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Binary options trading has become a very popular form of investment, joining the likes of Forex, stocks and commodities. These forms of trading require the assistance of a broker and there are literally hundreds of them to choose from. Picking the best broker to help with your trades is not the easiest of decisions you’re going to be faced with either. But it’s possibly one of the most important, aside from picking your trades.
There are a number of different factors that will have an impact on your decision. But one of the most important, and one that has the potential to cause you the most grief if you get it wrong, is a question of regulation. There really is no better broker than one that is regulated.
Why regulated binary options brokers are the best option
The most experienced traders will always choose a regulated broker as opposed to an unregulated one. The reason for this is that a regulated broker is far more likely to be honest and reliable. Their reputation will be much better and should bankruptcy be declared, your funds will usually be protected as they will be safe in segregated accounts.
There are a number of different regulatory bodies around the world, and most countries will have their own financial regulator that will be responsible for regulating the financial markets including stocks, Forex dealers, commodity exchanges and binary options brokers. Here is a list of a few of them:
Cyprus - Cyprus Securities and Exchange Commission (CySEC)
UK - Financial Conduct Authority (FCA)
United States - US Commodity Futures Trading Commission (CFTC)
Russia - Financial Market Relations Regulation Center (FMRCC)
Germany - Bundesanstalt für Finanzdienstleistungsaufsicht (BaFIN)
As this form of trading takes place online it’s possible for scam providers to slip through the regulatory net and offer their services to unsuspecting investors. Unfortunately, the marketplace has become littered with scary reports of fraudulent brokers, issues with withdrawals, and generally unscrupulous behaviour. There are a number of ways you can reduce the risk of falling victim to a scam. And the most significant way is to choose a broker that has been regulated. However, a word of warning is necessary, as some will claim to be regulated when in fact they are not.
Always check the validity of a broker's claims by visiting the website of the regulatory body the broker is claiming to be licensed by. At the end of the day, it is your responsibility to double check that the broker is actually registered with the regulator and that the license is still valid. All regulatory bodies allow the general public to access such information.