Trading Binary Options with an unregulated binary options broker is basically gambling. Many binary option brokers are not regulated, and many brokers are based in tax havens or places like Gibraltar, British Virgin Islands, Seychelles, St. Vincent and the Grenadines and Cyprus.
This causes many people to assume all binary options are scams. The truth is, not all brokers are scams.
Trading with a licensed & regulated broker is the smart thing to do! Read about regulated brokers here.
There are two CFTC licensed binary option exchanges, Cantor Exchange and Nadex.
Nadex is the only legal and licensed broker for Americans. If you are interested in really trading binary options, and not some offshore questionable company, then see the Nadex demo here. The minimum deposit for a real account is only $100, so give it a try today.
You can find the Nadex review here.
The most popular offshore brokers accepting American traders are:
Signals, Robots & Trading Systems
Most brokers offer some type of trading signals to their clients. There are a few brokers who actually have trading signals software. We have many articles about binary option robots and signals see here.
Most brokers do not offer free demo accounts for traders to test their trading platform.
You can read more detailed reviews of broker on Scam Broker. There you will find reviews of legitimate and scam binary option brokers.
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Recently, The Cyprus Securities and Exchange Commission decided to include binary options in the list of financial instruments that fall within the remit of the Investment Services and Activities and Regulated Markets Law. You can find the complete list of investment firms here.
Here is a quote from one Binary Options brokers website.
Like many other instruments that take their value based on the value of an underlying asset, binary options have no centralized exchange on which they’re traded. Brokers sell contracts directly to buyers with no third party involvement, known in the financial world as over-the-counter trading. Since binary options are almost exclusively traded over the internet, this allows brokers to establish themselves in areas with favorable financial regulations. Many brokers, for example, are based in Cyprus which has a low tax rate. Other than local taxation policies, there is little regulation for trading binary options. Their over-the-counter platform and various broker locations work together against the implementation of any real regulations.
It is imperative that someone who is considering trading binary options does their research before giving a broker their money. By simply performing a search and reading reviews for a given broker, a trader can ensure that their money is held securely and responsibly.
This broker is telling you to not open an account with a binary options brokerage firm, unless you verify that they have a good reputation.
Two issues that constantly come up with Binary Option Brokers are:
- Do they allow you to withdraw your profits?
- Are their quotes correct?
For example, If you are placing a bet on the EUR/USD. What price are they quoting? Is it the same price you see on the CME Globex, Interactive Brokers, FXCM? Each broker makes up their own prices. When trading Binary Options on a stock. Is the broker using their own data? Are they taking quotes from the NYSE, NYMEX and Electronic exchanges or from their own internal system.
Here is what many brokers write in their disclaimer about market prices.
Option quotes displayed on the platform are indicative rates that the company is prepared to sell options at, and may not correspond to either live market quotations or quoted rates at the point of sale.
When reading reviews it is important to know who is writing the review. You are better off speaking with friends who actually have an account with that broker and have had experience trading real money with them before you decide to open an account.
On June 6th 2013 the US SEC put out an investor alert regarding binary option scams. Read entire alert on the SEC website here.
Our most recent check on April 11th 2016, shows more than 200 different Binary Option Brokers, with many scams still active. See the complete list below.
We have not been able to verify that all of them are still operational but the ones with links are actively trading.