Binary options trading is the method of choice for many traders that don’t shy away from high risks. Its volatile nature and the use of leverage allow them to make high profits from both rising and falling values on the stock market. These peculiarities make it necessary to look for brokers that allow this kind of strategy. How do we find good trading platforms for binary option trading?
Using Brokers That Offer Binary Trading
Reviews of brokers can be found on many internet sites that focus on trading. They test and examine any service and list their features, pros, and cons. On these sites, you can find selections of categories. One of them would be brokers for binary trading, specifically. What makes it necessary to single them out like this? The reasons are both the specifics of binary trading and the legal framework regarding this technique.
What is Binary Option Trading?
When we use binary trading, we speculate whether our asset, a derivate of a financial instrument like a stock, will rise or fall in value. We chose the base asset, select a timeframe, and set a value we expect it to have reached by then.
While doing so, we can use several strategies. For example, we can set a specific target price or speculate using laddered price ranges. You can find more information about binary trading and its many complex strategies on trading websites and communities.
The one outstanding difference between binary option trading and trading with stocks, for example, is that you can benefit from both rising and falling values. As long as your prediction turns out to be true at the set end date, your investment will have been successful. This way, you can profit from a stock loosing value on the market, instead of hoping for its price to rise.
Another identifying factor is the possible use of leverage when you trade with binary options. These allow you to only pay a fragment of the trade volume you use for an investment, but benefit from the total when you succeed. However, your losses will also be based on the total trade volume and not just on the smaller sum you invested. This means you can lose much more money that you risked in the first place.
This and other factors make trading with binary options especially risky, which, on the stock market, also means it can bring huge profits.
What Separates a Binary Trading Broker From Other Trading Platforms?
For one, binary option traders must give you the option to speculate on binary options and carry the necessary features. More importantly, whether a broker offers you to invest using binary options also has legal ramifications. The method of trading has been banned by some countries.
The Legality of Binary Trading
The use of binary options has been banned by the UK and EU member states.
- For one, many binary option trading platforms have been exposed as fraudulent in the past.
- Secondly, many authorities consider this kind of trading a form of gambling.
To reduce the risk of their citizens using this trading strategy while it is prone to fraud and might cause gambling addiction, the financial regulatory bodies of these countries have banned the practice alltogether.
This also means that the online brokers who offer binary trading are excluded of getting licensed in these countries. Without a license, the providers are not regulated by a government body. Users can not rely on this safety net and might be scammed if they chose binary option brokers blindly.
Online Brokers Without Regulation
Using online brokers without a license and regulation is often ill-advised. The legal framework of these systems exists so we, as investors, can trust the service we are using. The provider has been thoroughly background checked, and the trading platform will be continuously controlled by the regulatory body. However, when we want to trade using binary options, we do not have this luxury.
- That is why we need to be especially careful when we pick a binary option trader.
A good way of finding a trustworthy service is to read reviews online. Make sure to compare the information from many sites, and don’t forget to read user comments. These user experiences are especially helpful since they don’t just focus on a service’s features, but also tell you about positive and negative treatment of their clients.
If you are using an online broker without a license, you need to read the terms and conditions. It will help you figure out if the demands of the provider are fair or not. You might, however, not be able to rely on these terms if no authority holds the service responsible for breaches. If you use these brokers, you should always withdraw any profits quickly to make sure they won’t be lost.
Binary options brokers are special. For one, they need to have the appropriate features for binary trading and give access to the right markets. However, they also are unlicensed in many countries because they have officially banned the trading method. If you still want to use binary trading, you will need to take extra care in choosing a trustworthy provider. Online reviews will help you find good binary option traders or alert you of any negative user experiences you’d want to avoid.