How to Choose the Right Binary Options Broker

Choosing the most suitable binary option broker comes down to your trading strategy. Beginner traders are usually enticed by free bonuses and promotions as well as educational resources and free trading signals that these brokers offer. More experienced traders and investors on the other hand are not interested in promotions and training materials, but simply look for specialized trading instruments, and will often use one dedicated broker for one particular type of trade. If for example the trader or investor in question already use one binary option broker, for long term one touch options on EUR/USD, and are happy with them, as long as the market prediction goes well and as expected, then they might just want to look for more efficient ways to hedge through another broker for when things go wrong. This may seem unnecessary and pointless to beginners, but there are significant differences from broker to broker, so that by combining different features and trading tools from 2 different brokers one can achieve superior risk-reward ratio than if they were using either broker exclusively.

Look for an Edge

Seasoned traders and even serious amateurs always look for efficient hedging techniques. Yes one broker can provide you with high yielding one touch options, but another can provide you with shorter term options that have limited lockout period, or ones that can be closed near expiry times, or ones that can be rolled over. You really have to think of every scenario, the winning scenario, the losing scenario, and how to hedge each with minimum cost. Ultimately the first determining factor is the time frame of your trading / investing objectives, and the exact expected duration of your trades! Someone who wants to capture trades on the 4 hour chart, in the markets, will want to use options that have quite long expiry times, and can cover at least one week in duration. But at the same time, the same trader will want to hedge small, short lived counter moves in the market, possibly 1 hour to 1 day in duration, and for that they might want to use the Option Builder trading tool that some brokers offer.

Another important detail is time decay, how fast does that binary option instrument go down in value if markets stay flat as expiry time approaches. This is kind of difficult to figure out and it probably doesn't matter much if you are trading small size, but if you are trading large size it is worth making test trades with various brokers, by making the same identical trade on 2 different brokers you will be able to see who offers best value. In this case you might find that one broker offers higher payout when you are right about the market, but another broker offers slower time decay, hence you lose less when you are wrong, by closing the trade early. It's totally up to the trader and their specific strategy, to choose the broker that delivers best.

Also remember that when trading large size, liquidity matters, brokers that offer most liquidity can be detected through their better value for money trades, you will see either lower premiums or higher payouts, or a little of both even at very volatile times in the markets.

Look for Quality Seminars, Market Analysis and Trading Signals

Beginners should choose at least one broker that offers very strong support and guidance, through dedicated, highly trained personnel, proven educational resources, and even free trading signals. Use at least one such broker, even if you trade once per month, their offered support and training is worth $1000s!!! Don't be worried if they don't offer a demo account, in that case look for a broker that offers the above, plus a convenient minimum trade size, some offer as little as $5! Don't be worried about deposit bonuses and refunds on losing trades, the objective for you is to gain access to their trading signals and educational material, your ultimate objective is for you to win, hence don't be nearsighted.

Beginners should avoid high frequency trading until at least they gain some insights into the markets they want to trade, if a broker cannot offer you any guidance or training, and all they have is 5 min, and 1 hour options, then you should find another broker that does offer both the required training, and the longer term option instruments! On longer term trades you can feel comfortable even if the minimum trade size is $20 or $25, beginners should always start from longer term objectives and then make progress towards shorter term ones! This way you will avoid all the market noise and news related volatility that really dominates during certain hours in the markets creating huge confusion and false technical signals. You should only trade 5 min and 1 hour binary options AFTER you have already traded daily and weekly options, also remember that the daily chart can hint what will happen at a particular hour, on the hourly chart, but the reverse cannot happen! The 5 min, or 1 hour chart cannot tell you anything that will change the daily trend, or anything that the daily chart isn't already telling you.

Choose a Reputable, Regulated Broker, Based in a Reputable Country

Choose a broker that is based in a reputable country, preferably in Europe and one that is licensed and regulated. Generally, the only ones to avoid are the ones that are based outside of Europe, in poorly regulated countries.

Traders and investors considering to trade with huge amounts of funds, should choose the most regulated brokers. Even in the unlikely event that your broker will become insolvent, you can still recover your initial deposit. That is safer for your money than even many banks. One just has to look at what happened in recent years, people thought banks were safe, and they weren't in some cases, but regulated option brokers really guarantee the safe return of your initial deposit under any circumstances, even if they go broke, that's because clients' funds are kept in segregated accounts. Winning traders should withdraw their winnings at least once a year, and they simply cannot lose, nor suffer any financial loss on their initial deposit.

Next: Facts and Myths About Binary Options Trading