If you are new to the Binary Options industry, you might be overwhelmed with the number of available brokers to choose from. A lot of them are unregulated or scam brokers that are looking to steal your money. In some cases, it may be beneficial to register with an unregulated broker, especially if you’re interested in automated trading systems. If a broker is unregulated, it does not immediately mean it’s a scam broker. Some brokers have very good reasons for not being regulated. However, if you’re not interested in automated trading and all you really want is a broker account set up so you can trade on your own, we recommend going with a regulated one (since you have the option to). We have extensively reviewed binary options brokers and have selected a few which we know are legit and will work well for you:
Binary Options Broker Guidelines
There are a few important things that you will need to know about binary options brokers. Binary options brokers are businesses, and like all other businesses, their goal is to turn a profit. Whenever a trader makes money, a broker loses money, and whenever a trader loses money, a broker makes money. It is crucial that you are aware of this relationship. Due to this conflict of interests, it is not uncommon for a broker to employ sales tactics that can cause a trader to lose money. Here are some guidelines that you can follow when dealing with brokers.
- Legitimacy – It is preferred if you sign up with a regulated binary options broker. If you are unsure which brokers are regulated, consult our list. In some cases, traders will have no other option but to register with an unregulated broker. If you find yourself in this position, you can still sign up and ensure your safety by following the rest of our guidelines.
- Managed Accounts – Do not sign up for managed accounts. If a broker offers to manage your account for you, decline it. It is unwise to accept trading advice from a party that profits when you lose. Instead, use a trustworthy signal provider or, if you are confident with your trading knowledge, trade on your own.
- Initial Deposit – Never invest more money than you can afford to lose. When it comes to trading or investing, there is always a risk factor involved. It is recommended that you deposit the minimum amount required by the broker so you can test the platform out. Once you get comfortable with the platform and are seeing results, you can consider adding more funds. You might get calls from the sales department of a broker urging you to add more and more funds with all kinds of promises. Never let any salesperson pressure you into adding more than you are comfortable with. Simply tell them that you are not interested in adding more funds and that you will contact them when you are ready to do so.
- Bonuses – Bonus offers can be very enticing but it is recommended that you stay away from those. Special terms and conditions apply when you accept a bonus. They may prevent you from easily withdrawing your trading funds. Some brokers would require that you reach a trading volume of 40x your initial deposit or bonus claimed, before allowing withdrawals. For example, if your initial deposit or bonus was $100, you would have to reach a trading volume of $40,000 before you are allowed to withdraw your funds. Be extremely cautious when dealing with bonuses. Read and understand the terms and conditions thoroughly before accepting any.
- Money Management – Do not invest more than 5-10% of your trading capital in a single trade. If you are trading with a capital of $500, your trade limit for a single trade should be between $25 or $50. Good money management is extremely important if you wish to be successful in binary options.
If you’ve had bad experiences with scam brokers or have any other broker-related question, let us know by leaving a comment below or by contacting us here.