Just like in any other financial markets trading, for an individual to access the binary options markets, he or she must go through a broker. A binary options broker simply offers the platform through which the trader can access the market, analyze the market and also trade.
To use the services of the broker, a trader must first register with the broker and create a trading account. During the registration process, the trader is asked to provide several documents or information that can help the broker identify him/her. Some brokers are usually very strict during the registration process though it is all for the security of your account.
Binary option brokers usually offer two main types of trading accounts: the real trading platforms and the demo account. The two can be owned at the same time by the same broker; a broker should have a demo account and a real trading account.
Every broker has a variety of real trading accounts that have different features. The most distinguishing features among the trading accounts are the commissions, spreads, personal account manager, the minimum initial deposit allowed and the withdrawal limits. In most cases, the broker will have an account for the beginners, the intermediate and the expert traders. Some brokers also have accounts tailored for the institutional traders.
The demo account is essentially where traders get to train and also get acquainted with the trading platform offered by the specific broker. This is especially important since different binary options brokers have different types of platforms. The demo account is also used for trying out new technical indicators and trading strategies. Actually, the trader should always experiment in the demo account with anything new before taking it in the real trading account.
Choosing a binary options broker
There are thousands and thousands of binary options brokers around the world and choosing the right one could be quite a hard task. There are various factors that a binary options trader should take into account.
Remember, you will be depositing some amount of your savings with the broker and there are also very many scammers in the internet waiting to steal your hard earned money and walk away with it just like that. It is therefore a delicate matter when it comes to choosing a broker.
A binary options trader should consider the following factors when choosing a binary options broker:
- Regulation and licensing
You should check to see that your broker is licensed and regulated by trusted regulations body. It is not a must that the broker be regulated in your country. As long as the broker is regulated in the place where the headquarters are, you should only check to see that he is allowed and given permission to conduct business in your country.
Depositing your money with a regulated broker is safe since you are sure that there is a body overseeing how the broker conducts its business. It is always advisable to work with regulated brokers. However, you should also avoid brokers who are primarily regulated by offshore regulating bodies.
- The minimum initial deposit amount allowed
The trader should choose a broker who has a real trading account that allows a minimum initial deposit equivalent to the savings he/she is willing to invest in Binary Options trading.
- Types of binary options
The more the variety of binary trading options/trades offered by the broker the better. This will give the trader a chance to choose the one that best suits his or her trading needs.
- The returns/payouts and refunds
The trader should also look at the amount of payouts offered by the broker. Payout is the percentage of profits that a trader gets once the trade expires in his/her favor. The larger the payouts the better.
Some brokers also offer a certain amount of refund in case the trade expires out-of-money. For example, you will find a broker with a payout percent of 82% and a maximum refund of 5% (commonly put as: payoff/refund: 82%/5%). The brokers offering a refund are better than those who don’t.
- Demo account
The demo account is a very crucial factor. Traders should always ensure that they go for brokers with demo accounts.
- Payment methods allowed by the broker
Different brokers allow clients to use different payment options in depositing and withdrawing funds. The wide the variety payment options the better for the trader.
The trader should especially ensure that the broker the cheapest payment option available in their country.
The trader should also take into consideration the duration that the withdrawal and depositing process takes. The faster the processes the better.
Please check my list of top-5 most reliable and renamed binary option brokers.