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Highest Payout Binary Options Brokers
Having acquired basic knowledge on binary options, the prospective investor or trader ought to move to the next step towards engaging in one of the most promising and exciting kind of investment. This involves selection of a best binary options broker. The selection process may sound easy but the fact of the matter is that it can be involving especially if the investor wants to get good returns on his or her investments. One is supposed to take time in the selection process so that the kind of binary options broker that the investor ends up with meets the needs. Making a wrong choice at this stage may lead to undesired results as well as problems with the trading platform, poor support services and low quality investor services.
Here are important characteristics and qualities of best binary options brokers that investors need to consider
Best binary options brokers
Best binary options broker is one who strives to make the investor’s job easier. An investor who is looking for a broker need to find one who offers an easy sign up, this enables the trader to get an account as well as start running it immediately. To get one who fits this description, an investor need to carry out a search so as to come up with an individual who is reliable. The investor can also ask for recommendations from people who have invested before, this will give a true and clear picture of the broker. Also the reviews from the internet will tell more about the reputation of a broker. If the people who have used a given platform are not happy with the services which they were offered as far as signing up process as well as payment methods are concerned, this should raise an alarm.
After ensuring that the broker whom you wish to trade with have an easy sign up process it is also important to establish whether the payment methods which are used by the broker meet your needs or they are well supported in the regions where you stay. There are some cases where brokers in some areas use payment methods which are unavailable allover the world. When the payment methods which are used by the broker are either unsupported or are unavailable in your area, when it comes to withdrawals and deposits, there might be an issue.
Binary options web platforms and mobile platforms
There are various trading platforms that are used in the trading of binary options. We have the mobile based and web based trading platform as the main types. It is important for an investor to find out the kind of platforms that a broker whom he or she intends to register uses in the course of trading. If the investor is planning to trade using a mobile device for example a tablet, then there is a need to establish whether the broker’s platform supports such tools. It may be frustrating to register and discover later that the devices in your possession are not compatible with a trading platform which is used by the broker. This will force the trader to spend extra money in buying a device which will work well with the trading platform. The best trading platforms in the market are normally compatible with most of the devices and can also be accessed from any part of the world as long as the area is covered by internet connections. A good trading platform also needs to have extra tools which help the investor to navigate through the system. The investor need to access the educational materials so that the learning process can be easier.
Binary options assets
There is a need to establish the kind of trading assets that each broker allows in their platform. You may find a very good broker in terms of the payment methods, compatibility, reliability but find that the trading assets available are somehow limiting .This basically means that as an investor one will not be satisfied since there is an outright limitation as far as the range of asset is concerned. Before engaging and even registering, an investor should check the assets that a given broker offers as well as make sure that popular assets are allowed.
Binary options broker payout is among the most important factors that any investor should consider when it comes to selecting an appropriate broker. While coming in to trade in binary options any investor aims are reaping the best and highest benefits. If the rate of return is low, then this will not be achieved, therefore the rate of returns offered by an individual broker should form the basis of decision making when it comes to selecting an binary options broker to work with. Normally the binary options brokers are known to offer returns ranging from 65 to 85 per cent, although in some case the rate may be higher. There are also some special kinds of binary options which offer a return of 500 per cent.
To succeed in binary options trade, an investor must have access to vital information on the assets he or she is trading on. There is also a need to access vital technical tools to help in execution of strategies as well as carry out the necessary technical analysis. Most of the brokers provide access to the necessary technical tools but one might not be sure, therefore it is important to establish whether the investor will be allowed to access the necessary tools required for technical analysis.
Binary options demo account
A binary options broker is supposed to provide the new investors with a demo account as part of educating them on how to trade. As an investor one should not use the services of a broker who does not provide an opportunity to carry out trade through a demo account. Demo accounts provide an environment similar to earn that exists in the normal trade, here the new investors learn all that is needed to carry out a successful binary options trade. One familiarizes with the interface of a trading platform and learns about the trade without having to risk the money. It is only after an investor has understood how the trade operates should they graduate to the real trade.
Support during the early days in trading assets is very important to an investor, this not only gives then a chance to ask for guidance but also any questions which may arise in the course using the services. The broker who is selected should have a support staff who are skilled, experienced as well as polite and helpful when it comes to dealing with issues which arise.
Making the right decision when it comes to the selection of brokers will largely determine the success of the investor, therefore every step should be taken to ensure that the one who is selected will offer all the necessary support, is reliable and at the same time have the best rate of return in the market.
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How to open an account
The accounts requirements
An investor is required to fill in information which almost every website requires in the course of registration. Here one is required to provide the name, residence, the currency which is preferred, email, password and the payment method. Contact details such as phone number are need to be used during the verification process as well as in case the investor needs support from the broker.Investors are allowed to register two accounts where one uses real money and the other one is a demo account. A demo account is necessary as it offers the investor a chance to learn before they start using real money.After the registration process is over, the investor will be required to verify the account. Most brokers carry out this process for security measures. The process ensures that the person who has registered is of age and at the same time, it is a real person. The verification process may be through sending a photograph as well as scanned images of personal identification documents such as driving license, national identity card or a passport. Although the process may be tedious, it guarantees the investor’s safety against identity theft as well as fraud. Some brokers will only require you to verify the account through sending an email or through accessing the website using a one time link which is sent through the email.The registration process depends on the broker that you have chosen, for some it may take only a few minutes while others a couple of hours to days. When asked to verify the account, it is not that the broker does not trust but rather it is a way of ensuring that fair and secure trade is maintained all the time
Various payment methods are available, an investor is supposed to select one which is allowed in his or her region. One can select to deposit or withdraw using a check, PayPal, skrill, money bookers, web money, bitcoins among other payments methods. Minimum and maximum deposits and withdrawals are set by individual brokers; therefore it is important for an investor to check with them. Some brokers may require a minimum of $ 100 as an investment while other may ask for more.
What You Need To Know About Binary Options Outside the U.S
What Do You Need To Know About Binary Options Outside the U.S?
Binary options let traders profit from price fluctuations in multiple global markets, but it’s important to understand the risks and rewards of these controversial and often-misunderstood financial instruments. Binary options bear little resemblance to traditional options, featuring different payouts, fees, and risks, as well as a unique liquidity structure and investment process.
Binary options traded outside the U.S. are also structured differently than those available on U.S. exchanges. They offer a viable alternative when speculating or hedging but only if the trader fully understands the two potential and opposing outcomes.
The Financial Industry Regulatory Authority (FINRA) summed up regulator skepticism about these exotic instruments, advising investors “to be particularly wary of non-U.S. companies that offer binary options trading platforms. These include trading applications with names that often imply an easy path to riches.”
- Binary options have a clear expiration date, time, and strike price.
- Traders profit from price fluctuations in multiple global markets using binary options, though those traded outside the U.S. are structured differently than those available on U.S. exchanges.
- Non-U.S. binary options typically have a fixed payout and risk, and are offered by individual brokers rather than directly on an exchange.
- While typical high-low binary options are the most common type of binary option, international brokers typically offer several other types of binaries as well.
Binary options outside the U.S. are an alternative for speculating or hedging but come with advantages and disadvantages. The positives include a known risk and reward, no commissions, innumerable strike prices, and expiry dates. Negatives include non-ownership of the traded asset, little regulatory oversight, and a winning payout that is usually less than the loss on losing trades.
Understanding Binary Options Outside the U.S
What Are Binary Options?
Binary options are deceptively simple to understand, making them a popular choice for low-skilled traders. The most commonly traded instrument is a high-low or fixed-return option that provides access to stocks, indices, commodities, and foreign exchange.
These options have a clearly stated expiration date, time, and strike price. If a trader wagers correctly on the market’s direction and price at the time of expiration, they are paid a fixed return regardless of how much the instrument has moved since the transaction, while an incorrect wager loses the original investment.
The binary options trader buys a call when bullish on a stock, index, commodity, or currency pair, or a put on those instruments when bearish. For a call to make money, the market must trade above the strike price at the expiration time. For a put to make money, the market must trade below the strike price at the expiration time.
The broker discloses the strike price, expiration date, payout, and risk when the trade is first established. For most high-low binary options traded outside the U.S., the strike price is the current price or rate of the underlying financial product. Therefore, the trader is wagering whether the price on the expiration date will be higher or lower than the current price.
Binary Options Outside the US
Foreign Versus U.S. Binary Options
Non-U.S. binary options typically have a fixed payout and risk and are offered by individual brokers rather than directly on an exchange. These brokers profit from the difference between what they pay out on winning trades and what they collect on losing trades. While there are exceptions, these instruments are supposed to be held until expiration in an “all-or-nothing” payout structure.
Foreign brokers are not legally allowed to solicit U.S. residents unless registered with a U.S. regulatory body such as the Securities and Exchange Commission (SEC) or Commodities Futures Trading Commission (CFTC).
The Chicago Board Options Exchange (CBOE) began listing binary options for U.S. residents in 2008. The SEC regulates the CBOE, which offers investors increased protection compared to over-the-counter markets. Chicago-based Nadex also runs a binary options exchange for U.S. residents, subject to oversight by the CFTC.
These options can be traded at any time, with the rate fluctuating between one and 100, based on the current probability of the position finishing in or out of the money. There is full transparency at all times and the trader can take the profit or loss they see on their screen prior to expiration.
They can also enter as the rate fluctuates, taking advantage of varying risk-to-reward scenarios, or hold until expiration and close the position with the maximum gain or loss documented at the time of entry. Each trade requires a willing buyer and seller because U.S. binary options trade through an exchange, which makes money through a fee that matches counter-parties.
High-Low Binary Option Example
Your analysis indicates the Standard & Poor’s 500 index will rally for the rest of the trading day and you to buy an index call option. It’s currently trading at 1,800 so you’re wagering the index’s price at expiration will be above that number. Since binary options are available for many time frames—from minutes to months away—you choose an expiration time or date that supports your analysis.
You choose an option that expires in 30 minutes, paying out 70% plus your original stake if the S&P 500 is above 1,800 at that time or you lose the entire stake if the S&P 500 is below 1,800. Minimum and maximum investments vary from broker to broker.
Say you invest $100 in the call that expires in 30 minutes. The S&P 500 price at expiration determines whether you make or lose money. The price at expiration may be the last quoted price, or the (bid + ask)/2. Each binary options broker outlines their own expiration price rules.
In this case, assume the last quote on the S&P 500 before expiration was 1,802. Therefore, you make a $70 profit (or 70% of $100) and maintain your original $100 investment. If the price finished below 1,800, you would lose your original $100 investment.
If the price expires exactly on the strike price, it is common for the trader to receive her/his money back with no profit or loss, although brokers may have different rules. The profit and/or original investment is automatically added to the trader’s account when the position is closed.
Other Types of Binary Options
The example above is for a typical high-low binary option—the most common type of binary option—outside the U.S. International brokers will typically offer several other types of binaries as well.
These include “one-touch” options, where the traded instrument needs to touch the strike price just once before expiration to make money. There is a target above and below the current price, so traders can pick which target they believe will be hit before the expiration date/time.
Meanwhile, a “range” binary option allows traders to select a price range the asset will trade within until expiration. A payout is received if price stays within the range, while the investment is lost if it exits the range.
As competition in the binary options space heats up, brokers are offering additional products that boast 50% to 500% payouts. While product structures and requirements may change, the risk and reward is always known at the trade’s outset, allowing the trader to potentially make more on a position than they lose. Of course, an option offering a 500% payout will be structured in such a way that the probability of winning the payout is very low.
Unlike their U.S. counterparts, some foreign brokers allow traders to exit positions before expiration, but most do not. Exiting a trade before expiration typically results in a lower payout (specified by broker) or small loss, but the trader won’t lose their entire investment.
The Upside and Downside
Risk and reward are known in advance, offering a major advantage. There are only two outcomes: win a fixed amount or lose a fixed amount, and there are generally no commissions or fees. They’re simple to use and there’s only one decision to make: Is the underlying asset going up or down?
In addition, there are also no liquidity concerns because the trader doesn’t own the underlying asset and brokers can offer innumerable strike prices and expiration times/dates, which is an attractive feature. The trader can also access multiple asset classes anytime a market is open somewhere in the world.
On the downside, the reward is always less than the risk when playing high-low binary options. As a result, the trader must be right a high percentage of the time to cover inevitable losses.
While payout and risk fluctuate from broker to broker and instrument to instrument, one thing remains constant: losing trades cost the trader more than they can make on winning trades. Other types of binary options may provide payouts where the reward is potentially greater than the risk but the percentage of winning trades will be lower.
Binary Options Brokers and Platforms
How to Compare Binary Options Brokers and Platforms
Trading binary options is done through a broker, but how do you choose the right one for you? Binary options brokers and their income matter to the professional trader, who wants to know about features and value for money.
So, what do you need to ask when selecting a broker? Well, you could start by asking the kind of questions that we’ve found customers typically ask. They usually want to know how much the minimum deposit is (and in our experience it could be anything from $5 to $250), who the broker is regulated by and whether they hold a licence, whether they offer demo accounts to practice on, whether they offer a signal service and what that costs, whether there is a mobile app, whether new traders get a bonus and what the terms and conditions are like.
And that’s just for starters. Potential traders also want to know which platform has the most comprehensive feature set, like detailed charts and technical analysis indicators. And some traders want to know if they’ll have access to a wide range of assets, like commodities, Forex, indices etc.
Traders also care about expiry times. Binary options brokers and their income are intimately tied to what they offer. The broker that offers ranges from half a minute to end of day and beyond is definitely more attractive than those that don’t. Minimum trade size, available option types (like Touch, Ladder, Boundary, Pairs and so on), extra tools like early closure, Metatrader 4 (Mt4) plugin or integration all matter to many traders.
Do they offer automated trading software? What’s the help department like? Does it have live chat or are you going to be waiting ages for emails or phone calls, and will the help you get come in a language that you understand?
Binary options brokers and their income are also linked to their payouts. Who offers the highest returns?
Some of the most well-known regulatory bodies:
CySec – The Cyprus Securities and Exchange Commission (Cyprus and the EU)
FCA – Financial Conduct Authority (UK)
CFTC – Commodity Futures Trading Commission (US)
FSB – Financial Services Board (South Africa)
ASIC – Australia Securities and Investment Commission
There are other regulators as well as these, and some brokers may well be regulated by more than one of them. This is happening more in Europe where binary options are experiencing greater scrutiny than before. All the most reputable companies will be able to demonstrate that they are regulated, because binary options brokers and their income depend on it. It might be the most important criterion for choosing a binary options broker.
There are other things to look at as well though, such as signing up bonuses. Binary options brokers and their income depend on attracting new custom, so they will often offer free demonstration accounts, or introductory free trades to tempt you in. Always check the terms and conditions of these though, to make sure that they don’t bring any unwelcome restrictions or expectations, and don’t make them the main reason for signing with that broker.
Binary options brokers and their income depend on happy traders like you, and one of the best ways to ensure that you are a happy trader is to give you the chance to practice on their specific software platforms. You don’t want to have to spend money just to learn, so many brokers offer demo accounts. There’s nothing to stop you opening practice accounts at a few different brokers, so you can take their software for a test drive. Are the payouts different with different brokers for the same asset? It’s well worth checking while you’re testing.
Low Minimum Deposits
When you’re starting out trying binary options, low minimum deposit requirements can be appealing because that keeps your risk low. Some brokers offer minimum deposits of just $5, and there is a growing number that will let you trade for less than $50.
Brokers also set minimum requirements for how much you trade as well, and it’s worth shopping around because of how much these can differ. Minimum trade figures vary between $1 and $25, which is a lot if you plan to trade frequently. If you’re expecting to trade a lot and you don’t have much experience then you could potentially lose a lot, which is one of the reasons why practice accounts are so attractive for beginners.
Payout percentages vary between brokers. Binary options brokers and their income rely on the difference between payouts and deposits, so they’re keen to maximise their advantage. There are variations but it isn’t always easy to compare brokers’ payouts because they can alter according to the underlying asset in the trade, as well as the expiry time of the option. Also, payouts will move because the broker will try to mitigate their risk level. They’re a moving target!
So, the best you can do as an investor, is to check the payouts for assets, and expiry times they are most likely to make, and then look for whose terms seem best. Doing this kind of research is another reason to recommend Demo accounts.
Exchange traded and OTC brokers offer different payouts— so they aren’t easy to measure against each other. That said, exchanges are usually the better value option.
It’s clear that it isn’t easy to select the best broker but then perhaps that doesn’t matter as much as you think, because you aren’t tied to just one. If you open an account then and end up regretting it, you can move to another, and there’s nothing to stop you having multiple accounts open at the same time either.
Which is the Best Binary Trading Platform?
It’s hard to say which trading platform is best, because our preference may be different from your preference. It all comes down to personal taste. Some traders favour simplicity while others can’t live without granular detail.
That said, platforms do vary in the quality of their features and usage. You’ll find that brokers who offer CFD’s as well as binary options will have the best software trading platforms. So, names like Nadex and IQ offer a highly professional trading platform. The more professional brokers will usually provide MetaTrader integration, and some of them will offer both mt4 and mt5 functionality.
Binary options brokers and their income – how do they make money?
Binary options brokers make money in two ways: as a counter-party, via payout percentages, and via the spread or commission of exchange brokers.
If you’re coming to OTC brokers for the first time then you might be wondering where the commission is, but there isn’t any! That’s why the term brokers doesn’t really apply here. It’s a bit of a misnomer because brokers usually act as middlemen, or deal arrangers. But in this case, they’re acting as the opposite party in each one of their customers’ positions. That’s why there isn’t any commission or fee for each trade. With binary options the relationship is more like the one between a gambler and a casino.
Where brokers cover both sides of the trade, that makes for a generous margin. Where they don’t, the payout amount still protects them to some extent. In certain situations, the broker will also hedge its own position to reduce risk.
Companies that trade binary options using an exchange act a bit more like a broker. In the OTC market the platform is the counter party, but with exchange traded options, the broker is the middleman, acting as a go-between for buyers and sellers in return for a commission that’s usually part of the spread, rather than an upfront fee.
Brokers like this because they’re not exposed to as much risk, and traders like it because less risk for the broker means they’re able to offer higher returns. You can select the best broker by comparing spreads. The smaller the difference between buying and selling prices, the less it will cost you to trade.
Brokers offering the spread model frequently provide leverage too. Also known as trading on margin, this gives the trader access to a bigger trade size and the broker a bigger profit.
Should you use more than one broker?
There are a few pluses to having multiple binary trading accounts. Certain brokers suit certain trading styles or types of trade. A broker might be great for short-term types of trade and offer excellent payouts on indices, but they may be let down by their ladder trades and forex payouts. If another broker offered a full set of long-term expiries along with generous payouts, and lots of choice of ladder trades, it makes sense to use both accounts and take advantage of the best of what each has to offer.
Demo accounts. It makes sense to have a lot of demo accounts. It’s the best and cheapest way to try different products on for size and find out which ones suit you best.
Reduced risk. If you have accounts in lots of places then your eggs aren’t in one basket, which is great because if one firm goes bankrupt or they have software issues, you’ll have plenty of other options.
Sign up offers. As we’ve seen already, many brokers offer signing on bonuses, so the more brokers you sign up with the more offers you may be able to receive. As we said before though, check to make sure that the terms and conditions of these ‘specials’ don’t adversely affect your trading.
Spread winnings. Some brokers will search for winning traders on their books, to restrict their trading. This won’t happen often, but if it does happen to you then that’s another good reason to have multiple accounts. They’ll usually look at total profit rather than strike rate, so using lots of broker accounts can help your successes avoid notice.
Exchange versus OTC (Over the Counter) Brokers
As we’ve said, exchange brokers act as intermediaries between buyers and sellers, matching the two and charging commission for the service. The market sets the prices. When there our more sellers than buyers, the price reduces until demand goes up. When there are more buyers than sellers, the option price rises.
A broker operating an exchange doesn’t care about winners and losers. They don’t get involved with, unless they’re offering leverage, so their only concern is their cut each transaction. Since the broker doesn’t carry any risk they are able to offer larger payouts to the winning trader. The commissions are relatively small too.
Other benefits include the fact that stop losses can be applied, and also that trades can be closed at any time (to take a profit or reduce losses).
That all sounds relatively straightforward, but the complicated part comes with the structure of these trades. A binary traded on an exchange will “trade” at a level of 0 to 100. Where 0 is the figure used where an event didn’t happen, and 100 means that it did. If the current price is 30, a ‘buyer’ would risk 30 times his trade size, to hopefully win 70. That means a seller would risk 70 to win 30. Not a complicated equation, but it is a little more complicated than the simple over the counter approach.
OTC (Over the Counter) Brokers
Over the counter (OTC) brokers are the most common type, but as we’ve seen, it’s not really right to call them brokers, because they take the role of counterparty in the trade. If the trader wins then they lose, and vice versa. But when they have another trader who has made the exact opposite trade, they can’t lose. Binary options brokers and their income depend on this kind of approach.
As this is riskier, brokers will offer a lower payout to mitigate some of the extra risk they are taking, so they’re likely to be paying out less than an exchange broker. Some brokers also use ‘hedging’ mechanisms to reduce their risk.
When using OTC brokers binary option trading remains simple. They’re much better at competing with exchanges now starting to offer ‘cash out’ values, so traders can close positions early, and set up stop losses. When such features become ubiquitous, OTC and exchanges will be more evenly matched. Right now, exchanges represent the better option for traders, but it’s best to use a demo account to become familiar with them first.
Deposit and withdrawal options vary from brokerage to brokerage. Here are the ones most frequently accepted:
- Wire Transfer
- Credit cards / Debit cards
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