If you haven’t heard of binary options yet then you’ve probably been living up in some log cabin in the mountains for the past few years. Binary options are a revolution in online trading that has rapidly taken the online trading market by storm. Essentially it is a stripped down, streamlined version of trading that allows anyone with an internet connection to speculate on the value of all sorts of assets, from commodities and currency pairs, to stocks and indices. Ever since the Chicago Board of Trade listed binary options in 2008 the floodgates were opened and now there are a dizzying amount of binary options websites offering trading services on the web.
This is great for the industry as a whole but can be bewildering for new traders who have no idea who is who, what safeguards there are in place and what the difference between a reputable and a disreputable binary options broker really is.
If you are completely new to the world of binary options then you may find this brief guide useful to read before you invest your money in any one binary options broker.
Capitalisation is basically how much money a company has on hand to pay out its winning traders. This is everything in binary options as no-matter what they try and tell you, when you trade binary options with a broker they are relying on a client losing in order to be able to pay out your win. Go for the bigger names, the ones on our recommended broker list have a history of binary trading activity and an impressive market share. These big boys can afford to pay you your winnings and this is why you should opt to trade with the bigger companies rather than the smaller ones.
Binary options are by far the easiest and most accessible trading option on the web, even so, for someone who has no grounding in economics or finance whatsoever, trading binary options can still be a pretty daunting prospect. Don’t trust a broker who is willing to let you loose on their platform without providing you with any kind of educational back up. Not to point fingers but these brokers are probably keen on you paying your money in and losing it as quickly as possible. Avoid. Brokers that provide you with educational resources such as tutorials, ebooks and educational videos are interested in binary options being sustainable as an industry. They are not afraid that you will learn some magic secret and then promptly take them to the cleaners. One of the criteria we employ when building our recommended broker lists is that they furnish their traders with sufficient educational material. And educated trader and all that….
In other forms of trading this relates to the availability of the assets being purchased, be they stocks, currencies, commodities etc. In binary options this simply means the availability of the trades you wish to place. Liquidity means that if you have a hunch on gold and you attempt to lock in a trade on it, that asset is not suddenly removed because other traders are also trading on it or because the broker has their own hunch that you’re about to make a killing. Seeing assets appearing and disappearing on a trading platform willy-nilly without any rhyme or reason is a pretty reliable sign that you’re dealing with a broker suffering from “liquidity issues” (for this read cash-strapped).
This is last but definitely not least. It’s important when dealing with any company that you feel you can trust the person at the other end of the line, or that there IS someone there at the other end of the line. Well-staffed customer service departments are the best indication that you are dealing with a company that has invested in binary options, rather than just put up a website with the intent of milking some money out of a booming industry and then disappearing. Don’t regard a customer service phone number as something to dial only in the case of an emergency. You should dial this number and get a feel for who you are dealing with before you ever deposit money with a binary broker. Make sure there are plenty of them, make sure they are available 24/7, and make sure they know what they are talking about.
George Milios is the founder of onlineforextrading.net, the binary options and forex news portal which is dedicated to providing you with all the information you need to successfully trade.