If you are new to Binary Options Trading it can be tricky to know exactly what to look for in a Binary Options Broker.
Even if you have traded before, there are other things to look out for with Binary Options compared to other trading instruments like spot Forex. As a matter of fact there are quite a few differences between Binary Options brokers as well which might not be apparent at first look.
The best is if you already have made a few decisions regarding the strategy you will use to trade. If you don’t have one now, it would then be better to select a broker which cover all the bases.
What to pay attention to when Choosing A Binary Options Broker
I have made the list according to my preferences, but perhaps you want to emphasize other features. Please go through the list and think about what you need from a broker in order to succeed.
- In-The-Money Payout
- Market Diversity
- Option Frequency
- Lock-Out Period Duration
- Binary Option Types
As I said you might not have the same preferences as I have but anyway you look at it I think all would agree that the most important is the payout. The reason it is the most important is due to low payouts make it more difficult to make a profit in the long run.
Some Binary Options brokers offer 90% payout and above. Why chose a broker that returns only 56-70%? It makes absolutely no sense, except if the have some special feature that is essential for the strategy you are trading.
Market diversity is also important because some of use prefer certain markets or trading instruments. If you love trading Stocks there is no reason why you should settle for a broker with limited choice of Stocks.
Some brokers have a range of trading instruments exceeding 80 and even 90 assets, that gives you a wide selection to decide what underlying asset suits your trading style the best. This is probably more important than what you might think. Trading that which you like and know very well can make a tremendous difference for the end result. Don’t overlook this if you want to succeed.
Option frequency might sound a bit cryptic but has to do with the how often the broker renews the contracts. Some brokers lets you trade every 15 minutes others less frequently (say every hour). If you can only set aside one hour or so per day to trade, there will be more choice and more opportunities with a broker that renews their contracts every 15 minutes. If you make a bad choice here you could end you being only able to make one trade in the hour you have at your disposal instead of four.
Other things to look for when Choosing A Binary Options Broker
We are now entering the not so important issues. Lock-out period duration is not of the most importance but it could restrain certain strategies and make them less effective.
Usually the Lock-out period lasts from 5 minute to 15 minutes (not taking 60 second options into regard as these I consider special feature). For some strategies 15 minutes can be a little long to wait and might not be suitable.
Personally as a trader I prefer something like 5 minutes, its neither too long nor too short. It wouldnt surprise me if some newbies actually believe the shorter the lock-out period the better. That is not the case at all.
The reason for this is they way price behaves. Price is chaotic which means it needs some time to develop in the direction our strategy tells us. If the Lock-out period is too short there will not be enough time for price to develop beyond the inherent noise included in it.
Some Binary Options brokers makes available to us, except for High/Low Binary Options, Boundary and One Touch Binary Options. If your strategy takes advantage of Boundary Options then it makes sense to choose a broker offering them.
Sometimes it also is a good idea to select a broker with other Binary Option types as you might want to change your strategy if another type suits your trading style better.
I hope this was helpful to you and I wish you a wonderful trading experience.