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Binary Options Regulation – Everything You Need to Know
I’ve decided to open another series of articles with an article about regulation matters, not because I think it’s the most important thing a trader should look for in a broker (and it’s not), but because I think that’s the most discussed issue by most binary options traders. Update: Now, three years after I first wrote this article, regulation has become a very important part of each trader’s process of choosing a broker. One of the first questions a new trader asks is whether the broker is regulated or not and if Yes, then by whom. The industry has transformed a lot since 2020 and I am glad to see that traders are a lot more careful with their money and pay attention to the companies they are doing business with.
Potential traders from all around the globe are beginning to understand the fine benefits of Binary Options, but somehow the whole binary options industry still seems quite blur for most people. The increasing growth of binary options brokers is defiantly not synchronized with the amounts of information given by these brokers about their product. Therefore, it’s not a big surprise to see so many confused people just longing for some clear information, for something to hold on before depositing their hard earned money. From my experience, all these worries and lack of information leads to one simple phrase pronounced by these fuzzy traders: “Binary Options Regulation”.
Regulation is an advantage, not a must. Just take a look at the small and un-important Forex industry (hope you all realize I use cynical, those of you who don’t know the Forex industry should do some learning before beginning with Binary Options…). The biggest Forex brokers are now valued by billions, but at the beginning, they weren’t so different from today’s binary options brokers. It’s important and advised to be suspicious towards new trends, but be reminded that sometimes pointing your finger at the right trend at the right time could make you great profits. It took quite some time before the Forex industry became fully regulated, similarly, it will take more time for the binary options industry to claim full regulation. In today’s market, traders could find a few already regulated Binary options brokers (or on process), our readers could find most of these brokers on our trusted binary options brokers list.
Update (November 2020): As I was saying three years ago, more time needs to pass until the binary options industry will become fully regulated, like the Forex industry (an unregulated Forex broker is a rare bird these days). But the industry has made significant advances and most brokers are looking to get a license from one of the main regulators across the globe. And speaking of that, the main player is now the Cyprus Securities and Exchange Commission (CySEC); their increased activity is due to the fact that most binary options brokers choose to operate out of Cyprus, so they have to get regulated by a Cypriot authority. You can read this in-depth and recently updated article about CySEC Regulation but keep in mind that other regulatory agencies are stepping in and start paying more attention to the binary options industry. The British Financial Conduct Authority (FCA) recently took some steps towards regulating binary options in the United Kingdom (Article coming soon), but also other regulatory agencies around the world are doing the same. However, I believe the best thing is that brokers now want to become regulated and this is mostly because traders demand to invest with licensed firms. In other words, unregulated brokers will soon start to lose clients who will close their accounts and join regulated companies. To keep you informed about regulation around the world we’ve recently added all regulators information which will also show you how to file an official complaint against your brokerage in case of misconduct.
Why do we Need Regulation in Binary Options?
First, for those of us who have absolutely no idea what’s regulation is all about: if a company is regulated or not regulated, it doesn’t mean it conducts legal business or illegal business if not regulated. So why regulate at all? For several reasons. First, despite the free markets liberal overlook, markets and economies can’t function properly without a basic set of rules to ensure physical rights, underpin transactions, and antitrust laws for safeguard fair competition. Rules and regulations carry the weight of law but are not written by lawmakers. Instead, they’re issued mostly by bureaucrats who rely on information and advice from experts to form the basis of the new standard. Therefore, the main reason behind regulation is to ensure that the company is handling its business in light of the law, and to protect the company from other companies who do not apply to rules of regulation.
Second. In many cases, rules and regulations are implemented because some people have forgotten the fair business rules and now the rest must pay the price. The rules are essential requirements to ensure the safety of those directly involved plus the greater good of all related population. Regulation is necessary to mitigate broader market failures in competitive industries. For us as clients, regulation is needed to ensure the protection of consumers from abuse, to introduce and maintain safety standards, and to protect individuals from scams and frauds. In a perfect world, laws, rules, and regulations ensure a better product or service, better distribution, safer environment and, in general, better guidelines with which to move forward to progress.
Regulation and Binary Options
The field of Binary Options is relatively breached, both since it’s quite fresh and the different definitions of binary options trading in different countries. In the U.K. for example, Binary Options falls into the “gaming” category (however, new FCA sets of rules will be soon implemented and by mid-2020 binary options are likely to be officially considered “financial instruments” – article coming soon) while in other countries Binary options trading is “gambling”. Same goes to Forex, before regulation. The reason for that is that different states have different definitions, legal definitions, for the same industry. That’s why Binary Options is not available in all countries. In the U.S, which is stricter than other countries when it comes to people’s money, not all assets are available to trade. Some brokers don’t even allow U.S traders to deposit. On the other hand, both Europe and the U.K do allow all traders to trade all assets. Asian markets are even less strict.
The first countries to issue legal statues to Binary Options platforms and Brokers where, as always, the tax shelters countries: BVI and Cyprus. Many internet gambling and trading website companies are located in those countries, mostly in Cyprus due to its physical and legal linkage to Europe. That’s the reason why most Binary Options brokers are also located in those countries, and of course, the low to zero taxes. Moreover, most regulation processed in Cyprus effects European citizens also. The Cypriot regulators have already begun processing binary options brokers appeals to regulation, inside information told me that it’s only a matter of a couple of months before the first brokers would be officially regulated by the Cypriot regulators. *Update: Now after more than three years, we can safely say the CySEC is the main regulator of the binary options industry and that other regulators across the globe are also working towards a safer trading environment. Some of the most important authorities are the Italian Commissione Nazionale per le Società e la Borsa (CONSOB) and the French Autorité des Marchés Financiers (AMF) but of course, others are starting to participate actively. As for the U.S. – it’ll take time, but some steps are being taken by the Financial Industry Regulatory Authority (FINRA). E.U regulation is only good for Europe, regulated brokers would have problems working with American customers. Hopefully, the U.S. would follow the European footsteps soon, so that trading will be safer and available to anyone. We’re working on a comprehensive guide to U.S. regulation so stay tuned if you want to know how Binary Options are evolving and changing in order to enter the U.S. market through the front door.
When a broker is not regulated, it doesn’t mean it’s a scam! The main reason why regulation is an advantage (and of course should be the main goal of the binary options industry in the end) is that when a broker is regulated it means the deposited money in kept in a safe account and monitored by a third party to ensure fair-play. Since the Binary Options industry is quite fresh (the first brokers only opened for business on 2008), most brokers don’t have the longed regulation. Nowadays, we can see many countries, From Northern America to the Far East and Australia and back to Europe, begin to understand the risks for the growing number of traders and benefits for their own economy and therefore be allowing slowly but with caution some regulation. The way I see it, Australia is currently the most advanced country in terms of regulation, but sadly those regulations do not apply in the US also, for example.
Each and every country have their own laws and restrictions, for example, many tax shelter countries with an increasing economic growth (especially in the financial markets) such as Cyprus or the British Virgin Islands are now allowing regulation for some binary options brokers under their own restrictions which also applies to other countries.
Full regulation all around the world still has some way to go, meanwhile, we advise our readers to stick with the popular under regulation or on process binary options brokers since they’re considered by most experts as safer and better-trusted brokers.
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Regulators Across the Globe
Many of you are familiar with the Cyprus Securities and Exchange Commission (CySEC), mostly because the majority of binary options brokers are located in Cyprus and thus, regulated by CySEC. A broker located in the United Kingdom has to become regulated by a British authority, one located in Australia looks for regulation from an Australian regulator and so on. Some brokers even look for multiple regulations (i.e.: they are from Cyprus but want to operate in the UK so they get regulation from a British watchdog) but we cannot take their word for it and we have to be able to check if they are really regulated. For that, we need to know how to contact the regulators and how to complain in case of misconduct from the part of our broker. So, let’s meet the main regulatory agencies around the world:
Cyprus: Cyprus Securities and Exchange Commission (CySEC). We start with the CySEC because it’s the most active watchdog for the binary options industry. A lot of brokers choose to get regulated by the CySEC because it’s relatively cheap and the conditions are not as severe or restrictive as with other regulators. Some argue that the CySEC goes too easy on brokers that misbehave but warnings and fines have been issued, which shows they are doing their job. Sometimes they should step in more decisively but that’s just an opinion and overall, trading with a CySEC regulated broker is better than with an unregulated one. For more info about CYSEC, we recommend reading this CySec Binary Options Regulation article and if you have to file a complaint, follow this link. If compensation is sought, you are advised to submit your complaint to the Financial Ombudsman of the Republic of Cyprus.
United Kingdom: Financial Conduct Authority (FCA). This is one of the more “feared” regulators and their conditions are a lot tougher than CySEC’s. A binary options broker regulated by the FCA offers a higher degree of trust and is generally regarded as the safer choice, mostly because it’s harder to receive an FCA license and most brokers go for the easier option (CySEC). We’ve recently added a full article about the Binary Options FCA Regulation and we invite you to read it for more complex information. To learn how to file a complaint with the FCA, follow this link. If you are still not happy with the way the issue was handled, contact the British Financial Ombudsman Service and file a complaint with them as well.
United States: Financial Industry Regulatory Authority (FINRA). Through its Complaint Program, FINRA investigates the activity of brokerages and is empowered to take action against them, including fines and suspensions. FINRA operates one of the largest dispute resolution forums in the industry and assists in the resolution of problems that may arise between investors and brokerage firms. To file a complaint with the FINRA, use this link and to check your broker’s license or certification, use their BrokerCheck tool available here. If you are a senior investor and have concerns about your brokerage or investment, you’ll be happy to hear that recently FINRA have set up a Help Line for Seniors – HELPS. A toll free number is listed and further information about how to proceed so make sure you follow the link above. Other U.S. watchdogs include the Securities and Exchange Commission (SEC), the US Commodity Futures Trading Commission (CFTC) and the National Futures Association (NFA). There’s a lot to say CFTC, so visit this CFTC Binary Options review.
France: Autorité des Marchés Financiers (AMF). The French watchdog ensures the protection of investors and the proper functioning of the financial markets so if you are having a problem with your financial intermediary, make sure you contact the AMF Ombudsman’s Office. Another authority you can turn to is the Banque de France ACPR so make sure you contact them as well if your problem is not solved.
We will continue with a list of links to other regulatory authorities from different parts of the world:
Complain, Don’t Let them Get Away With It!
We’ve given you the map but you have to do the work. Now you know where to complain, but you need to fill all forms and send all the required documents. Go to the respective regulators’ websites using the links above and explain the issue with as much detail as possible. Also, note that most brokerages keep records of your trades, emails and phone conversations so make sure what you are claiming is true and that you can prove it. You can be involved in several scenarios:
1: If your brokerage is using aggressive sales tactics, make sure you record a few of the conversations (or take screenshots of your emails) before contacting the regulatory authority. During the conversations, explain in a clear manner to the broker’s representative that you are not interested in the service they are offering. Warn them that you are going to complain to the authorities if they don’t stop bothering you.
2: If you are not able to withdraw or you have been scammed, gather all proof of this before contacting the regulators. Make sure the required identification documents are sent to your brokerage (in conformity with Anti-Money Laundering procedures) and that you are not in breach of the brokerage’s Terms and Conditions. If you haven’t read the T&Cs and agreed blindly, the regulatory body will not be able to help you much, unless the T&Cs are illegal according to local laws.
3: If Bonus problems arise and your investment money is tied to the brokerage until a certain trading volume is reached, first inform the brokerage of CySEC’s circular CI144-2020-02. That document makes it clear that an investor can withdraw the initial investment (not the bonus) but if you are dealing with a broker that is not regulated by CySEC you will need to contact their respective regulatory agency and file a complaint.
4: If your account manager performed trades on your account without being instructed to do so in writing, you need to gather all proof and present it to the authority that regulates their activity. This is a grave breech of your privacy and means the brokerage/account manager has access to your password and consequently to your money. In some countries, it’s illegal for individuals to even offer investment advice if they don’t have the required certifications (Investment Advisor/Consultant), so investing your money directly, without your approval is an even greater issue, which can attract serious legal action.
5: If you can’t get a hold of your broker, make sure you’ve tried all the possible ways and only then contact the regulatory authority, inquiring about the status of the brokerage. Firms have to stay in constant communications with their regulators (procedures differ depending on the regulatory agency) so the watchdog will be able to shine some light on the situation. If not, at least they will have a better chance than you to get a hold of the brokerage.
6: If the brokerage is manipulating price, you need to record your trading platform using screen capture software (preferably video). You should be able to prove everything you claim, so as soon as you start suspecting that quotes are manipulated, start gathering all sorts of evidence and only then contact the regulatory agency.
Regulation = More Chances of Getting your Money Back
There could be other scenarios but they all have the same guidelines: gather all the evidence you can, back up everything you say and explain in detail the situation to the regulatory authority. Maybe I don’t need to say it but do not swear and please use formal tone. Regulators are there to help but they are not your beer buddies, so act accordingly. Everything I’ve talked above applies to a regulated brokerage. It’s your job to check if the brokerage you want to invest with is regulated by a major authority but this shouldn’t be too hard because usually, brokerages make it easy for their clients to find out if they are regulated. In other words, you will find a “Regulation” tab on the broker’s website, where they display all the agencies that regulate their activity. However, if you’ve fallen in a non-regulated broker scam, your best chances are to contact your bank and credit card provider and ask for a chargeback or any other way of getting your money back. Of course, we strongly recommend investing only with regulated brokerages because as you can see, you have a plethora of methods to get your money back and to have your problem solved.
US Binary Options Brokers 2020
It’s not very easy to find binary options brokers, that are actually ready to allow traders from the USA.
Because of their different regulations and restrictions, most of the binary options brokers out there are unable accept US traders.
Our team has done the research, to bring you an updated list of binary options brokers that still accept Americans. We’ve registered on all binary options brokers that still accept US traders and we’ve tested them all. Below you will find the best us binary options brokers and exchanges.
Best US Binary Options Exchange:
Nadex – CFTC Regulated US Exchange
Nadex is the only binary exchange that has a CFTC license. This site is exclusive to US traders.
- Most Trusted US Binary Platform
- CFTC Regulation
- No Broker Commissions
Nadex is the only regulated binary options exchange in the US. For this reason we think that it’s very safe. If you need more information, you can read our Nadex review.
Alternatives To US Binary Options Brokers
There aren’t many US binary options brokers to choose from. However there are plenty of US brokers that offer other types of trading: CFD, Stocks, Cryptocurrency, Forex etc.
If you are interested in binary options, you will definitely like these other forms of trading.
Here is a list with the best US brokers that offer other types of trading:
|$50||YES||+ FOREX TRADING||TRADE NOW|
|$100||YES||+ GET 1 FREE STOCK||TRADE NOW|
Binary Options Brokers That Still Accept US Traders
The brokers in the detailed list below are some of the oldest and best names in the industry. All the brokers listed on this page welcome traders from the USA.
Only the best are viable, and the safety as well as the security of your data on their servers is very high. There are many scams out there, and only a few truly trustworthy brokers.
We have tested all of these brokers. Look at the short reviews below for more information:
Nadex is the only regulated (CFTC regulated) binary options broker that accepts US traders. The broker offers charting and technical analyisis tools, as well as, advanced order types.
The minimum deposit is only $250.
BinaryCent is currently the best US welcome binary options broker. They offer a fantastic deposit bonus, and the trading platform is top-notch.
Binary Mate has a maximum payout of up to 95%. The minimum deposit is $250 and they offer a 100% deposit bonus to all new traders.
WARNING! WE DO NOT RECOMMEND THIS BROKER ANYMORE VISIT BINARYCENT
CentoBot is a binary options robot that accepts US traders. The minimum investment is only $0.10 and the max return is 90%.
This auto trading robot is 100% free if you sign up and deposit on their recommended broker (the minimum deposit there is $250).
WARNING! WE DO NOT RECOMMEND THIS BROKER ANYMORE VISIT CENTOBOT
How To Pick A US Binary Options Broker
Overall, you need to be careful when choosing the right US binary options broker for you. There are a lot of scams out there, so you probably should take the advice in this list seriously if you want your investments to be safe. We will update this list as frequently as possible because more and more brokers are closing their doors to US traders.
Please note that Nadex is not a broker, but an exchange.
What customer like about Nadex is, that it has no broker commissions. The US Government requires Nadex to keep the clients’ funds in segregated accounts.
|Rank||Broker||Min. Deposit||Max Returns*||Features||Review|
|$250||100%||+ Regulated US Brand||TRADE NOW|
Never deposit on a binary options broker that we (or any other trader) do not recommend. You can also check our scams page to find out which brokers are scams.
Unfortunately US welcome brokers are not regulated by CYSEC or ASIC. Therefore you have to be extra cautious where you deposit your money.
Non-USA Binary Options Brokers
In order to help our American traders find the best brokers and keep them updated, we’ve decided to also list the brokers that used to accept Americans, but stopped later on.
Take at the list below, with all binary options brokers that accepted US traders in the past:
|BinaryMate||100%||$250||95%||US NOT ACCEPTED|
|ctoption||100%||$250||85%||US NOT ACCEPTED|
|OptionRobot||100%||$200||90%||US NOT ACCEPTED|
|Boss Capital||100%||$200||85%||US NOT ACCEPTED|
|CherryTrade||100%||$200||81%||US NOT ACCEPTED|
|Optionleague||100%||$200||99%||US NOT ACCEPTED|
Brokers That Stopped Accepting USA Traders or Closed
FinRally is the newest binary options broker to accept US traders. They have a great payout of up to 95% and the minimum deposit is $250.
Update: This broker closed.
Founded in the year 2020, this broker is owned by Norske Inter LP and Lerona Impex SA. It used to welcome traders from the US, but currently they only accept Europe and most parts of Asia. The broker is based on the SpotOption 2.0 platform, one of the most popular with traders everywhere.
It features over 100 assets to trade in and has some of the highest security measures out there. There is secure trading, as well as speedy 1 hour withdrawals possible. With a return of up to 90% for traders, and signals from over 10,000 traders globally using the ZuluTrade feature integrated into the platform, this broker is one of the best out there for people in the USA.
Update: This broker closed. There were also some scam reports.
This is one of the older brokers out there, having been around since the year 2020. It is owned by Infinicore, a company that is to be found in St. Vincent (offshore). While they aren’t licensed by CySec, this is so that they can support traders from the USA without any hassle.
This broker is not regulated in the US.
The broker has over 100 assets to trade as well as a demo account possible to sample the features before using it. It is popular among traders all over the world, mainly because of the 90% payout to traders.
There is a free social trading feature on the platform as well as unique OTC trades that allow up to 40% more trading time every day.
Update: Tradethunder closed. Opened in 2020, Trade Thunder is still a young company, owned by LGK Industries Ltd., based in the UK.
They offer traders from the US a nice welcome, and have a very unique platform to trade on called the Leverate BX8 platform. It is a platform that is used a lot in Forex trading. The payouts from this broker are up to 90% of the initial deposit, which can be done in many currencies.
With multilingual support and easy trading, this is one of the best US brokers out there.
Update: This broker closed.
This broker opened up in the year 2020, and was one of the best to accept traders from the US (they stopped accepting USA Traders in 2020). They have a great bonus for the first deposit for customers, with up to 10 risk free trades offered to new traders. It is owned by a company based in the UK called Running Forest Partners Ltd., and have 5 different types of US binary options accounts, each of which has its own set of material for learning as well different deposit requirements. Expiry on options expire in any time from 30 seconds to 6 months, and there are multiple currency options available.
Update: This broker closed.
This binary options broker was created in 2020, making it one of the newer options out there. It is owned by FLY Ltd., located in St. Vincent & Grenadines, and has a registered office in the UK as well. It was open to traders from the US without any restrictions but they decided to stop accepting them in 2020.
Returns to traders is about 85%, but some of the trading methods it offers can give bonuses up to 1500% of the deposit. Their platform is browser-based, has a small learning curve, and is very easy. A mobile app is also incoming. The broker offers over 150 assets for trade, with real time updates on the state of the market. It is one of the more feature-filled out there.
Binary Options USA: What To Consider
Please note that most US brokers are unregulated. Therefore please do your own research before signing up and before becoming a binary options customer there. All unregulated brokers are “ok” at best. There is a higher risk of getting scammed by an unregulated broker. Also read their terms and conditions before depositing (check their withdrawal conditions). It is the best to stay away from unregulated brokers.
Binary Options India – Beginners Guide to Options Trading in 2020
Over the last 5 years, Binary Options have only grown more and more as a popular form of investment in the whole world, including India. Due to the fact that it is an easier form of online trading to get into and because you often need less capital or qualifications compared to Forex trading for example, many beginners have made their way from beginner to expert traders.
Binary options trading is however a typical “easy to learn, hard to master” kind of thing, so if you are new to this world, we suggest that you do these three things:
- Go through this article and discover the basics of options trading.
- Then head over to the Tutorial section where we explain the basic concept on how you can be a profitable trader in the long run.
- Once you have the basics, check out our free Trading Academy where we show you some very successful “over the shoulder” strategies that we still use to make profits – and that you can start copying immediately, too.
Are you ready? So let’s get started.
Do you know already how options trading works and are you just looking for the best broker? Click here and read our review about our #1 broker choice.
What Are Binary Options?
Binary options are by far one of the simplest forms of online investment, a way of betting on the outcome of an event of an asset. You stake an investment on your prediction on whether the price of an asset will go up or down within a certain time period.
If an investor is successful with his prediction, he receives a fixed profit return between 80-100%.
Here is a quick video explanation:
The assets traded are generally the same as the traditional stock market, the only difference is that Binary Options Traders do not actually buy and sell shares. They invest only in the perspective valuation or devaluation of an asset – so basically, if the price of the asset will go up or down.
If the outcome of the asset is different than predicted, the investor loses the amount invested. Investing in Binary Options without an investment strategy is foolish. This is important to remember that because of how easy and simple it is to invest, it can easily become a form of gambling.
This is why we have created this guide and this is why we suggest you to go through our tutorial and the free Trading Academy before you invest any money so we can help you to become a smart trader, not a risky gambler who just randomly place bets.
Let’s see a trading example
Let us look at a simple Binary Options Trade, step by step so you can understand what we are talking about here.
Example: (Made up numbers)
- You have been watching the market and decided that you want to make a trade. You have decided to make a prediction on the price of Gold.
- Currently, the Gold index is trading at $1000. After using your analytical tools and education (which you will gain in our academy), you have predicted that in the next 1 hour, Gold will be trading at a value higher than $1000.
- You then invest $100 in a “Call option”, which is basically a bet that expects a higher price than the current $1000.
- After locking in your Call option you then wait 1 hour.
If after that 1 hour, Gold is trading at anything above $1000, you will earn up to 80-100%, depending on the broker, of your investment back on top of your original investment. So basically, in case of a successful trade, you almost doubled your money.
If you were wrong however, you lose your investment. Now we hope that you see already why binary options trading is often called a “high risk, high profit” investment and it is true.
However we want to stress out again that a smart trader follows specific strategies and rules and not just blindly place bets which enables them eventually to be profitable in the long run.
A few things to note:
- Brokers usually offer expiration periods that range from minutes all the way up to months.
- The profit value depends on your broker, average payouts are 80-90% depending on your broker and your account level with them. In rare cases, you can get even 100% profit rate on your investment.
- Remember the amount that the index increases by is irrelevant as you do not own the stock, you are simply betting on the outcome.
So even if the price of Gold went up just by $1, you still get your 80-100% profit.
I hope you guys have learned how simple it is to make your first trade.
Did you know? Most trustworthy brokers are offering a free, unlimited demo account, so you can try online trading in just 2 minutes, without any risk.
Are Binary Options Safe?
Binary options are a form of legal investment, with millions of investors and strictly regulated broker firms operating across the globe.
So from a legal perspective, if you choose a popular, internationally regulated broker– which you can find under our “Broker” section – your money should be safe.
Due to the simplicity of it however, it is very important that investors use tools and analysis, along with a strong education to make their predictions.
The industry gets a bad name because so many beginner traders are simply betting their investment money away, with no education at all. Then they go on to moan about how options trading is a scam.
Binary options trading is an amazing opportunity to make good profit and income. However, it takes time and patience to educate yourself, this is not a get rich quick scheme! You may lose money with some trades and it may take several weeks to get to a position you are earning good money – and you have to accept this fact.
Do not get disheartened by losses, as long as you are learning and applying a strategy, you will learn from every mistake and if you are using a good strategy, the wins quickly outweigh the losses.
Fraudulent Brokers and Scams: Signals, Robots, Autotrading
Another reason the Binary Options trading market gets a bad name is due to the large amount of fraudulent brokers and scam tools like most robots and signal services. Check our full list of binary option scams here.
If you are a beginner or even an advanced-expert trader, we highly suggest you to choose regulated brokers only and stay away from one-click tools that offer easy money overnight.
We have simplified your choice by testing most of the available brokers out there, so check out our “Brokers” menu for our top suggestions. If you chose one of these brokers, we can almost guarantee that you will get amazing customer service, great trading experience and last but not least: investment protection up to €20.000 in most cases.
Binary Options Trading In India
India has gone through massive economic growth in previous years, because of this binary options trading has grown exponentially in popularity. Many residents see online trading as a great way to earn an income part-time, with many even quitting their jobs to trade full time. With advancements in smartphones and brokers bringing platforms to the population of growing smartphone users, this kind of trading becoming more and more accessible.
Indian assets are becoming more available across a wide range of brokers, so we believe that the online trading industry has entered India, and it is here to stay.
Here are a few quick guides to some of the unique factors you need to look at as an Indian trader.
Regulation and Licensing – Is binary options trading allowed/legal in India?
The legality of Binary Options Trading in India is complex and is debated often, but let us be clear here: It is not illegal in India to trade on the Binary Options market.
The reason there is so much confusion and hearsay around the topic is the fact that it isn’t regulated in India just yet by the Reserve Bank of India. The difference between the brokers who are regulated and the brokers who are not regulated is vast.
For now, it seems the best option for Indians to trade online is to choose an offshore broker with strong a regulation accreditation. Look for regulations such as FinaCom (International Financial Commission), or if you are looking at European brokers, look for CySEC, FCA or MiFID licensing.
All of these accreditation means that you are protected up to 20,000 euros per trade if the broker does something unlawful.
Customer Support and Hindi language
We will go into much more detail later in this guide about customer support in general. As an Indian trader, not only do you need to make sure that the customer support of your broker is excellent, you also need to make sure that you will not face a language barrier problem during exchanges.
The perfect broker for you will not only offer excellent customer support, they will also be able to converse quickly and efficiently in your native language. Obviously, every trading broker speaks English, but fortunately, Hindi language within the customer support is getting more and more popular among leading brokers.
Taxation in India – do you have to pay income tax after trading?
Generally, any income from trading will be considered a non-speculative business income in India, so yes, you have to pay taxes after your binary option profits.
If you are earning and making profits from trading, then you are expected to follow the tax rules of your country and declare it. Declaration is your decision, but we highly recommend following your government’s procedures to avoid any future issues, especially when you become a very profitable trader who is making a nice income.
Your profits will be added to your yearly income, and depending on your tax bracket, you will pay tax accordingly.
You can, however, claim this as business income, so you are allowed to offset it against any expenses your business incurs. You can offset against advisers, the cost of software, internet bills, etc. You can also offset non-speculative losses against your non-salary income.
Important Terminology in Options Trading
If you have ever watched films, or seen an actual market floor, you may have gotten overwhelmed by the terminology and jargon flying around. We are aiming to simplify that, that way you enter the world of investment confidently.
To start basic trading, you don’t really need to know what each of the below words mean, but if you want to understand strategies and use tools (which we highly recommend), it is important to your long term goals that you know what all this terminology means, even if it’s difficult to understand what they exactly cover.
But do not worry, over time, this terminology will become part of your everyday vocabulary.
- Asset – this is the underlying stock, commodity, currency pair or index, on which the trading activity is based
- Expiration time – the date and time when the option is about to expire. This is the time when you your option is closed and you either made a profit or not.
- High or Call option: by choosing a Call option, you speculate that the asset’s price will rise.
- Low or Put option: by choosing a Put option, you speculate that the asset’s price will fall.
- In-the-money – this term is used in order to describe the situation when you have predicted the movement of the asset price correctly and the binary option is profitable.
- Out-of-the-money – this term describes the situation when you have wrongfully predicted the asset’s price movement, rendering the binary option a loser.
What are the available option types?
Now we have glossed over the basics, let us look into Binary Options in more detail.
The term “Binary” is used because there are only two results, either the price will go up or the price will go down. You win or lose based on these results.
There are several varieties of Binary Options.
Put or Call options
The simplest binary option form is called the Put or Call option.
The PUT option is a prediction that the price of the given asset will DECLINE over the period stated.
The CALL option is a prediction that the price of the given asset will RISE over the period stated.
These are the simplest form of binary options, and for the first stage of your trader career, we suggest sticking to these options.
When you advance to a better level of knowledge and experience wise you can experiment with different types, such as the following:
There are two types of touch options.
The one-touch option gives investors an advantage when they are confident that the asset will move according to their prediction.
They will set a one-touch option at a “trigger point”, during a period of time.
During this period of time, if the price of their asset reaches this trigger at least once, the investor will receive a payout, regardless of where the asset finishes.
Let us give an example.
The Gold exchange price is $ 1000, you decide that within the next week, Gold will reach $1250 at least once.
During that next week, the price of Gold reaches $1340, before dropping back to $980.
You receive your payout upon the trigger point being met so you are paid out.
This option is the opposite of One Touch Option. The no-touch option predicts that the value of the asset you are aiming for will not reach a certain value limit. Like One Touch Option, you or your broker set a certain price for the target asset and predict the price of the asset will not touch the price you or your broker set in a certain time period.
Double Touch Option
Double One Touch option
By taking the concept of the one-touch option, the double touch option has two trigger point values. Your option will benefit if the value of your assets touches one of the triggers that you set, regardless of which point.
For example, if the current price of gold is $ 1200, and you or your broker set the trigger’s top point at $ 1250 and the trigger’s bottom point at $ 1150, your option will be profitable if the gold price rises to $ 1250 or drops to $ 1150. Conversely, if the price of gold does not touch one of the trigger points within a certain time period, it will be out-of-the-money.
Double No Touch option
As the name suggests, the double no-touch option has the opposite direction from double one touch. You still have two trigger values but this option must be in-the-money form. It is predicted that the asset will not touch one of the two trigger points you have set for a certain period of time.
If one of the trigger points is touched by the price of your option transaction it becomes out-of-the-money and you lose your investment in assets. Therefore, traders usually prefer to invest in markets with a tight range that usually appears after the climax of selling or buying (strong price spikes).
Paired options are one of the more exotic forms of binary options. This option is only given by a very few brokers and is usually based on the performance of an asset which is related to other assets.
Here, the trader selects the asset pair from the list that has been given and bet on which asset will surpass the other within a certain time. Assets are paired by class and sector (the categories must be the same).
Although some of these options sound very interesting, we highly recommend that you stick with the basic call and put options.
For two reasons:
- Regulated brokers usually don’t offer exotic option types.
- Due to their nature, they make trading very risky. It’s a big challenge already to hit the right direction of the price movement, why would you take extra risks?
What Assets Are Used In Binary Trading?
As you become more knowledgeable, you will probably begin to prefer to trade certain assets. This is a beginner’s guide so we will not go into this in too much detail here. Range of assets can be an important judging factor when reaching a more experienced level, but for beginner traders it’s not necessarily the #1 aspect you should look after.
However, I am sure you have all seen on the news, stories about stock prices from big companies like Microsoft or Toyota. Stories about massive increased or gradual decreases in the value of stock. These are the main types of Assets you will encounter in the Binary Trading World.
On the stock index, you have to predict the value of the top shares of a stock market whether it will increase or decrease in a certain period of time.
You can trade on any stock index, be it Dow Jones, FTSE 100, Hang Seng, DAX, and NASDAQ. The advantage of playing a stock index is that the procedure is easier than buying shares through a broker, in binary options you don’t have to pay any fees or commissions.
You also do not need any fancy accreditation, or to work in the horrible environment that is the stock market.
Let the stock market traders get up early and go to work for 18 hours a day in their hot suits, whilst you get up at noon and make trades whilst sat in bed!
Currency pairs and Forex
Trading with currency and foreign exchange options is very closely related to paired options, because you can only define a price of a currency relative to another one.
Popular currency pairs are EUR/USD, USD/JPY, USD/GBP, USD/CHF, USD/CAD, AUD/USD, NZD/USD, etc
In addition, the binary options offer exchange for bitcoin with other currencies, such as bitcoin with US dollars.
Cryptocurrency and Bitcoin
This brings us onto Cryptocurrency. A currency that deserves its own paragraph due to the complexity of it.
Crypto is one of the most exciting and explosive markets we have seen since the .com era. Overnight rises of up to 1500% are not just happening, they are happening often.
A very dangerous commodity with the potential to earn a fortune or destroy. You rarely can apply normal investor strategy or analysis to Crypto, so be wary of dipping your toe into this world.
If you are interested in trading with Bitcoin, Ethereum, etc. check out our guide about Cryptocurrency Trading.
In commodity trading goods allow you to trade without having to buy these commodities physically, which of course must be very expensive. Typically, commodities traded through binary options trading are the value of gold, silver, copper and crude oil.
Previously, the sale and purchase of shares was generally only carried out by high-ranking business people who at least had a bachelor’s degree in economics or equivalent. For beginners, buying and selling shares is quite risky to do.
With binary options, even you beginners can trade up to thousands of shares without having to buy real shares from a company where you invest.
How To Start Trading Binary Options?
Even for beginners, getting into this world is very easy. With the right knowledge and guidance, you should be up and running in no time. Make sure you keep up to date with news and reviews here in order to get the most up to date information on trust-worthy brokers.
4 Steps to start trading with binary options:
- First, look for the best broker – check out for our recommendations in the “Brokers” menu.
- When you have found your broker make sure you register a Demo Account. Use this demo account to test how good the platform is for you, test the comfort and smoothness of the platform out.
- When you are comfortable with a platform depositing funds into your account. Check out our article if you need help with it.
- Sign up for our FREE Trading Academy and learn what strategies we use to be profitable while trading.
How To Choose the best Binary Options Broker?
Choosing a binary option broker is crucial for your long term investment goals. This is your hard-earned investment money here, choosing the wrong broker means you could lose the value of your investment.
We understand this, so we are going to give you a quick guide to use when investigating potential Brokers. We use a more in-depth analysis when writing our broker reviews, but the below information will give you a very good idea about what to look for.
First Impressions/General Information
When looking for a broker, first impressions are often a great indicator of whether to continue looking into a broker.
There should be clear transparent information about the company’s objectives and past achievements as well as statistics and general information about the company.
Look for trust signals such as physical company locations, details on leading members of staff, up to date news of current positions.
If learning material is publicly available and access to a demo account is free, take your time to see the quality. Compare the content of existing learning material with other material provided by competitors.
Regulations and Safety
A regulatory body, such as CySEC or the Financial Commission are 100% crucial when picking a Broker. Look for similar accreditations like the one from Olymp Trade below:
If no one is regulating a broker, they are free to do what they want, this is how most people have been scammed in the past.
The purpose of regulation consists of things such as consumer protection and strict adherence to the financial market model, as well as convincing and promoting fair competition among companies with fair rules so that consumers can exercise their rights fairly.
For binary options brokers to be regulated, they must meet the requirements and operate in accordance with the regulations set by the regulator. Among these requirements are security protocols and procedures to fight money laundering and fraud.
If a broker is regulated by FinaCom or CySEC, your trades are protected up to a value of 20,000 Euros.
Because of these regulation, we have to stress out:
Never give fake data. You will lose your money and will have no right to contest.
Please Read That Again.
Free Demo account
Every broker who is worth their salt will have some form of a demo account available to its users.
When looking for a Broker, we would not recommend going with a broker who does not have this kind of feature available.
Demo accounts allow you to test-run a platform, checking that it works for you, runs smoothly and remains stable for long periods of time and makes sure you like the style and tools available.
Use demo accounts wisely to check how well your strategies are doing, test new strategies, learn how to use different metric measurements, indicators, and chart types.
Platforms that work well no matter what your account level is, usually work out better for users in the long run.
Most good brokers will allow you to keep a demo account alongside your regular account, allowing you to test and practice without investing your capital every time.
Wide selection of Deposit and Withdrawal Options
Make sure you thoroughly read through all the terms, conditions and stipulations around a Broker’s deposit and withdrawal system.
Make sure you find out the policy for withdrawals and the time scales. Some brokers only allow withdrawals to the same method you used to deposit.
Make sure you check what the method is also, will you use international bank transfers? Or an electronic wallet such as Skrill or Paypal.
The general consensus we have found for users in India is that Skrill is currently the best way of transferring and withdrawing money. You can read our full Skrill review here.
Please note: Due to policies to prevent money laundering and fraud, you may be asked to send and confirm documents at the time of initial withdrawal, which can be time-consuming during the initial withdrawal process.
Additional Features: VIP account, indicators, tournaments
Now you should have narrowed your choices down to Brokers that have good money policies and are highly regulated and safe.
The next step would be to choose the platform you like the best. Many platforms are very similar in the Binary Options market, so if you find one with a particular feature that you like, that other brokers don’t have then this may influence your decision.
These features could include:
- Learning material: What topics and strategies can be learned from the material the broker provides for free to its members.
- Tournaments: Almost all of the good brokers have some kind of trading tournaments where you can win nice prize pools by competing other traders.
- Analysis and projection tools: Some platforms provide analysis and predictions for multiple assets. This feature provides a better understanding of scenarios and therefore increases the chances of success even further, increasing investor return on investment (ROI)
- Main Graph Quality: The main graph shows investors the most information regarding a potential investment. Although it looks simple, this is very important, when faced with investment, the ability to clearly visualize the situation helps in identifying trends. Most existing strategies are based on the interpretation of scenarios based on graphics and special tools, this feature should be maximized in its use.
- VIP Account Manager: This is a very specific type of customer service. Many brokers offer their VIP Accounts, Private account managers. These account managers act as dedicated customer service agents to individual traders, allowing for much quicker customer service queries.
- Personal consultant: Personal consultants can give you valuable tips about investing to maximize your level of profit. This feature is again usually available for users with high deposit volumes and VIP Accounts.
Hopefully, if you use the above guidelines, you will be able to choose a broker that will help you prosper and grow as a trader.
We cannot highly recommend to check out our #1 broker recommendation, as this is the one we use the most ourselves to trade, you will be in good hands.
Our recommended brokers score highly in every one of the above factors, they have very high regulation status, have won countless awards, and also have one of the most feature-rich and innovative platforms we have seen out of any currently available brokers.
How Do You Make Money With Options Trading?
You have found out about the potential to make good money with Options trading and you want to know-how. This is probably the main reason you are reading this article.
As we mentioned earlier, options trading looks very simple for the first sight, but it’s somewhat more complex than you might think. Because of this, we have dedicated a whole “Tutorial” section, the article you are currently reading is just the first part of it that is covering all the basics you have to know.
If you already know how to register a new broker account you can skip that article and jump straight to the “How to make money with online trading in theory” article.
Things To Remember!
- Risk is constant throughout all trades, but you will never lose more than you put into a trade.
- There is no need for stop losses in Binary Options Trading, you win or lose.
- Returns are on average 70%-90% per trade, sometimes even 100%
- Make use of Demo Accounts, Free Education and our Free Trading Academy, to give yourself the best possible start.
- Make sure your brokers are REGULATED
And most importantly: Using a good strategy and discipline is the key. Read our next article about how you can make money with online trading (link above), check out our FREE Trading Academy and start your online trading journey now!
Binary Options FAQ
How Much Money Should I Invest?
As with all investments, only ever invest what you can afford to lose. Obviously the more you invest the more profit you will make per trade. With $10 it is going to take you a long time to see sizable profits. But you can still learn a lot from trading at this level.
Investing around $100 is a good entry point for the average user, you can make some decent If you have the capital investing $1000 or more will provide the best benefits, you will gain VIP Status with most brokers, and gain access to all areas of the brokers’ platforms. You will gain more education and specialized tools, as well as dedicated broker support and account managers.
At the end of the day, you have to decide how much you want to invest, no amount is the wrong amount.
If Binary Options Are Profitable, Why isn’t everyone doing it?
80% of people who sign up for Binary Options brokers end up gambling their investment money with little thought or education.
Even though Binary Options can be very profitable, you aren’t going to see massive returns off $10, you won’t make thousands of such a small deposit, this can put off potential investors that are scared to deposit larger sums and just want to get rich quick.
How Much Profit Can I Make?
This depends on deposit size, trading activity, payout, commitment to self-education. It is impossible to tell how much profit you are going to make, however, we use strategies that work with around 75-80% accuracy when we trade. If you are interested in those strategies, sign up to the free academy where we will be revealing our methods.
Can I Try Binary Options For Free?
Yes, all of our recommended brokers have free demos you can try.
We encourage you to do so and spend a good amount of time on the demo before opening a real account with your hard-earned money. It does not matter how good the broker is if you don’t like or understand the platform they use.
Try your usual strategies, try new strategies, fiddle with all the possible settings. After doing that over several brokers, choose the one that felt right to you.
How Do I Withdraw My Winnings?
Please read our section on withdrawals in the article.
When Is The Best Time To trade binary options?
A crucial advanced part of your education will be the utilization of economic calendars.
Economic calendars list the times and days, when each country releases the latest data they have to the public. Certain brokers have better economic calendars then others.
Good brokers have “Data Release Days” with many of them offering bonuses for traders trading on that day.
This can be an absolutely brilliant way of increasing your profits on a day where you will have access to all the newest information.
Open a Free $10.000 Demo Account at our #1 Broker, Olymp Trade:
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