It might seem strange to write an article about binary options broker features which are not important, but I feel that traders often lose track of what is important when shopping for a broker. Brokers will often loudly advertise these features in the hopes that potential customers will overlook the areas where their service is terribly lacking. Please note that none of the features below are useless. It is still a good thing ultimately if a broker offers them, but they should take a backseat in your considerations after more important features like a demo account, good customer service, a well-constructed website, company transparency, trade types and features, and flexible withdrawal terms. Refer to Part 1 for a complete list.
Here are the features I consider overrated:
- Regulation (yes, I will explain this).
- A billion deposit options.
- A billion assets.
- “No commissions.”
- “VIP” benefits.
Now let’s talk about why I think these features are over-hyped and overrated.
“But wait. Isn’t that the most important thing for any broker? If the broker isn’t regulated, doesn’t that make them untrustworthy?” That is probably what you are thinking right now. But the reality is that binary options regulation is a murky territory, and a lot of the brokers who claim that they are “regulated” are not. Many of them are simply licensed to operate as businesses in Cyprus. That has nothing to do with financial regulation whatsoever. A few may be licensed to offer financial services—that is closer to genuine regulation. And some may be regulated by gambling commissions or private banking commissions. That is also typically a good sign.
The reality though is that you cannot simply look at the words “regulated binary options broker” on the front page of a broker and take them at face value. You have to learn what they mean. If the broker is genuinely regulated as some kind of financial entity, that is excellent. But 9 times in 10, the broker is simply a licensed business in the most general sense, and is misleading you about regulation. You would be safer with an unregulated broker that admits its status as unregulated than one which pretends to be regulated when it isn’t. And that is why this feature is overrated.
Get the inside scoop from a binary options broker representative.
Bonuses are a huge selling point for binary options brokers. The idea of being given $500 or more completely free of charge just for depositing money is incredibly appealing. Who doesn’t love free money? Is there really such a thing as free money though? Not when you have to achieve a huge turnover volume in your account just to claim your bonus as cash.
Once again, bonuses can be a great thing, especially if you are trading for fun, and you want to raise the stakes to boost your trading excitement. There is no reason under those circumstances not to look for high match bonuses. But if you are looking at trading as a business, bonuses are not only overrated, but actually may become a deterrent, depending on how set the broker is on giving you one. Bonuses are usually optional, but some brokers force you to take them. If you are forced to take a bonus, you cannot trade conservatively with ease, and you may struggle to withdraw money. A bonus may thus become an inconvenience. Plus, any time a company is trying to force you to take money, you should question their motives.
This is why you need to carefully read bonus terms before depositing money with a broker. Bonuses can range from a fun and rewarding feature to a dangerous detractor, depending on the broker. You should never decide to trade with any company solely on the basis of a promotion like, “Claim your FREE $500 gift by depositing NOW!” That gift comes with strings attached, and they need to be acceptable to you. Many serious traders are not going to opt into bonuses at all.
- A billion deposit options.
There are a lot of brokers that offer dozens upon dozens of different deposit methods. This is overrated as a feature for the simple reason that you do not need dozens of different deposit methods. You only need one or several that work for you. A lot of traders are going to go with the simplest and most obvious choices. This feature is just not all that important in the grand scheme of things.
- A billion assets.
A lot of brokers promote themselves with claims like, “Over 180 assets to trade!” There are two reasons why you should question the importance of this. The first is that a lot of times, the numbers you see quoted are not even accurate. Assets come and go on any given platform. Furthermore, there are not always trade opportunities for every asset listed at all times and days. It is much more sensible to skim the trading page and look at the types of assets with active trades during the day. Those are the assets you can expect to trade.
The second reason this is a bit of an over-hyped thing is that you probably would not trade 180 assets even if you could. A lot of traders do just fine with a handful of assets. It is wise to be flexible enough to consider trading a broad range of assets, since it can keep you in the market during difficult times. But even then, you probably will not trade that many assets. You will likely stick with what you know. I think a lot of traders read asset lists and interpret 180 assets as “180 chances to win.” That is simply not a translation that makes any sense.
Binary options brokers typically offer something in the way of educational resources to their traders. This can range from a few how-to pages and video tours of the trading platform to eBooks, trading articles, systems, trade alerts, and one-on-one training. It is a sign of integrity overall if a broker actually offers these resources (and doesn’t just say that they do, which happens rather frequently). It means that they are on your side and want to help you succeed. They are encouraging you to trade responsibly.
So why do I say that this is not the most important feature to look for in a broker? Because a lot of the free resources a broker will provide you with are also available for free in other locations. On top of that, most of these training materials are very much beginner-oriented, and you will need to continue your education long past that point. In fact, there is a good chance that by the time you are really ready to start trading online, you will already have surpassed most of the knowledge the broker is offering to share with you. Since these resources are thus somewhat superfluous, in general, they are not that important.
You want to trade with an award-winning broker, right? Maybe, maybe not. A lot of the best companies out there are not even that well known. And those that are may or may not live up to the hype. Plus, a lot of the “awards” you find listed for brokers on their about pages are not even real awards! Never actually believe an award is real until you see it listed on the site of the publication which hands it out. Look it up yourself, and you will discover most of these “awards” are there simply to mislead you. So don’t look at those little gold medal graphics and blue ribbons and think that they are anything to be taken seriously. There are a few legitimate awards out there, but they are relatively uncommon.
- “No commissions.”
This is a phrase which is commonly peppered across the home pages and about pages of binary options brokers. The reason it is not all that important is because it is basically the norm. Binary options brokers rarely charge fees or commissions for trading. They make their money on the difference between the payout percentages and the out-of-money rewards, which work in their favor. So this is not really a selling point. It just means that the broker you are considering is following the same model as every other broker in existence.
- “VIP” benefits.
Some brokers offer all kinds of vague VIP benefits for customers who deposit $10,000 or more into a binary options account. Sometimes they list these benefits, and other times they just refer to them as “VIP benefits.” Listed benefits often include prizes, special promotions, credit cards, travel, and so on. Whether these benefits actually exist is questionable; the majority of traders on binary options sites will open an account with $200, not $10,000. Companies put these benefits down because it makes them look good. Everybody dreams of wealth and prestige—of being a “Very Important Person.” Unless you actually are a trader with an enormous bankroll, these benefits do not really apply to you either way.
So now you know which features on binary options websites are not really that important. That allows you to spend more time focusing on features that are important. None of the features listed above are undesirable, but none of them are vital either. If you find a great broker with truly excellent service and has some of these extras, that is the best case scenario. But if you find a broker with a poor core product, you should press on, even if they have a ton of optional features.