Binary Options BrokersThe world of financial investments puts you at risk every day. However, some options tend to be closer to the edge than others. In this regard binary options trading is considered a high risk activity on the global financial market.

Starting from the basic definition, one might say that binary options are estimates regarding certain assets, such as stocks and commodities, and their overall performance over a specific period of time. The term ‘binary’ itself suggests that there are two parts to this story.

Admittedly, this title has originated from the primary meaning of the specific word. It suggests that there are two parts of this procedure, which in practice is expressed by the two prediction options, ‘Call‘ or ‘Put‘.

The term Call is used when you predict that the asset’s price is going to rise. The Put option, on the other hand, is used when you predict a falling pattern in the asset’s pricing.

As you can see, you are not actually trading any specific assets. On the contrary, binary options solely allow you to predict the rising or falling movement of the asset’s price, without actually buying it and worrying about this same movement.

List of Binary Option Brokers accepting traders from the USA:

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Frequently Asked Questions

The topic of binary options is a relatively new and unexplored area for financial investors, but there are still many people interested in it. Due to this, people demand answers to all kinds of questions regarding the way it functions. Therefore, this FAQs section should act as a knowledge-base in order to teach people how to get started on their investments.

  1. Can I profit from binary options trading?

    This is a tricky question in fact. Undoubtedly, everyone wants to invest a certain amount of money and then withdraw ten times more as profit. However, when it comes to binary options, even if you place a single investment and win, that doesn’t mean that you’re making money, at least not on the long run. However, if you invest a larger sum, let’s say $1000 and you get $100 profit each month for a long period of time, you might be able to make enough for a living.

    Binary options are often compared to gambling, but you need to be aware that they function completely differently. If you are interested in making a change with your binary options investments, you are going to need a lot of knowledge and even more practice.

  2. Are there any good books I could read?

    Yes, there are. Many books have been written on this topic, but not all of them are as good as they should. The following few are really worth the time and money it would take you to buy and read them. First, there is the book Binary Options: Fixed Odds Financial Bets, by Hamish Raw, which clearly distinguishes between short and long bets and focuses on Lloyd’s of London as its biggest marketplace.

    The other book is called Trading Binary Options: Strategies and Tactics, where the author Abe Cofnas focuses on identifying the primary markets for binary options trading and their characteristics.

  3. What assets can be subject to binary options trading?

    There are numerous types of assets whose market pricing often increases and decreases, making them the perfect subject for binary options.

    Namely, these types of assets include indices, such as Dow Jones and Nasdaq, as well as Forex. The latter basically represents combinations of major currencies such as USD, EUR and GBP whose value changes due to many social and economic factors. Stocks from multiple international companies and certain commodities, like gold, silver, oil and coffee, can be included in trading binary options.

  4. Are the earnings from binary options taxed?

    This is another tricky question on the list. Taxes on binary options are determined according to your land-based taxation policies in the country. However, many states still haven’t regulated these options. There are claims that they belong into the capital gain/loss category, although others categorize them with other gambling games like sports betting and poker. The best thing to do is check your specific country’s policy in order to be in the clear.

  5. How should I get started with binary options trading?

    Before you start trading or even signing up, it’s crucial that you choose the best platform for traders like you. These are easily recognizable by their clear-cut homepage which has everything up front in order to make learning easier for new traders.

  6. Are there any trial versions before I go over to the real thing?

    Surely, there are a couple of brokers on the market which offer some basic learning options to their newest traders. However, the selection is quite limited and comes with certain conditions. Some brokers offer demo versions for a few days after the sign up process, while others limit it even further to just a couple of hours. In any case, there are not enough available options which could help you prepare for trade.

  7. What is a broker & what is a trader?

    Believe it or not, this is a relatively frequent question, as it can be confusing at the beginning. Just to be clear, brokers are those which provide sites, platforms where you can trade. Traders are the ones which speculate on the market regarding the market price of all the assets we mentioned previously. These traders basically depend on the brokers because they cannot trade unless the brokers provide them with suitable binary options trading platforms.

  8. What is Rollover?

    As previously mentioned, the estimates traders make are within a certain time frame. But if the binary option is close to its expiration and the trader has been doing well until now, they come to believe that the market will continue to move just like they predicted. That’s when they normally choose to use the Rollover option, which basically prolongs the primary expiration time.

  9. What is Double Up?

    Logically, this is another move from the binary options trading practice. It occurs near the end of the time of expiry of the bet, just like the previous move. However, in the Double Up, you are practically feeling on a roll, and due to the agreeable market appearance, you might decide to place the same bet once again. This is done by creating a new trade with the same conditions as the first one, just under the current price of the asset. If you succeed, you might just end up doubling your profits.

  10. Are there any options for trading during the weekends?

    These services tend to last during the working week, but there are still many platforms which allow traders to try their luck 24/7. Some of the most commonly available assets which can be traded during weekends include Dow Jones, EUR/USD and oil.

Legislations and Binary Options

Various parts of the world have their own stance regarding binary options. Some more skeptical legislations tend to view this type of trading as a pure form of gambling and compare it with poker or sports betting. However, there are others which consider this as an elite method of financial investments. Either way, staying in the golden middle might prove to be the best option. All you should worry about is making sure these binary options are legal in your country. You wouldn’t want to end up in jail, now would you?

Most countries in Europe have legitimized binary options trading. The member-states of the EU are predominantly regulated by a single body, known as CySEC, which stands for Cyprus Security and Exchange Commission, although there are other authorities that regulate the matter in specific countries. As such, France has the AMF, whereas CONSOB takes care of protecting the law in Italy.

In the US, to view another example, these binary options are also legal, although not completely. The limitations mainly refer to the platforms and their proper functions. The USA has only three platforms which can be used for this type of trading: NADEX, CME and Cantor Exchange.

Their northern neighbour Canada has left things a bit undefined when it comes to this matter. Canada seems to be the grey are of financial investments because there is practically no legislation to ban or permit the trading activities with binary options.

As for South Africa and Australia, citizens have recently been allowed to perform their trades via binary options safely. The Securities Service Act of 2004 is the primary regulation in South Africa, while Australia has set up a legislative body called the Australian Securities and Investment Commission.

UK and Singapore, as two other states which are trying to legalize binary options still haven’t completely cleared up their situation. UK can be compared to Canada’s position, while Singapore is one step forward. There are about a dozen districts in Singapore which have completely legalized such trading.