The task of selecting a binary options broker can be rather daunting if you do not know which factors to consider. There are now many different brokers to choose from, with new platforms entering the marketplace each month. At first glance, much of what they offer is going to seem quite similar. However, upon closer inspection the key differences will come to light.
Platform Design and Usability
Today, most platforms are designed to be extremely user-friendly. This is a plus, as many of the people who make the decision to start trading have little to no previous experience with options trading. If the platform is too complex, does not load correctly, or does not provide plenty of different trade options, consider looking elsewhere. Ideally, there will be at least three trade types, fifty or more underlying assets, and plenty of expiry times to choose from.
Upfront Cost and Banking Functionality
Binary options brokers do not collect any per-trade fees or commissions. The upfront cost is limited to your deposit amount, which should all be available for use in trades. Be sure to ask what the minimum deposit is, whether or not a deposit bonus is being offered, which payment methods are accepted, and whether or not there are any costs associated with withdrawing your funds. Should you be considering accepting a bonus, consider reading the terms and conditions associated with the acceptance of these funds.
Return and Refund Rates
Return rates typically range from 70% to 85% on standard trades. Trades of the high-yield variety can offer returns of as much as 600%. Return rate information is usually posted on the home page of each broker’s website, but if not, be sure to ask. Refund rates may or may not be offered. Some brokers do still offer small refunds on positions that finish out of the money. If offered, expect these rates to be anywhere from 1% to 15%, dependent upon the trade type and investment amount.
Customer Service and Regulation
Regulation is a touchy subject with traders. Not every binary options broker is located in an area where a regulatory agency is in place. This does not automatically mean that they are running a scam, but it does mean that your money is not as safe as it would be with a regulated broker. Any binary options broker that is located is Cyprus (which many are) is governed by the Cyprus Securities and Exchange Commission and must become regulated in order to continue their operations. When considering an unregulated broker, put their customer service department to the test. Be sure that they answer all of your questions, are completely accessible throughout the week, and can be reached via phone.
The Bottom Line
Many of the features offered by modern brokers are quite similar. Platforms are designed with a goal of appealing to traders, although some fail to do so. A solid platform, plenty of trade variety, and a history of reliability are the hallmarks of a great brokerage. Once these have been verified, you can them move on to examining the smaller details that will determine whether a specific binary options broker is the correct selection for you.