There are many binary options brokers from which a trader can choose. So many brokerages are small, and there is not a lot of trustworthy information about them or their business practices. Different brokerages have different payouts, software packages, account funding requirements, and withdrawal practices. We at How We Trade are here to help you navigate the sea of brokers, and to help you identify the reputable from the untrustworthy. We do prefer using large brokerages, especially those regulated by relevant securities regulatory agencies, over newer and smaller brokerages. Ultimately the brokerage that you choose may come down to what is legally available for you, but ideally you will be able to pick the brokerage with the best blend of reputation, payouts, software and convenience. At How We Trade we feel like Tradorax provides the best blend of all these factors for our needs.
Below is a detailed summary of every factor that most traders will consider when they choose their brokerage.
We realize that what every trader really wants is to make the most money. With that in mind, at How We Trade we feel that Tradorax is the best brokerage. We feel they are top notch because they have excellent trading software, their servers and execution speeds are extremely fast, and they give traders the tools they need at their disposal to consistently make money. In the binary options trading world, Tradorax is one of the most professional brokerages on the market. We always recommend the most professional outfit to our clients.
This is a hot topic with binary options, and for good reasons. Many binary option brokerage are operating in countries where they are not registered. For instance, if you are a US trader based in the United States, there is only one legal brokerage for you to use. This brokerage is NADEX. This is the only brokerage that is registered with the SEC, and can legally accept US traders. If you trade with NADEX you know that they will adhere to legal requirements regarding accurate price quoting and the withdrawal of money. The downside of NADEX is that they charge a premium because they are the only brokerage which can legally accept US traders.
There are other international brokerages which do accept US traders, however these brokerages are not operating within US regulations. Usually the trader will not be punished by trading with a brokerage that can not operate legally within the US, but they do risk the brokerage being punished. They also have no guarantees from US law for the protection of any cash balances within the brokerage.
This is not to say that there are not other reputable brokerages. Tradorax for instance is a very reputable brokerage, and they are registered with CYSEC, which is a securities and exchange regulatory body for Cyprus, where many brokerages are based. They adhere to strict price quoting principals, allow for speedy withdrawals, and have a reputation for integrity. They also accept traders from anywhere in the world.
Also of interest, many brokerages are simply white labels for the brokerage Spot Option, which is a very large brokerage re-branded by many smaller companies. Spot Option is also registered with CYSEC.
Payouts are set by each individual brokerage, for each individual available trade. A good payout for most short term binary option contracts is 85%, while some brokerage may pay as low as 60%. The payout is everything in terms of profitability. Look at the profitability table half way down the article. The higher the payout, the lower your threshold is for probability of wins/losses where you are still profitable. Use a brokerage that routinely offers contracts paying 75% or higher. Tradorax often offers 85% payouts and higher for winning trades, which gives you a much higher chance of making money in the long run. This is one of the best payouts in the industry.
Keep in mind that if you plan on trading binary options successfully, the payout is a major factor in how much money you will ultimately make or lose over time. The payout is second only the the accuracy of price quoting of the brokerage.
Speaking of price quoting, this is another extremely important factor to consider. Some brokerages have been in trouble in the past regarding manipulation of price to lower the winning percentage of their traders, essentially they were committing fraud. While much of this has been put in the past, luckily, the possibility always exists that an unscrupulous brokerage will manipulate your closing prices or account to their advantage. Always be sure that you are working with a reputable and straightforward brokerage, who will always quote you an accurate price. NADEX is of course the most reliable as they are regulated by the SEC, but we use Tradorax because they also have an impeccable reputation for accuracy and honesty in the industry. The key is for you as a trader to be completely confident that the price displayed at all times matches the real market price. Make sure you work with an honest broker.
Speed of Withdrawals
Some brokerages are famous for being extremely slow returning money to clients, or getting profits to clients. You want to avoid any brokerage which has multiple complaints against them regarding the speed of their withdrawals. We have never seen or heard of a problem with Tradorax, which is another reason why we recommend them. The last thing any trader wants is to have profits sitting with a broker which are inaccessible.
You want software to be modern, easy to use, easy to understand, and to effectively convey a lot of information regarding the trading. You can see our previous article regarding the best trading software for binary options for a more in depth discussion, but we favor Tradorax for their slick, accurate, and easy to use trading platform. Their software is extremely fast, which is what every trader wants, and their price quoting is extremely accurate. They allow both one touch trading for extremely fast order entry, or if you prefer to double check your orders you can confirm each before it is placed. We believe that they has one of the best software platforms in the industry for new and experience traders alike, which is another reason why re recommend them.
You want to choose a brokerage that offers a diverse set of asset classes and trades. Tradorax offers a wide range of equities, commodities such as gold, silver and oil, stock indexes, foreign currency exchange, and they offer trades in a variety of formats. You can take bets that the the option will close with the price within a certain boundary, that it will close above or below a certain price, and there are many various lengths of contracts available from minutes to weeks in length. Always make sure that any brokerage which you decide to trade with offers a diverse set of assets and option contract structures because good brokerages always will have many options.
Be Comfortable With Your Broker
The most important aspect of choosing a brokerage is to choose one that you will be comfortable with for a long time. You want the software to be easy and intuitive with minimal lag, you want the price quoting to be spot on accurate, and you want to be able to add and withdraw money to your account quickly and easily. The last thing any trader wants to worry about is any factors outside of their goals of taking the correct trades and making money.