Binary Options trading is becoming more and more popular with individual investors due to the low cost of entry and simplicity of trading. While this form of investing opens up opportunities for traders it also presents opportunities for people whose only aim is to scam you out of your hard earned money. While there are reputable brokers in this field there are some which are a blatant Binary Options scam and many more who because of poor processes, bad management and unreliable systems provide a less than acceptable service to traders. While they are not scams as such you could just as easily lose your hard earned cash.
Since the concept of Binary Options trading emerged in 2008 the brokers involved remained largely unregulated. That is until very recently. Some brokers are now regulated by one of the appointed regulatory bodies and these brokers are audited to insure that they have the required processes and procedures in place to provide the promised service. In addition, client funds are ring fenced and guaranteed should the broker find itself in a position where it is unable to honour its debts.
Not All Unregulated Brokers Are Scams
Keep in mind that there are still good reputable brokers that are, as yet, unregulated and they may be going through the process of regulation.
Many Binary Options brokers are registered in Cyprus and they will usually be regulated by the Cyprus Securities and Exchange Commission (CYSEC). This is the most common form of Binary Options Broker Regulation today.
There are scam brokers who claim to be regulated so it is worth checking with the regulatory authority if they are indeed regulated. Often the registered entity will trade as a brand name so it is important to establish the actual name of the company behind the brand. For example the company behind 24Options is CBay Financial Services Ltd and that is the name you want to look up when checking the Regulatory Authority registers.
The more common Regulatory Authorities are:
CYSEC – Cyprus Securities and Exchange Commission
CFTC – Commodity Futures Trading Commission
FCA – Financial Conduct Authority
ASIC – Australian Securities and Investments Commission
Choosing the Best Binary Options Broker
There are many factors to check out other than whether they are regulated or not when choosing your broker. While regulation is important you may want to know:
– Do they accept US traders (if you are resident in the USA)
– Have they a good reputation
– Have they high pay outs
– Do they pay out quickly
– What is their minimum deposit
– What is their minimum trade amount
– Do they have a mobile app
– Do they provide education and support
– Do they have a demo system
– Do they provide bonuses
– Are their terms and conditions reasonable and fair (also check their bonus Ts & Cs)
With some of the best brokers now regulated and many more going through the process you will have ample choice and are sure to find a reputable broker that suits your needs.