How to Choose a Broker – Video Tutorial

Best Binary Options Brokers 2020:
  • BINARIUM
    BINARIUM

    Best Binary Options Broker 2020!
    Ideal for beginners!
    Free Demo Account + Free Trading Education!
    Get a Sign-up Bonus:

  • BINOMO
    BINOMO

    2nd place in the ranking!

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HOW TO CHOOSE THE BEST BROKER

The first step towards a positive trading experience is a selection of a reliable broker. The best broker is the one who has the most competitive features, offers high return rates and supports implementation of different types of trading styles. Among most important factors are also size and liquidity.

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Before You Even Start

Selecting the right broker can be a difficult task for beginners since new traders are mostly not aware of all the important differences between brokers and trading platforms. Each platform offers a bit different set of trading tools, return rates, expiry times, bonus deals etc .

Some brokers offer extensive support for beginners by providing written and video tutorials that introduce all the aspects of binary options trading. In addition, some brokers will also offer live trading webinars.

Best Binary Options Brokers 2020:
  • BINARIUM
    BINARIUM

    Best Binary Options Broker 2020!
    Ideal for beginners!
    Free Demo Account + Free Trading Education!
    Get a Sign-up Bonus:

  • BINOMO
    BINOMO

    2nd place in the ranking!

If you never traded before it is advised to open a free demo account with at least one of the proven and reputable brokers, to get familiar with the basics of binary options trading.

The Difference Between Brokers and Platforms

Different brokers use different trading platforms. There is a difference between a broker and a trading platform.

  • A broker is a trading service provider, usually owned and run by a specific business company.
  • The trading platform is a software or an interface, which displays the market charts and enables the trader to place trades.

The types of trading which are offered by specific brokers depend on the choice of the broker as well as on the technology of the trading platforms they use.

Most common trading platforms for binary options trading are SpotOption, TechFinancials, TradoLogic, Panda TS and TradeSmarter. Many brokers offer their own independent trading platforms which are in many cases in-line or even better when compared to the platforms offered by external third party providers.

Trading platforms differ by trading types, expiry times, responsiveness, trading tools and other built-in features such as technical analysis charts, market sentiment display, signals or other similar features.

Important Factors for Selecting a Reliable Broker

Types of Binary Options Trading

Broadest selection of different trading features are offered by brokers who use the SoptOption and TechFinancials platform. Depending on the broker selection of features they want to use, the platforms themselves enable the following types of trading: Short Term (30sec, 60sec, 120sec, 180sec, 5min), Regular Call & Put Options (with 5, 10, 15, 20, 25, 30, . etc expiry times, up to end of day expiry time), Long Term (with expiry times at end of day or at specific date, end of week, end of month, etc), Touch Options, Boundary or Range Options, Above/Below Options, Option Builder, Ladder, Pairs or Pair Stocks, and lately some brokers are also introducing classic FX trading possibilities. When looking into trading options it is also very important to take a look at the expiry times offered for specific trading options.

Expiry Times

When selecting a broker it is always good to pay attention to have flexible expiry times available. In addition to 60 seconds trades, offered by most brokers, it is very good to have the possibility to select 2 minutes and 5 minutes expiry times as well. For the longer expiry times it is always good if the broker offers the option to select as many different expiry options as possible. The expiry times and general list of trading options available will usually differ, based on the trading platform each broker offers. For example, the brokers who utilize the TechFinancials trading platform offer the best flexibility in the expiry times for regular call and put options and a wide selection of trading possibilities. Example of two such brokers are 24option and Boss Capital. These brokers will give you the possibility to implement many different trading strategies and systems, because all their trading options are very flexible.

Return Rates

Different binary options brokers offer different return rates on investments. The difference for similar options can be even up to 10%, which acts as an decisive factor in making profit or loss with your trading. As a general rule it is always good to choose a broker who offers high return rates, however this is not a single or most important factor. If you don’t have the flexibility with previously described expiry times, you might find it difficult to implement your own profitable trading systems and even the high return can rates will not compensate for the lack of expiry times selection. Keep in mind that the return rates on short term trades are always a bit lower as return rates on regular options (with expiry longer than 5 minutes). A good return rate for short term trades (60 sec to 5 minutes) are anywhere above 72% and a good return rates on regular options are anywhere around 80%. Brokers who offer ‘touch’ or ‘high yield touch’ options or ‘ladder trading’ for example, will give you the possibility for much higher return rates on these trades, ranging from 250%, even up to 500% or higher. But you have to be aware that such trades can be placed only in specific market conditions and quite some experience is needed to recognize the best situations where to place such trades.

Bonus Deals

All brokers tend to offer different bonus deals. For example, if you deposit a $250 the broker will match your deposit amount and give you up to 100% bonus, so you will have $500 on your trading account available to start trading. When dealing with bonus offers you have to be aware that all bonuses come with specific conditions. Usually the condition is that you have to trade a certain volume worth of trades before you can withdraw your profits. For example, if you take a 100% bonus deal, the turnover can be even up to 40 times the amount of bonus. So in case you invested $250 it would mean that you have to make $10.000 worth of trades (win or loss) before you can withdraw your profits. Bonuses are always welcome, but you if you decide for a bonus make sure you are aware of the conditions which are tied to specific offer. Different brokers will offer different bonus conditions. However, to be able to freely withdraw your profits at any time, signing-up for a bonus deal is not advised for a first time trader.

Regulation

There are two types of brokers – regulated and unregulated. Main difference is that regulated brokers will not accept traders from United States and unregulated brokers usually accept USA traders as well. Among the regulated brokers a large number of them is registered in Cyprus because of favorable taxing policy. All regulated brokers who are based in Cyprus are regulated by the national securities commission CySec. CySec offers additional security for the traders, since their regulatory requirements are quite strict and oriented towards protecting the traders investment against any fraudulent activity. Additionally, brokers can be regulated in other countries by other country specific commissions who handle Forex, CFD, commodities and binary options trading platforms. Opening an account with regulated broker will give the trader additional security. However, the regulation limits the brokers from accepting the traders from USA. Many brokers choose not to get regulates, simply because they wanted to continue offering their services to USA traders. In these cases it does not mean that, if the broker is not regulated, it is not a good choice. Some unregulated brokers still hold a good reputation among their traders and there are no complications with trading or payouts on their platforms. However, the traders from USA are limited to selection of unregulated brokers only, if they want to engage in binary options trading.

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How to Choose the Best Online Broker

There’s never been a better time to be an investor: Competition among online brokers is fierce, which means costs are coming down and services are being ramped up.

But picking the right brokerage account comes down to your individual priorities. Some investors are willing to pay higher trade commissions for a state-of-the-art platform; others count costs above all else. Here’s how to find the best online broker for you.

Choosing the best online broker

To evaluate brokers, you should look at the following factors:

Look at commissions on the investments you’ll use most

Brokers generally offer a similar menu of investment options: individual stocks, options, mutual funds, exchange-traded funds, and bonds. Some will also offer access to futures trading and forex (currency) trading.

The investments offered by the broker will dictate two things: whether your investment needs will be satisfied, and how much you’ll pay in commissions. Pay careful attention to the commissions associated with your preferred investments:

  • Individual stocks: Some brokers still charge a commission to buy and sell stocks, either per trade or per share. However, there are several brokers that now charge no commission, including TD Ameritrade, E-Trade and Interactive Brokers.
  • Options: Options trades often incur the stock trade commission plus a per-contract fee, which usually runs $0.15 to $1.50. Some brokers charge only a commission or only a contract fee.
  • Mutual funds: Some brokers charge a fee to purchase mutual funds. You can limit mutual fund transaction costs or avoid them completely by selecting a broker that offers no-transaction-fee mutual funds. (Mutual funds also carry internal fees called expense ratios. These are charged not by the broker, but by the fund itself.)
  • ETFs: ETFs trade like a stock and are purchased for a share price, so they are often subject to the broker’s stock trade commission. But many brokers also offer a list of commission-free ETFs. If you plan to invest in ETFs, you should look for one of these brokers.
  • Bonds: You can purchase bond mutual funds and ETFs at no charge by using no-transaction-fee mutual funds and commission-free ETFs. Brokers may charge a fee to purchase individual bonds, with a minimum and maximum charge.

Pay attention to account minimums

You can find highly ranked brokers with no account minimum, including TD Ameritrade, Merrill Edge and Ally Invest. All three are on NerdWallet’s list of the best brokers.

But some brokers do require a minimum initial investment, and it can skew toward $500 or more. Many mutual funds also require similar minimum investments, which means even if you’re able to open a brokerage account with a small amount of money, it could be a struggle to actually invest it.

It isn’t impossible, however: We have strategies for how to invest $500 and how to invest $1,000.

Watch out for account fees

You may not be able to avoid account fees completely, but you can certainly minimize them. Most brokers will charge a fee for transferring out funds or closing your account. If you’re transferring to another broker, that new company may offer to reimburse your transfer fees, at least up to a limit.

Most other fees can be sidestepped by simply choosing a broker that doesn’t charge them, or by opting out of services that cost extra. Common fees to watch out for include annual fees, inactivity fees, trading platform subscriptions and extra charges for research or data.

Consider your trading style and tech needs

If you’re a beginner investor, you probably won’t need extras, like an advanced trading platform. But you may want an education and a little hand-holding. This could include videos and tutorials on the broker’s website, or in-person seminars at branches. Many brokers offer these services free to account holders.

Many brokers offer educational resources for new investors.

Active traders, on the other hand, will want to look for a brokerage that supports that kind of frequency. That includes weighing a broker’s trading platforms, analysis tools, research and data offerings in addition to commissions — including discounts for high-volume traders — and fees.

Plenty of high-quality online brokers offer access to trading platforms, tools and research for free, so beware of brokers that nickel and dime each feature; those costs can add up quickly.

Take advantage of promotions

Online brokers, like many companies, frequently entice new customers with deals, offering a number of commission-free trades or a cash bonus on certain deposit amounts. It isn’t wise to choose a broker solely on its promotional offer — a high commission over the long term could easily wipe out any initial bonus or savings — but if you’re stuck between two options, a promotion may sway you one way or the other.

NerdWallet’s online broker ratings

Reviewing brokers is what we do best. Our ratings are comprehensive, thorough and — most importantly — objective.

If you’re struggling to sort through the above, or just want the reassurance of an expert opinion, we’re here to help. Our team looks at all of the factors outlined above to select the best brokers for each type of investor. Here are some of our current favorites:

Best Binary Options Brokers 2020:
  • BINARIUM
    BINARIUM

    Best Binary Options Broker 2020!
    Ideal for beginners!
    Free Demo Account + Free Trading Education!
    Get a Sign-up Bonus:

  • BINOMO
    BINOMO

    2nd place in the ranking!

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