UNITED STATES—One of the most important considerations, when you start as a binary options trader is your choice of a binary options broker. Making the wrong choice can severely limit your opportunities and even cause you to lose money. Although you can always switch brokers, getting it right the first time is better.

Binary options trading has grown over the decade, increasing the number of binary options brokers in the market. There are many legitimate brokers out there like IQCENT but there are a lot of unscrupulous brokers you want to avoid. 

In this article, we will explore the role of brokers in binary options and show you how to choose the right broker. 

What’s a binary options broker? 

A binary options broker is a financial service firm that provides you with access and a trading platform to trade binary options. You can either download the trading platform to your local device or use it directly via a web browser.

The broker serves as your bridge to the financial markets. The broker may also provide customer support, tools such as indicators and charts and other features. While binary options brokers are generally companies, some brokerages are operated by individuals. 

How to choose the best broker for binary options trading 

Here are some tips to help you choose the best binary options broker 

Verify the broker’s regulatory status

The first thing you should screen for is regulation. Stay away from brokers that are not subject to regulatory bodies. There are many renowned regulation agencies, and each will allow you to verify the broker’s regulatory status of any broker that claims to be regulated by them.

However, you should know that many countries do not regulate binary options. As such, reliable brokers often choose to work with international regulatory bodies. These brokers are usually located offshore and are often as reliable as those regulated by local bodies such as the CySEC, ASIC, and the FSA. 

Terms for deposit and withdrawal 

At this stage, you want to consider fees for deposits and withdrawals, minimum deposit requirements, conditions for deposits and withdrawals and bonus offers. 

The goal of trading is to maximize profit and minimize loss. So it would be wise to look for a reputable broker that requires minimal fees. Most brokers offer free deposits and withdrawals. (Note that the payment channel you use to deposit or withdraw funds might charge you transaction fees which the broker may not cover.)

The minimum deposit requirements are not fixed amongst brokers. Some brokers require an initial deposit as low as $20 to start trading, while others may require as high as $100 or even $100. If you are on a budget or want to limit your exposure then you need a broker that requires a little initial deposit amount to validate your registration. Some brokers may offer you bonuses based on your deposit.

You should also check the conditions for deposit and withdrawal. Most brokers will require you to verify your account and payment options before you can fund your account and withdraw earnings. Examining the deposit and withdrawal procedures to prevent unpleasant surprises would be best.

The payout percentage

The return on a binary options contract depends on the payout percentage. The broker will set the payout percentage based on the type of trading instrument used, asset price and expiration date. Most brokers offer between 75%-95% payout.

Note that the payout percentage is not uniform. So ensure you read the fine print before opening and funding your account. However, don’t be blinded by brokers by offering ridiculously high payout percentages. Check other criteria such as regulatory compliance, deposit and withdrawal conditions and extra features.

Demo account 

A demo account allows you to gain trading experience without financial risk. It is ideal for beginners who are still learning binary options trading. Veteran traders can also use demo accounts to test new trading strategies.

Note that while demo and live accounts are similar, there are significant differences. For instance, the service level of a demo account is lower than that given to a live account. Some brokers offer limited access to demo accounts, while others provide lifetime access.  

Lastly, particular market conditions may not be available in a demo account. So be prepared for a slight experience when you migrate from demo trading to live trading.

Wrapping up

You can’t trade binary options without a binary options broker. When selecting a binary options broker, check their regulatory status, terms on withdrawal and deposits and other features like payout percentage and demo account.