The hysteria as to trading with binaries on the USA financial market keeps increasing, because more and more people based in the States are showing an interest in this field. With such growth in popularity, many new binary options trading platform have appeared on the market, but, still, people tend to have doubts about them. The fact that there are so many doubts as to binary options USA brokers so, we have decided to make this subject clearer and to provide some helpful information. By reading it, you can finally decide for yourself whether to trade with binary options brokers based in USA, or not. And to make this reading more interesting for you, we will tell you now – you can trust these trading websites and you should not have any concerns about them.
The History Behind Binary Options Brokers USA
The very first thing we need to tell you that in the beginning, trading with binary options, while being based in USA, was indeed illegal. USA financial authorities used to ban this field of having fun and earning extra cash. The reason was that the old American laws pointed trading with binaries as a form of gambling and you must be already aware that games of chance was strictly forbidden and even punished. However, over the last few years, the American laws have passed through several changes and currently, it is not illegal to trade in binaries with USA brokers. What you have to look for, though, is a good and reliable website that has an official license for operating on the market and that has found an agency to cover its security. Thankfully, after the changes we have mentioned, there are now official controlling bodies in USA, which are in charge of the binary options USA brokers.
Who Is In Charge of Binary Options USA Trading Websites?
The following two agencies are currently responsible for the safety regulation in binary options trading brokers. Find out more about these authorities in order to get more confident as to trading with binaries in USA:
National Futures Association
Known by the abbreviation of NFA across the binary options audience, the National Futures Association was at first the only body that gave official permissions and licenses to the USA trading brokers. Today, it still has such powers, but it also applies the significant and obligatory standards for all the financial brokers in USA – including those with binary options. Safety for clients – connected with the financial transactions and the personal data – is also taken by the NFA, too, and such cases can be opened according to specific procedures, too. Compliances and electronic filings are options, which are available on the official NFA website, as well.
Commodity Futures Trading Commission
The Commodity Futures Trading Commission or the CFTC works to preserve the transparency, loyal competitiveness and financial stability to all the binary options brokers in USA. The procedures and measures this commission takes are all focused on the better trading processing, as well as on minimizing the systemic risk. The CFTC is also in charge to promote market integrity and to stop any act of violation or abuse. However, finding and charging frauds is the main mission that the Commodity Futures Trading Commission follows in its general work. Last, but not least, the CFTC is obliged to publically inform people about its actions – including about beginning an investigation for a suspicious binary brokers USA. By the way, keep in mind that the Commodity Futures Trading Commission is more active in binary sphere, because it covers commodities, as well. Those of you, who have already some kind of experience in this field, are aware that trading with binaries is highly connected with commodities and even when they make their predictions, they do follow the movement of the commodity market to buy the most suitable binary. So, when you need any kind of information as to a certain binary option broker in USA and mostly as to its reliability and license, the CFTC is the one that you are supposed to turn to. Binary options USA brokers are now considered to be the newest, but one of the best trading platforms these days.
Binary Options Brokers – How To Choose The Right Broker
Choosing the right broker is vital to your success as a trader.
However, in binary options this task can become very difficult, since you are essentially trading against the broker.
Unfortunately for the binary options market, it has been infected with scams and dishonest brokers that have used their unregulated position to steal money from customers.
There are many things a trader can do to improve, but unfortunately one of the things he can not influence and control, is his broker.
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They store traders’ funds until they are withdrawn.
They control the available liquidity pool.
They process and sync all trading activity in the market.
They provide support to their clients (traders).
The role of brokers in the binary options market is too important to be taken lightly. This is why traders have to be very careful where they choose to deposit their money.
Brokers can also function as market makers, providing liquidity which enables traders with very small amounts of money to still have the chance at participating in the market.
Is the broker regulated?
Regulation in the binary options market is still an issue in many countries. At the moment, the US, UK, Japan, Australia, Cyprus and Malta can claim to have solid regulatory frameworks for the binary options brokers. In many countries, binary options is seen as a gaming activity or put under regulatory oversight of gaming commissions which have no rules on segregation of client funds.
If you want to trade binary options, you may start to look at the issue of regulation of brokers a lot more seriously than before.
You can no longer afford to keep your money in brokerages which are not regulated or which have no obligations as required by laws to segregate your money. Putting your funds in such brokerages is a very risky business.
So when choosing a broker on the basis of regulation, you must get answers to these questions:
Does the broker have a license number issued from the country’s regulators. You must confirm this information from the regulators.
Does the broker actually segregate the funds of its traders, and do the regulators that oversee their operations enforce this function?
Can you be sure that the broker is actually based in the country where it claims to be domiciled?
Some brokers have been blacklisted recently for infractions bordering on these points. Do your due diligence and ensure you have accurate information in this regard.
When it comes to trading binary options, the trading conditions matter immensely.
This has to do with the structure of the market and how brokers in this market actually make money.
Apart from the US where binary options are exchange-traded, in many other countries this is not the case.
Binary brokers do not make their money from commissions, but from losses of traders on the wrong side of the market.
Most binary options brokers are trade counter parties. Some of them skew their online platforms to increase profits. However, it is a lot harder for them to do this on medium and long term contract expiry times than on the short term trades.
Furthermore, there is talk about brokers having risk management teams that bookmark accounts of traders who make too much money at the broker’s expense. Some are more honest about this than others.
Customer service departments came into existence to enable clients ask questions or get solutions to some issues bothering them about the service of the company.
In binary options, there will be lots of issues to talk to the customer service about.
You will therefore need a responsive customer support service from your broker, which can be reached at all times (at least on trading days) and also via Live Chat.
In addition to a quick response time the customer service should also be able to answer most of your questions about the broker’s conditions as well as the trading platform. Some brokers offer outstanding customer support and it is actually one of their biggest pull factors.
Certain issues need to be dealt with quickly and the best way to do that is by direct communication. Choose a broker with a responsive live chat.
Prompt withdrawal settlement
It is only good that when a trader makes money from the market, he is allowed to enjoy the proceeds of such an investment via prompt fulfilment of withdrawals from the broker. Many brokers for reasons best known to them have come up with all manner of obstacles to prevent this from happening. This is usually a fine line and many scam brokers do this because profits for traders mean losses for them.
How do scam brokers operate in this regard?
By putting unreasonable withdrawal caps,
by applying hefty charges on withdrawals,
by tying withdrawal ability to high trade volumes meant to cover a bonus.
You need to be very careful of brokers that change their withdrawal policies randomly, as this is one of the early signals that a broker is starting to have cash flow problems.
Policy on bonuses
Because online binary options brokers are often in direct competition, they will often offer promotions, perks, and bonuses to get more people interested in their service. Generally speaking, the perks they offer increase with the amount that you deposit, and you can find a number of promotions specifically for first-time traders. These special offers can greatly benefit you, particularly when you’re just starting out.
However, beware of brokers who place very heavy trade volumes as a prerequisite for making withdrawals on accounts which have been awarded bonuses.
Bonuses are a good thing, but they have been widely abused. It is simply not right for a broker to expect to make from a trader more than 100 times what has been awarded as a bonus.
Choose a broker with a responsible bonus policy.
Bonuses are supposed to work in a symbiosis, but where one party starts to profit heavily at the expense of the other, the arrangement loses its core values.
This is partly why Japanese regulators have issued laws regarding how bonuses are to be managed, and also why Australian regulator ASIC is planning to introduce regulation to have them stopped altogether.
Choice of contract types and assets
Use brokers who give a generous offer of the kinds of trade contracts which can be traded on their platform.
Some traders will find they are much better at trading certain options and markets than others. For such traders, choosing a broker with a lot of flexibility in how to trade assets, will be a major benefit.
All binary options brokers will offer different assets within the categories of stocks, commodities, currency pairs, and indices and some will also offer cruptocurrencies.
Expiry times offered
Because there are different trading strategies and risks associated with the various expiry times, it is important that you find a broker that has the right expiry times that will work for you. Even though who offer high speed training have different ideas of what high speed is.
Some have high speed expiry times of 60 seconds while others offer just 15 second expiry times for these trades. Some binary options brokers offer much longer expiry times of a month or more while others consider the end of the day to be a longer expiry time.
If you are new to binary options and don’t yet know which you prefer, it may be best to go with a broker that has a wider variety of expiry time options to choose from so you can find one that fits you best.
Ease of transactions
Many payment options have evolved over the years which give traders plenty of flexibility in how they can deposit and withdraw funds.
So unless your country is under a financial blacklist just as the US recently blacklisted Crimea, you should choose a binary options broker which offers you a variety of transaction methods such as credit/debit cards and various e-wallet options such as Skrill, CashU, Ukash, Sofort, etc.
In the EU today, binary option brokers can only open trading accounts to licensed and professional traders. In many countries binary options are classed as gambling, which is not necessarily a bad thing in itself. In some countries it is illegal to trade or operate binary option platforms.
Today, the best option for new or existing binary option traders is to trade with a regulated CFD and Forex broker.
Although it is important to take your time while choosing your broker, it is also vital to understand that brokers are not the only determining factor when it comes to making money in trading online.
The most important thing is to learn how to trade and manage your risk.
Most popular brokers
Many readers ask which brokers are the best. It is difficult to point to one specific broker because it’s often a matter of preference.
Due to new regulations many of the biggest and most known binary brokers have closed or modified their operation to fill a different market demand.
To trade safely and with a peace of mind, look for regulated brokers with the best user reviews and various international awards.
EasyMarkets is a good example of a fully regulated, time-tested, reliable broker. Over the years, it has won 37 international awards and gained a lot of loyal customers.
Best Binary Options Trading Brokers for 2020
Below you will find a list of Binary Options Brokers that offer various binary contracts for trading. Although the term may appear to be very confusing, it’s not that complicated. A binary option is a sort of a contract with a value, expiration date and determined conditions of winning. By purchasing it, you technically make a bet. Most common wager is to predict whether the asset’s price will go up or down from a certain level and stay there until the option expires. Most tradable assets are currencies, indices and some commodities. There used to be much more brokers offering binary options, but many regulatory authorities placed restrictions and prohibited that kind of trading.
Binary options for the retail market were instituted in 2008 when the first description of this product was approved by the US Securities and Exchange Commission. The initial description of what is now known as US-style binary options was based on assets that were listed on exchanges, with traders pitting their bets against each other.
A short while later, a different model of binary options was developed and introduced to the world by brokers based in Europe and Israel. This model (European-style binary options) was essentially based on off-exchange trading of CFDs. However, what followed was years of unwholesome practices and remarkable scandals, which led to the shutdown of the industry in Israel by regulators there, and in the UK and EU region by the European Securities and Markets Authority (ESMA).
The industry is presently undergoing a self-cleansing, and we now have offshore brokers who are showing better commitment at playing by the rules and ensuring their clients get a good deal for their money.
What led to the near collapse of the binary options market?
The answer lies in only one direction: shady brokers and their agents all over the globe. But perhaps some portion of the blame can go to regulators, who were generally very slow in rising up to the occasion to protect the clients, whose money constituted the entire financial backbone of the market.
Brokers are meant to create markets for their clients to trade and are supposed to ensure transparency and safety of trading venues, while maintaining some level of neutrality. However, what occurred between 2020 and 2020 was a situation where a lacuna in regulation led to the emergence of fraudulent entities. These fly-by-night operators set up “brokerages” that were essentially criminal enterprises, specifically designed to rob traders of their hard earned cash. These scam brokers devised several means of ripping off their unsuspecting customers.
A) A common method was the use of call center agents, who unscrupulously obtained contacts of prospective traders and literally harassed them into making ever-increasing deposits, with promises of helping them reap bountiful returns on their investments.
B) There was also the use of volume requirements for incentive bonuses, which were tied to the ability to make withdrawals. Traders soon found out that achieving these volume requirements was practically impossible, thus ending any opportunity at retrieving capital or profits made.
C) In some brazen instances, agents in the brokerage house would access trader accounts from the back end, and execute trades that had been deliberately configured to lose on those accounts. There is at least one case known to the writer where $5,000 was stolen in this manner. Prosecutors and law enforcement agents presently have warrants on the identified personalities behind that brokerage.
Perhaps the case that brought binary options into very negative light, prompting calls for an EU-wide ban, was the unfortunate case of a Canadian investor who lost his life savings after patronizing a shady brokerage entity. The eventual suicide of this investor was the breaking point; EU and UK regulators took action and shut down binary options in Europe and the UK.
It is not only traders that suffered from the criminal activities of the scam brokers. Legitimate brokers such as Binary.com paid a very heavy price, as they lost a significant amount of the market share in an industry where they could be said to be the pioneers. Binary.com (which is listed below as one of the best binary options brokers of repute today) and several other legitimate companies around the world were forced to make major changes to their operational models, in an attempt to improve transparency and to bring back badly eroded investor confidence into the market.
Some of the changes which have been introduced include:
A) Restriction on issuance of bonuses, a lot of which is now provided as cashback for volume trading.
B) Robust trader education, in order to ensure that only informed traders use the binary options platforms.
C) Provision of demo accounts, which many of the defunct brokers never provided for their clients. No longer will traders be deprived of the opportunity to test their strategies and learn the process using virtual accounts.
D) Enhancement of the analytical tools on the platforms, to replace the archaic methods of the old order which provided traders with only line charts and zero tools for analysis!
E) Elimination of confusing binary options bet types and sticking to the classical binary options.
F) Getting their entities regulated in the countries of operation, to enhance user protection and boost broker accountability to enforcing regulatory institutions.
G) Incorporating new asset classes (e.g. cryptocurrencies) to the mix.
Criteria used in broker selection
In selecting the binary options brokers displayed in our list below, the following parameters were used in the process of consideration and selection to ensure that only the most genuine brokers are available for you. We have thus made the process simple, knowing that it is quite a challenge for traders to be able to select these brokers on their own.
The issue of regulation cannot be emphasized enough. The only way traders are going to be protected is by regulating the binary options providers they operate with. Anything short of this will be inviting the old demons back. Regulation also provides for greater accountability and ensures that investor confidence is never lacking in the market.
2) Corporate Governance Structure
A look was taken at the structure with which the listed brokerages operate. Many of them have been around for more than 9 years, and have invested in improving their platforms and trade offerings. These brokerages also have properly defined corporate hierarchy and a face to which the company can be tied to. For instance, the CEO of Binary.com is well known. Olymptrade has a very active presence in an online forum in Africa. Brokerages like Go Markets have officials who are also well known. There are no faceless companies in our list.
3) Openness and Reachability
The brokers listed here all have verifiable contact addresses and can be reached by phone, email and social media channels. Compare this with the old order where some brokerage operations were essentially husband/wife run establishments, operating out of a kitchen (yes, a “binary options broker” was found to be just that several years ago).
4) Trade Conditions
The trade conditions for each broker were also reviewed. For instance, we looked at factors such as stability of the platform, uptimes and downtimes, accessibility of customer support, latency of price and data feeds as well as how the brokers handled counterparty risks. Brokers that were found wanting were eliminated from the list.
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