Six Things to Look at When Choosing a Broker
If you’re looking for a new binary options broker, you probably have questions about which one is the best. This is a valid question. Having the best broker on your side drastically reduces the amount of risk that you will have, and it ensures that your money is doing what you intend it to do. A good broker won’t necessarily make you a profitable trader, but it will go a long way toward ensuring that you aren’t losing money needlessly. All traders have different needs, so it’s important that when you are looking for a new broker, you don’t just choose the one that everyone else says is great. You really need to look at your individual situation.
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With that said, here is our list of the top things that you should look for when choosing the best binary options broker for you.
- Legality. Is the broker that you are looking at legally allowed to operate where you live? Because of the internet, you can access websites from all around the world, but that doesn’t mean that you can just choose to work with any broker you want. Before you decide which broker is best, make sure that they are allowed to accept traders from where you live, and that your country of residence allows you to trade at their site. For example, traders in the United States cannot legally use a CySEC regulated broker, but need to stick with Nadex since they are regulated within the U.S.
- Reputation. Some brokers have better reputations than others. You don’t want to deposit money with a broker that has a reputation for poor quality financial transactions, for example. Even if you never experience a problem on this front, working with a broker that drags its feet when it comes to processing withdrawal requests is a dangerous thing to do. Also, not all broker uphold the high standards that you deserve from your binary broker. You want a broker that is fully regulated by a high quality regulatory body. For example, ASIC in Australia, CySEC is Europe, or the CFTC in the United States are all considered to be the best regulatory bodies in their respective regions. An unregulated broker might have pure intentions, but there is a much higher risk to your cash when you work with one.
- Ease of Use. The broker that you decide to use should be easy to navigate. They should have a platform that you can use with ease and not make careless mistakes. If you can, you should definitely try out the free demo account that your binary options broker offers. If you’ve never used a site before, there’s a chance that user error might come into play, and you could make a mistake. Testing out the site in a risk free setting with a no risk demo account using fake money alleviates the chances of this happening. Also, all transactions with the site should fit your needs. We hinted at the need for smooth financial transactions earlier, but this is a must. Your broker should make it easy to put money in and get money out of your trading account. The broker does need to follow the law when it comes to financial transactions, and you should not expect them to bend the rules for you, so knowing the regulations and what you need to do on your end to make transactions smoother will be an easy way to make this experience even more pleasant. Also, broker that have an auto trading robot, may help you get started as well. Remember to ask customer service when you open the account.
- Returns. Some brokers return more than others. Even the difference of a few percentage points here or there can make a big difference over the course of time. Let’s say Broker A offers 78 percent on the asset you like to trade most, while Broker B offers 80 percent. With all other things being equal, choosing the larger number can mean thousands of extra dollars in profits. If you risk $50 per trade and make 1,000 trades in a year (less than 3 per day), you are potentially gaining $1,000 extra in profits over the course of time by going with the better return. Most traders make many more trades than this per year.
- Educational Material. When your broker offers you free resources to help you become a better trader, you know that they are more likely to be on your side. These come in a lot of different forms: free eBooks, webinars, strategy videos, economic calendars, blogs, and news feeds are some of the more popular resources. All of these things are available for free around the web, but having a broker supply them for you can make your life a lot easier so that you don’t need to search around and find the tools you need to improve.
- Bonuses. Some brokers offer you a bonus when you make your first deposit. Although this can be helpful, it’s really the last thing that you should consider when choosing your broker. But why? Isn’t free money a good thing? Yes, free money is nice, but that’s not quite what a bonus is. In fact, brokers want you to think of a bonus as free money to you because it is good business for them if you do so. Why wouldn’t you want an extra $500? However, because most bonuses are so hard to unlock, most traders never actually get to see their bonus cash. Brokers require you to trade at least 30 times the bonus amount if you want to see your bonus returned to you. So, if you received a $500 bonus, you would need to trade $15,000 worth of trades before you could unlock your bonus. Some brokers even put a time requirement on this, after which the bonus cash disappears. A new trader without experience is very unlikely to receive this bonus because they will lose their money long before they ever reach that threshold. A bonus can be nice, but make sure that it is not a priority when choosing your broker. Otherwise, you are just falling for a marketing gimmick. Be sure to check each of the steps listed above before you think about getting a bonus.
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