case in the online poker industry.
Are all regulated brokers good for trade ? I know that , there are many regulated brokers that are scam . What do you want to say about this ?