Binary Options

When selecting a broker, it is important that find one that fits your particular trading strategy and preferences. A broker that is perfect for one person might be all wrong for someone else, so it pays to do your homework and actually look at the little details.

For starters, it is always important to known how much it would cost me (in spreads, commission, decreased payouts, various fees, etc) to use this particular broker for my particular trading strategy. Also, is the broker based in a jurisdiction that is suitable for me? Can I use a method for deposits and withdrawals that I am comfortable with using and that does not cost me too much to utilize? And so on. These are just a few examples of important questions to answer when in the process of selecting a broker.

In this article, we will go through various issues that are good to keep in mind when selecting a binary options broker. Hopefully, it will help you to find the broker that is right for you.

You can read more broker reviews here.

Buying binary options

Binary options are typically sold on online platforms run by companies that aren’t exchanges. Examples of this includes eToro and binary.com.  There are exceptions though, such as Nadex, a US-based exchange where binary options trading takes place.

When the seller of a binary option also is the writer (creator) of the binary option, and there is no clearinghouse acting as a buffer, it becomes especially important that the vendor is both willing and able to honour all their obligations to their clients. Since non-exchanges are less strictly regulated than exchanges, it becomes extra important for prospective investors to do their own homework and pick binary option vendors carefully.

In some jurisdictions, binary options are regulated as financial instruments. In others, they are regulated by the gambling authority and seen as a type of financial betting.

Regulation

Regulation is a key factor when selecting a broker.

For traditional trading, e.g. stock trading, we typically recommend selecting a broker based in and licensed by one of the stricter authorities, e.g. a broker licensed in European Union country, the United Kingdom or Australia.

Doing so has, however, become a bit more difficult for non-professional traders who wish to carry out binary options trading, because many of the stricter authorities have put certain restrictions on the sale and distribution of binary options to non-professional traders – especially when it comes to leveraged trades. It may still be legal, but stricter conditions apply than before. From a traders perspective, this can either be a great thing or a bad thing – depending on your own preferences and appetite for risk.

When stricter authorities began cracking down on the sale and distribution of binary options to non-professional traders, some brokers either stopped offering this service or moved to more lenient jurisdictions. Therefore, we are today in a situation where non-professional traders who wish to carry out binary options trading online will find that many of the appealing brokers are not based and licensed in any of the stricter countries. Even if the country did not enact any outright ban, brokers became worried that such a ban might be waiting just around the corner and therefore preferred to leave preemptively.

A binary options broker is not necessarily shady just because they are based and licensed in a country known for having a comparatively relaxed legislation in regards to online brokers. It has simply become popular even among the serious and reputable binary options brokers to be based and licensed in such a jurisdiction since they wish to keep offering binary options and significant leverage to non-professional traders without constantly worrying about new, stricter legislation.

There are still some binary options brokers who remain based and licensed in stricter countries. The Nandex Exchange is for instance regulated by the Commodity Futures Trading Commission (CFTC) in the United States, while Binary.com is based in and licensed by Malta. Malta is a European Union membership country, and the European Union´s Financial Instruments Directive (MiFID) applies.

A few examples of countries that are considered strict or semi-strict when it comes to the sale and distribution of binary options to non-professional traders:

• Australia. Australia Securities and Investment Commission (ASIC).
• Cyprus, which is a part of the European Union. The Cyprus Securities and Exchange Commission (CySec).
• Malta, which is a part of the European Union. The Malta Financial Services Authority (MFSA).
• South Africa. The Financial Sector Conduct Authority (FSCA) has replaced the Financial Services Board (FSB) of South Africa.
• United Kingdom. The UK Financial Conduct Authority (UK FCA).
• United States of America. The Commodity Futures Trading Commission (CFTC).

Recourse

Where a company is based does not only impact which laws that will apply; it will also impact your own ability to raise a complaint and get an issue resolved by the appropriate authority to if your broker breaks the rules.

For instance, for a trader based in New Zealand, it is typically easier for file a complaint against an New Zealand-based company and actually have something happen, than to take on a complex legal battle against a company based in a small French-speaking island country on the other side of the globe.

Can I try out this broker and platform(s) using a free Demo Account?

Many brokers are offering a free Demo Account that you can use to check out the platform or platforms and see what this broker has to offer.

Demo Accounts are great, for various reasons:

• Check out if you like the broker and platform, including interface and features, before you make a decision.
• If there are several platforms, you can compare them and evalutate their respecitve pros and cons for your trading strategies.
• Demo Accounts with play-money is great for learning how everyting works without doing costly beginner mistakes with real money.
• You can use play-money to test run trading strategies and fine-tune them.

Does it come with play-money?

Nowadays, the typical type of free Demo Account will come with play-money. This way, you can actually see what it feels like to place orders on the platform. Without play-money, you will simply be navigating around, and it gives you less information about how it is to really use the platform for trades. Therefore, a play-money Demo Account is superiour to a Demo Account without any play-money.

Can the play-money be replenished for free?

It is very common for a Demo Account to come with $10,000 in play-money.

What happens if you run out of money? Some brokers will let you replenish your account for free by contacting the customer support, while others are more stingy.

Is it limited when it comes to time?

Some brokers have a time limit on the Demo Account and it might for instance only be accessible for 30 days. Some type of time limit is normal, but be wary of brokers who are stingy in this regard and want to stress you into making a decision, e.g. by only allowing you 60 minutes with the Demo Account.

On the other side of the spectrum, we find the generous brokers who allow you to keep your Demo Account active for as long as you want and replenish it with play-money for free, e.g. so you can use it to test-run new trading strategies with play-money even after you have started trading with real money. A play-money Demo Account is also perfect to learn how to utilize new features on the platform.

Will you get access to everything?

Is is not unusual for certain features to be excluded from the Demo Account. A broker that offers a valuable trading tip or news service may not want people to sign up for a free Demo Account just to gain access to this featrure. So, having a few things excluded is not a red flag in itself, but be wary if a lot of things are hidden from the demo account, e.g. if you can only trade using a very limited assortment of instruments and underlying assets.

Is a first deposit required?

Do you have to make a first deposit before you get access to the demo account?

Today, there is a wide range of brokers available that will let you get a free Demo Account without making any first deposit, so you really do not have to waste time on the ones that don´t – unless they have some very unusual and specific trait that is really important to you.

One of the main reasons to get a Demo Account is to test out a broker BEFORE you decide if you want to trust them with some of your money. So, when a broker requires you to make a deposit to get a demo account, they have sort of missed the point – or, even worse, they fully know that what they have to offer is not very great and that most people would not decide to make any first deposit if they got a chance to try it first.

Is is overly complicated to sign-up and/or do you have to part with a lot of private information?

There are many brokers who only require you to give them a valid email address to sign up for a free Demo Account. Therefore, it makes sense to be a bit suspicious if a broker wants your full name, photo copy of your ID, that you register a credit card with them, utility bills to prove your address, etcetera. All those things can be a part of the anti-money laundering process for real-money traders on the platform, but it should (under normal circumstances) not be required to simply open a free Demo Account.

Underlying assets for binary options

Which type of underlying asset does your trading strategy rest on? Make sure you pick a broker who has a suitable assortment of assets in your coveted category.

Examples of asset types and product types:

• Forex (foreign currency pairs)
• Cryptocurrency
• Stocks
• Stock indices
• Exchange traded funds (ETF)
• Commodities

A side note when it comes to assets: A common beginner mistake in the world of trading is to spread oneself too thin and try to stay on top of the forex market, the stock market, the ETF market, many different commodities, a bunch of different cryptocurrencies, etcetera – all at the same time. It is better to focus on one asset type and become an expert. Then, if you have the time and energy, you can branch out a bit more.

Binary options lifespans

What does your trading strategy look like when it comes to binary option lifespans?

Most binary options traders are daytraders, which means that they do not hold any positions open at the end of a trading day. Many go for options that will only last for a few hours, or even less. There is even turbo binary options available, i.e. options that will expire very quickly after being purchased. Many brokers offer turbos that expire after 30 seconds or 60 seconds, but there are also some brokers where you can select options that end even quicker than that, e.g. 5 seconds or 10 seconds after being purchased.

If you want to utilize binary options that remain active even after the end of the trading day (intraday binary options), your choices will be a bit more limited, but there are still many valid brokers out there for you to sign up with. You can for instance buy options that will expire the next trading day, later in the week, after 10 days, after 30 days, or even longer.

Early close-out

Some binary options brokers come with a special feature that will allow you to close a binary option prematurely. This can be used to take-profit (a reduced profit) or realize a loss (a reduced loss).

Prolonged lifespan

Some binary options brokers come with a special feature that will allow you to extend the lifespan of an active option by paying a fee.

Binary option types

Which binary option types does your trading strategy involve and are they available with this broker? Are the terms and conditions for them favorable?

Examples of popular binary option types:

• High/Low binary option (this is the classic binary option)
• Ladder binary option
• Boundary binary option
• Pairs binary option

Sometimes, staying loyal to one particular brokers is not in your best interest. It can benefit your bankroll to sign up with more than one broker to gain access to the various option types you want with the best terms and conditions you can find for each category.

Payouts

This is an area where it is really difficult to compare brokers in advance and pick the best one. Many brokers will clearly state in their information material how large the biggest possible payout is (e.g. we offer binary options with up to 90% payout) but that only tells us where the upper limit is.

When we start trading, we will notice that payout levels tend to change based on a variety of factors, including the underlying asset type and the lifespan of the binary options. One broker may for instance have turbo forex options that pay 90%, but the 8-hour options based on stocks pays only 40%. While another broker doesn´t have any options that pay more than 80%, but actually have plenty of 8-hour options options based on stocks that pays 75%. The former broker seems better at first glance, but if 8-hour options based on stocks is your thing, the second broker is probably the better choice in reality. As we have mentioned before, you need to find the best broker for your trading strategy.

Further complicating the situation is the fact that exchange-trade brokers and OTC brokers tend to offer different payout percentages for similar deals, and they can be difficult to accurately compare since other elements need to be taken into account besides the exact payout percentage.

It is also important to remember to always check the payout percentage right before you purchase a binary option, because the payouts of right now may not be the same as those offered a little earlier. Brokers typically adjust the payout levels to manage their own risk. With some brokers, you can be offered a substantially higher payout percentage if you go against the dominating trend among the other traders with the same broker. So, if most of your fellow traders are buying options believing that the USD is about to strengthen against the GBP, but you believe the opposite, you may be able to obtain a really nice payout percentage for options going in that direction.

Demo Accounts filled with free play-money are a good way to check out various brokers and develop a feel for their payout percentages for various underlying assets, time frames and situations. You might realize that you want to have an account with both Broker X, Broker Y and Broker Z to cherry-pick the best from each one.

The minimum trade size – is it suitable for your budget and trading strategy?

Before you pick a broker, make sure the minimum trade size is suitable for your bankroll and trading strategy. It needs to be in line with your risk-management plan; it is not good to pick a broker that have such a big minimum trade size that you are forced to risk too much of your entire bankroll on each trade.

Binary options can be beneficial for small-scale traders looking do many small trades

One of the reasons why binary options have become so popular among small-scale traders is that many binary options brokers are very flexible when it comes to trade size. You simply tell the trading platform how much you wish to stake – within the permitted parametres – and that will be your stake for the binary option. Different brokers have different limits for how small and how big a trade can be, and these numbers are important to find out in advance to make sure the broker you sign-up with is suitable for you.

Binary options are used by many small-scale traders to gain exposure to underlying assets that they could not buy and sell outright without breaking their budget. Example: If you were to actually buy and sell stocks, instead of using binary options, you would have to pay the market share price. At the time of writing, the price of 1 single Apple share (NASDAQ:AAPL) is just below 190 USD, which is well above the budget for many small-scale traders who are just starting out; especially if they want to practise sensible risk-management and not risk their whole bankroll on a single trade. And Apple is not in any way an exceptionally pricy share. At the time of writing, Chevron is trading at $164, Exxon Mobile at $113, Tesla at $245, Johnson & Johnson at $163, and so on.

Which is the best trading platform for binary options?

It would be nice if there was a simple answer to this question and we could you send you on to the broker or brokers that would give you access to that specific platform. Unfortunately, asking “which is the best trading platform” is a bit like asking “which is the nicest neighborhood” or “which is the best dessert”. It has so much to do with personal preferences and there are many excellent choices available out there – each with their own pros and cons. The super cozy neighborhood butting up to a wonderful forest area might be a long commute from your place of work, while the centrally located neighborhood gets noisy during the weekends. With that said, there are also sketchy neighborhoods that most people avoid if they can – and that is also true for trading platforms.

Here are a few things to consider when selecting a trading platform

• Do you want a platform that opens directly in your browser, or do you prefer to download and install software on your computer?
• Do you want to be able to trade and do other tasks on you smartphone and tablet? Some platforms offer really nice and functional apps, while others do not work well on mobile touch-screen devices or limit what you get access to when using the platform from a mobile device. Also remember that an app designed for iOS (Apple) will not work on an Android device, and vice versa.
• Do you prefer a sleek minimalist interface and work space, or do you want there to be a lot of data on the screen at all times?
• Do you want the platform to come with tools for technical analysis? How extensive does the tool box need to be, and are there any specific tools you need?
• Do you want a third-party platform used by many brokers? Some traders prefer to learn the ins and outs of a major third-party platform such as MetaTrader 4 (MT4), MetaTrader 5 (MT5) or cTrader, because it makes it very easy for them to utilize multiple brokers or switch from one from to another. MT4, MT5 and cTrader are also famous for their extensive assortment of tools for technical analysis and databases for trading strategy back-testing.
• Would you prefer, or at least be okay with, a platform devoted only to binary options, or do you want the platform to offer other types of trading alongside the binary options? (With third-party platforms, exactly what you get access to can vary depending on which broker you utilize.)

Exchange binary options brokers vs. OTC binary options brokers

Exchange Brokers

Compared to the OTC broker, a binary options broker that offers and exchange works in a manner more similar to a traditional broker.

On an exchange, a seller of an asset will be matched with a buyer. The broker charges a commission for facilitating the deal. The asset is sold for an amount of money decided by the market – at which price point is there a willing seller and a matching willing buyer? The normal rules of supply and demand applies.

For the broker, it does not matter if a specific seller makes a profit on their sale or not. The broker will make money as long as purchases are being made through the exchange.

Also, the broker is not doing any trading. It is only a middleman facilitating trades between other parties. Since the broker is earning a commission on each deal, the commissions can be kept quite low. If the broker starts charging high commissions, it can discourage buyers and sellers from making deals.

Generally speaking, the returns (to the trader) for a winning binary option will be higher when the broker is an exchange broker and not and OTC broker. Other advantages (from a trader perspective) is that exchange brokers tend to offer features such as stop-loss orders and take-profit orders.

Exchange binary options broker are less common than OTC binary options broker, but they do exist. One example of an exchange binary options broker that is available to retail clients online is Nadex.

Structure

The binary option will “trade” somewhere between 0 and 100, where 0 denotes an event not occurring and 100 where it did. If the price is currently 30, a buyer would risk 30 times the trade size to potentially win 70. The seller would risk 70 to win 30.

Some traders dislike the exchange broker model because they find it unnecessarily complicated and prefer the more straight-forward OTC broker model.

OTC (over-the-counter) brokers

The OTC (over-the-counter) binary options broker is much more common than the exchange broker.

Strictly speaking, an OTC binary options broker is not really a broker (middleman) because they actually take the role of the counter-party in the deal. So, a trader on the platform will open a position, and the OTC “broker” will be the counter-party. The broker will therefore win or lose money on the trade. (If the broker has another trader who has made the exact opposite trade, it can equal out.)

Since the broker can actually lose money on a trade, it is common for OTC brokers to offer lower payouts than exchange brokers. The lower payout mitigates the extra risk they are taking on.

Some OTC brokers utilize a model that includes built-in hedging mechanisms for additional risk management.

OTC binary options brokers are more common than exchange binary options brokers, and they have become popular despite their tendency to offer lower payouts.

They are typically not offering classic take-profit orders, but some do offer something similar – the ´cash out´ choice where a trader will be given the opportunity to close their position early and cash out immediately.

How is the broker making money? Exchange-model versus OTC-model

Most binary options brokers make money either as a counter-party in the deal or by spread and/or commission.

As explained above, the OTC binary options broker will be the counter-party in the trades. To manage the risk that this entails, the broker will typically pay a fairly low payout on the binary options.

A broker using the exchange-model is not the counter-party and can therefore not win or lose a trade. The risk is lower, but the broker must find another way of making money to sustain their business, and the two most commonly utilized methods is to make money from the spread and/or charge a commission (fee) on each trade. The spread is the difference between buy price and sell price. The tighter the spread, the less costly it is to trade.

When you see a binary options broker/platform stating that they offer Commission-free Trading, it is typically because they are an OTC broker or because they make enough money on the spread. In the latter case, this can sometimes (but not always) mean that the spreads are a bit wider than average.

Brokers who earn money based on the size of a trade, i.e. through the spread or by charging a size-based commission, are typically extra eager to offer big leverage. The bigger the trade, the more they earn – regardless of if it is a winning or losing trade for the trader. With that said, there are also many OTC brokers out there who offers a lot of leverage, so you don´t have to pick an exchange broker just because you want to use a lot of leverage for your trading. OTC brokers also profit, in their own way, on traders doing large deals instead of small ones – but it comes with higher risk to the broker since the broker needs to be the counter-party in big trades.

Deposits and withdrawals

Transaction limits

• How small is the smallest possible deposit? Are you okay with making a deposit of this size? Especially when it comes to making the first deposit, many traders wish to keep the amount small.
• How small is the smallest possible withdrawal? If the number is high, your money may be “locked in” until you have enough in the account to reach the minimum withdrawal limit. It is not fun to be forced to make a deposit just to be able to make a withdrawal.
• If you wish to withdraw a large amount of money from your account, is that possible to do in one go or is there a ceiling that will force you to make multiple withdrawals over time?

It is common for transaction limits to vary depending on the transaction method used, so make sure you find numbers that pertain to the specific transaction method you wish to use.

Novice traders typically want to start with a small first deposit, and even if you are an experienced trader with a substantial budget, it can still be nice to make a small first deposit when you are in the process of trying out a new broker.

Many brokers are aware of this and will not require big deposits, and there are many good brokers to chose among where the smallest deposit size is within the $5 – $50 range. So, if you don´t feel like making a bigger first deposit, you don´t have to – you can simply avoid the brokers that require bigger deposits than this.

Of course, it is also important that the minimum trade size is small enough if you plan on making a small deposit. There is not much of a point making a $5 deposit into an account where the smallest possible trade size is $10.

Transaction methods

It is important to pick a broker where you can use a method for deposits and withdrawals that:

1. You like and feel comfortable using online.
2. Doesn´t cost too much for you to use. Even seemingly small fees can erode your bankroll noticably over time, especially if you are making a lot of transactions.

Note: In recent years, an increasing number of binary options brokers have begun accepting deposits and withdrawals in major cryptocurrencies. Bitcoin and Ether (Ethereum) are especially common.

Fees

When you look at transaction fees, remember that there are two pillars to take into account.

• The transaction method that you have picked, e.g. a credit card or an e-wallet, can charge you for using the method.
• Some brokers will charge deposit and/or withdrawal fees for processing your deposits / withdrawals.

Make sure you understand how transaction fees are calculated (fixed fees and amount-based fees) to avoid unpleasant surprises.

Some brokers will allow you to make a limited number of withdrawals per month without charging a processing fee.

Time

How long a transfer takes will depend on both the method you are using and the broker´s processing routines. Many brokers process deposits faster than withdrawal requests.

KYC checks

In order to comply with anti-money laundering routines, many brokers carry out a know-your-customer check that must be completed before you can start making withdrawals from your account. Exactly what it entails vary, but you can for instance be asked to (digitally) send them a photo of your ID (to confirm your identity) and a photo of a utility bill in your name (to confirm your address).

Since a KYC check can take some time to process, it is best to get it done and over with a soon as possible when you have signed up with a new broker, instead of waiting until you really need to make a withdrawal and want the money quick.

Examples of common transaction methods

• Advcash
• Alipay
• Apple Pay
• AstroPay
• Cashu
• Credit Card
• Debit Card
• FasaPay
• Flutterwave
• GlobePay
• Google Wallet
• JCB Card
• M-Pesa
• Maestro
• Mastercard
• NETELLER
• PayPal
• PayRedeem
• Paysafecard
• Paytrust88
• Perfect Money
• POLi
• QIWI
• Skrill
• Sofort
• UnionPay
• Vietcom
• Visa
• WebMoney
• Western Union

Account currency

Which account currency you can select can impact your currency risk.

Example: A trader who is making and spending their money in NOK, but it using USD as their account currency, will incur an additional currency risk, since the USD will fluctuate in value in relation to the NOK.

It is also a good idea to take a look at possible conversion costs to avoid surprises. If your account currency is USD but you make your deposits in another currency, e.g. EUR, AUD or BTC, will there be a cost associated with exchanging one currency for another, and how will the exchange rate be determined?

Customer support

Customer support is one of those aspects of a broker that we tend to ignore when signing up. It just does not feel like an important thing to consider, when there are payout levels, asset classes and welcome bonuses to focus on. Then, when something actually goes wrong and we need help, the quality of the customer support goes from being non-relevant to one of the most important things of them all.

Therefore, it can be smart to do some investigation into the customer support before you part with any money. You might even want to send out a little inquiry and see how they handle it.

Here are a few things to consider:

• How do you prefer to contact the support, and is this method available with this broker? Phone call, email and live chat are the most common options.
• If you prefer phone support, are you okay with making a (potentially costly) phone call abroad? Otherwise, look for a broker who offers phone support with a local phone number, a free-phone number that can be reached from your country, over the internet (e.g. Whatsapp), or similar. Some brokers offer a call-back service. You send them a message through live chat or email, and they call you – so you do not have to worry about the phone bill.
• Is support available in a language you are comfortable using?
• When is the support department staffed? Is there a difference between phone support, live chat support and email support in this regard? Is the support staffed during your typical trading hours, when you are most likely to run into an urgent issue?

Bonus money

Many binary options brokers offer bonuses. It is for instance common to get a welcome bonus when you make your first deposit, and some brokers even give you a small bonus before you have made any deposit, simply to welcome you as a client.

The most common form of bonus is the deposit bonus, and it is typically given as a percentage of the deposit. Example: “Make a deposit now and get a 50% deposit bonus up to a maximum of $500.”

While getting bonus money can be fun, it is important to read and understand the terms and conditions before accepting any bonus. Naturally, a broker does not want you to sign up, make a deposit, get a bonus and then promptly withdraw all your money from your account. Therefore, bonus money typically come with a trading requirement.

• Always find out how large the trading requirement is before you accept any bonus, and how it is calculated. “Trading requirement: 20x” does not say much, because you do not know if it is only the bonus money or your deposit + the bonus money that must be traded 20 times to fulfill the requirement. Example: You make a $100 deposit and get a 50% bonus, i.e. $50. If the 20x trading requirement is for the bonus only, you need to risk $50 x 20 = $1,000 on trades to fulfill the requirement. If the trading requirement is calculated based on deposit + bonus, it will be $150 x 20 = $3,000. That is a whopping $1,000 difference.
• Always find out what will happen to your account while you are trying to fulfill the requirement. Will you be completely blocked from making any withdrawals? Will only the bonus money be blocked from being withdrawn? What happens if you make a withdrawal request without first having fulfilled the requirement?
• Is there a time limit for fulfilling the requirement? If so, what happens if you fail to fulfill the requirement in time?

Some bonus offers are nice, while others come with such horrible terms and conditions that it is better to decline them.

Your own trading style will also impact how easy it will be for you to fulfill a certain requirement. If you are already trading frequently and fairly large amounts, reaching $3,000 in a month might not be difficult. For others, reaching that goal would require plenty of additional deposits and a serious change of trading style, and it is not a good idea to carry out such changes simply to chase a bonus requirement.

“Risk free” trades

Instead of offering bonus money, some binary options brokers offer so called “risk free” trades. Typically, these trades are not exactly risk free, so read the fine print before you decide if you want to accept the offer or not.

In general, a “risk free trade” means that if you lose the trade, your loss will be replaced by bonus money in your account. So, your account balance looks the same, but you will actually have lost real money and gotten bonus bonus in their place. The bonus money comes with terms and conditions, so they are not the same as real money. There may for instance be a trading requirement attached to the bonus money or it might be impossible to withdraw the bonus money (only profits generated by it can be withdrawn).

You can use multiple brokers if you want to

You don´t have to be loyal to one particular broker and/or platform. It is sometimes best to sign-up with more than one broker, in order to cherry-pick the best from several brokers. Instead of trying to find a lukewarm compromise, sign-up with several brokers and utilize them for different strategies. You might for instance realize that Broker A is ideal for trading turbo forex options and Broker B is best for your intraday cryptocurrency speculation.

Some traders also prefer to have money deposited with several brokers for security reasons. Just like we risk-manage our investment portfolios by not putting all our eggs in one basket, we risk-manage by having accounts with multiple brokers. If one broker turns out to be shady, becomes insolvent or drastically change their offer, you will suffer less from the blow if you have spread out your deposits and holdings over several brokers.

Having access to several broker accounts and platforms will also make you less vulnerable to technical issues and downtime, since you can turn to Broker B if Broker A is not functioning properly, and so on. Last but not least, there are – regrettably – some brokers out their that will limit your trading ability if you are too successful. They may for instance restrict the maximal trade size or limit your available leverage. (This is especially likely among brokers who are actually not true brokers and instead act as your counter-party in the deals.) Typically, brokers who adhere to this practice will be on the look out for unusually large total profits over time rather than win rate, so if you are an excellent binary options traders, it can be smart to spread out your deals over multiple brokers to not trip the wire. This can also help you access your winnings more quickly if necessary, since you would be doing several mid-size withdrawals from multiple accounts instead of trying to make a single big withdrawal from one account.

This article was last updated on: October 3, 2023