1. What are Binary Option Brokers?
The majority of binary option brokers are exclusively focused on binary options trading. There are some Forex brokers that have added binaries as an additional offering.
When you are trading with a broker, you are actually trading against the broker. When you make a profit, the broker is the one that loses the money. They are acting as both the market maker and the exchange. This is one of the reasons that binary option brokers can not operate legally in the United States.
2. What’s the Difference Between Binary Option Brokers?
There are hundreds of firm online today offering binary option brokerage services. The 2 main differences between brokers is licenses & trading platform.
Catering to these brokers are software providers like SpotOption, TechFinancials and MarketPulse, who provide the actual trading platform software the broker uses. When you compare various brokers you will see come across multiple brokers using the exact same platform.
A handful of brokers have developed their own unique trading platforms, as a way of differentiating themselves from their competitors.
Licensed Brokers are usually the leaders in the industry. Although most of them are licensed by the financial regulator in Cyprus, there are a few brokers that are licensed in countries like New Zealand and Australia.
3. Who are the Industry Leading Binary Option Brokers?
The first brokers only opened in 2010, and although many firms have come and gone, there are a few brokers that lead the industry.
TopOption, 24Option & Banc De Binary are still the largest brokers in Europe. In North America (United States & Canada) it is not so clear as the CFTC & SEC do not license binary option brokers.
Although every broker claims to be the biggest and best broker, a serious investor / trader should always research and read reviews of brokers.
4. Can I Trust my Broker?
The simple answer is no. How can you trust any broker who only makes money, when you lose money? (read more here)
So how can you successfully trade binary options? By working with a licensed and regulated broker, who has a clean reputation of treating their customers fairly. Traders need to be sure that the broker has a license, and that they are covered by the license. Recently, Cyprus licensed brokers have been opening a separate website to offer unlicensed brokerage services to traders outside of the European Union.
5. Which Broker is Best For Trading Binary Options?
The broker that has a government license, provides real time market prices, and offers a high payout on the option type you will be trading.
If you are going to be trading binary options on the UK pound sterling against the Euro (GBP/EUR), check the returns offered at various brokers. If you are going to be trading hourly options, then see what the rate of return is for hourly and not 60 second options. All brokers advertise 95% returns, but in reality, many assets only payout 70% returns.