How to Know the Difference Between a Good and an Amazing Broker?
Picking the right broker is probably the factor with the biggest impact on your binary option trading success. Indeed, there are many different breeds of brokers out there, and some of them won’t hesitate tinkering with their prices to make sure your trade ends up out of the money. From the scammer to the good broker, all the way to the positively excellent one, everyone is represented. While most of the regulated brokers are indeed fair, that doesn’t mean all of them suit your personal needs to a T. What is the definition of an amazing broker though? Such a broker is one that fulfills all your broker selection criteria and then tosses in something extra on top.
What exactly are you looking for in an amazing broker?
First of all, its regulatory status should be solid and clear. No one should ever trade with unregulated brokers. Regulation is perhaps the most basic requirement in this sense. The business model used by the broker should ideally also be an exchange-based one. What this means is that the broker is not the sole market maker in the setup. Traders going up against other traders is what the exchange-based model is, but one has to be aware of the fact that such a setup is not always feasible. Regardless of the actual business model used by the broker though, you absolutely need proper and thorough regulation.
You then need some sort of legal safety net, which guarantees you that your money won’t go MIA if the broker happens to go under. Brokers under proper regulation are protected by such legal safety nets.
The next most important requirement concerns the return rates you get on your trades. The higher these are, the better of course. Most brokers feature return rates in the 70-90% range. If you can get something above 90%, you’re in an ideal situation indeed.
Next, we have the required minimum on your first deposit, which is essentially your first investment into the venture. The smaller this is, the better off you are. The industry average in this respect is around $250, but there are brokers out there who only require a $100 deposit. What’s more, there’s at least one broker, like IQOption, who only asks for $10. While a small first deposit requirement does indeed make a broker more attractive in terms of accessibility, going extremely small may not be beneficial for your long-term success. A minimum requirement of $10 does not stop you from making a $100 or $200 deposit though.
The types of options featured is another major factor, more important than the platform and the asset selection. Option types will directly determine what sort of strategies you’ll be able to use for your trading. Look for as wide a selection as possible in this respect. You may not want to do any pairs trading right now for instance, but down the line, who knows what ideas you’ll get and what systems you’ll stumble upon.
Asset selection is important too. Most traders have a handful of favorite underlying assets that they’re comfortable trading. If you’re forced out of this comfort-zone, you may become prone to committing mistakes. The bottom line is that if you like to trade coffee, and have a system worked out for it, you should be able to trade coffee.
The prices/spreads the broker features are extremely important as well. This is one point where even licensed and regulated brokers may attempt to pull a fast one on you. What are these spreads? They’re the difference between the prices featured by the broker and the actual market prices that you will have on your charts. If these differences are too large, or if they’re manipulated, you’ll find your analysis rendered useless and your skills eliminated from the trading equation.
The trading tools and educational material featured by the broker, weigh heavily in the long-term balance too. The amazing broker will feature plenty of such tools. In fact, it will go overboard, possibly offering you an entire platform that you can use for the creation of your own trading tools, signal generators and auto-traders. There is at least one CySEC broker out there who offers such a platform. Education is extremely important as well, but the possibility to create trading tools from scratch, or using ready-made modules, is downright revolutionary.
This above-mentioned platform also allows traders to use the tools created by others, cost free. This brings us to another feature you will want your ideal broker to possess: access to social trading. Social trading is essentially about attempting to ride the coat-tails of a successful trader. It may or may not work out, but it is definitely an excellent way for beginners to get their feet wet, while actually placing trades that make sense.
The bottom line
You will most probably not find a broker to possess all the above -listed attributes, but if you know what to look for, your broker selection will definitely be more efficient and your overall trading effort more successful.