When you are looking for a binary options website to trade on, you should go in with a list of important features. Odds are you are not going to find a broker that offers all of the features you want, so you will need to be prepared for that. Still, you want to find a broker that satisfies most of your criteria, particularly the important criteria. Oftentimes, brokers will throw red herrings at you—site features that they boast about which really are not all that important, even though they present them as if they are. They will use these red herrings to distract you from the areas where they are lacking. Following is a list of very important features that a surprising number of binary options brokers lack. With this list, you can focus on what is most important during your search.
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1. Early closure, double up, and rollover.
While all three of these trading tools are very common overall, I am still surprised at just how many binary options sites I find that do not offer them. Some sites only offer one or two of these tools, and many offer none at all. Of all of them, the most important is early closure. This one will save you money, whereas the other two will more often increase your risk, not decrease it. All three are great to have, but prioritize early closure if you have to choose. I spoke to a broker one day and she told me how the traders on her site that actually won consistently used these tools, while the rest ignored them. So you can see just how important these trading tools are.
2. A demo account.
Thankfully this is becoming more and more common. Several years ago when binary options trading was first starting to get big, hardly any brokers at all offered practice accounts. With a demo account, you can trade using virtual money and take a test drive before you go live with real money. This is an absolutely essential step toward becoming a professional trader! If you skip straight from backtesting to live trading, you will almost certainly lose money. There are just too many variables that you cannot explore without testing live in real time. Those variables will disrupt your trading and lead to unfortunate results if you do not learn how to compensate for them in demo.
If a binary options broker does not offer you a demo account, you should at the very least go and find one which does, and test there before returning to trade on the broker you have selected for your real account. If you can find a binary options broker that offers you the features you need for live trading and a demo account, that is the best scenario.
3. Boundary trading.
I feel like this should get its own mention as a specific type of trade which offers you great value as a binary options trader, but which a lot of brokers simply do not provide. Why? Because boundary trading is actually unique to the binary options world. With most types of trading, you make money from market movements. You do not make money from markets that are flat, and profiting in flat markets can be immensely challenging as a result. When you realize that most markets spend the majority of their time doing very little, you realize how hard it is to profit in trading overall.
Binary options is the only market where you can profit off of a lack of price movement—but only if you are offered boundary trading! Other types of binary options like High/Low and One Touch rely on price movement. With boundary trading (also called range trading), you profit when price stays inside a certain range. In other words, the less price moves around, the better your chances are of making money. Because this is a unique benefit of binary options trading, it is a real shame when brokers do not permit it. And sadly, the vast majority do not offer this exciting type of trading.
4. Low withdrawal thresholds and friendly withdrawal terms.
Even though a lot of binary options brokers do not charge fees for deposits and withdrawals, they do impose plenty of additional restrictions. One of the most common and irritating is restrictions on the amount of money you can withdraw and how often. A surprisingly high number of brokers set terms like these:
“Low minimum deposit of $100. You may withdraw money from your account at any time, so long as you meet the minimum withdrawal threshold of $100.”
Some brokers do specify that you can remove all your money if you are closing out your account, even if it is less than the threshold amount, but many do not include this point in their terms of service. In other words, they are free to keep your money if you fall under the threshold. And falling under the threshold is quite easy when you open an account with the same amount of money. Lose even one trade and your funds are no longer accessible. Your money should be easy to access. Terms like these cause a lot of the problems that traders cite when it comes to withdrawals.
Another common problem is a term like this one:
“You are allowed one free withdrawal per month. All other withdrawals are subject to a $30 fee.”
If you are careful, and do not withdraw often from your account (and hopefully you do not, since you are trying to grow your balance), you should not lose money because of a term like this. But it is still inconvenient, and if you schedule your withdrawals poorly or forget you already used your free withdrawal, you lose $30 every time. Anyone who has ever watched bank fees pile up because of overdrafting knows how quickly fees like these can add up. Brokers with friendly withdrawal conditions are relatively rare, but they are out there, so look for them.
5. A clear history in finance.
Read the “About” page for the majority of binary options brokers, and you will run into really generic text that assures you of the safety of your funds and the broker’s good intentions. What you will not find is any sort of specificity, especially reflecting a history in the financial industry. While everyone starts somewhere, the majority of brokers appear to have little or no history whatsoever in the industry. They are small start-ups run by people who may never have traded in their lives. And no, a phrase like, “expert traders” does not mean anything on its own. There are no credentials attached to that. It could be entirely fictitious.
There are a few binary option brokers finally starting to break into the scene that actually have a background in finance, however, one which you can take an objective look at. Some well-known Forex companies are starting to offer binary options trading, either on their main sites, or on sister sites dedicated exclusively to binary options. When you trade with companies like these, you have the benefit of their experience and you actually know they have good intentions. You can rely on their longstanding reputations, and not just on their word.
Another thing to look for is binary options sites run by companies that operate other ones already. Sometimes experienced, reputable binary options brokers will start opening new binary options sites to serve additional markets or provide different trading products. For example, a binary options company that runs an international site may start a sister site for USA traders. This is also the kind of experience and reputation you can rely on.
6. Useful training resources.
Most binary options websites do offer training materials, but not all of them offer useful training resources. On many sites, if you actually look at the trading ebook or video tutorials or articles, you will discover nothing but generic how-to instructions and perhaps a vague, general overview of really basic trading techniques. These resources will not get you very far, and many newbies will unfortunately be tempted into thinking they have mastered trading if they read and view all these simplistic resources.
Your training as a trader is going to extend far beyond your broker’s resources, but it is reasonable to look for a broker that can at least offer you a good start, especially if you hold a larger account. Look for article and video databases that include in-depth information on trading and real strategies you can actually try out. Search for useful tools like Fibonacci calculators and pivot calculators. Try and find brokers that offer valuable extras like trading signals and one-on-one coaching.
7. Customer service.
Finally, all binary options brokers should actually be there to talk to you, answer questions, and help you out when you need it! Yet this all-important feature is too often lacking. Even if a broker offers you amazing terms and conditions, easy withdrawals, powerful trading tools, and valuable training resources, none of it will amount to much if your broker is not there for you. What if you have a problem with a withdrawal and urgently need assistance? What if a trade did not go as expected, and you believe a technical error cost you money? Do you want to be stuck waiting on an absentee customer service team to help you out?
Look for a binary options broker who actually answers their live chat desk and their phone line. Make sure they do not give you a hard-sell and try to push you into depositing money or investing more than you are comfortable with. Ask them questions to test the speed and clarity of their responses. Good customer service is rare in an industry populated by largely untrustworthy brokers, but there are still dozens of strong options out there.
While you are shopping around for a binary options broker, be cognizant of the features that brokers will often draw attention to when attempting to distract you from their shortcomings failings. These features are great to have, but not they are not as essential as the ones above:
- High match bonuses and referral bonuses.
- Mobile trading apps (useful, but rarely essential).
- Training materials that are high in quantity, but low in quality.
- General registration as a business (which is not the same as a license with a financial authority).
- A “state-of-the-art” trading platform (which more often than not is the same platform that all other binary options brokers use).
- A super low minimum deposit (you probably should be starting with at least $500, so it does not matter if a broker will accept $100).
- A zillion assets to trade (you will end up ignoring most of them).
- Fake awards (okay, this is not really a feature, but it is a red herring).
Now you should have a pretty solid idea of what to look for in a binary options broker, and how to weigh the relative importance of different features for trading. If you need a starting place, just check out our recommended brokers list. Most of the brokers in our list have most of the features we recommend (again, you will be hard-pressed to find any broker that has it all), and most importantly, have demonstrated their reliability and trustworthiness.