You might say there is currently a war against binary options being waged by various countries around the world. Israel is currently considering a law that will ban binary options while countries like Singapore and Netherlands are discouraging their people from engaging in the industry.
In the US, CFTC warned people against trading binary options, but the trade has not been banned. In a 2013 statement by the CFTC, they warned against trading with internet-based trading platforms which were not regulated. Instead, they advised traders in the US to make use of the several exchanges which are registered with the regulatory bodies.
The reasons behind the war against binary options stem from an increasing number of complaints from traders. These traders have claimed that the brokers have defrauded them of their investment. The regulatory bodies also point at the misrepresentation of the binary options industry by brokers who tend to downplay the risks involved while promising extremely lucrative returns. (Trading binary options vs. Forex)
Nevertheless, the industry is still thriving, and more traders prefer binary options to other forms of trading. The main reason for this is the ease of trading binary options and the lucrative potential returns. Like every investment, binary options carry risk, but with one of the Best Binary Options Brokers, your chances of losing are reduced to the factors you can control.
For traders based in the US, it’s a bit more difficult to find a broker because there’s only one US-based binary options broker, Nadex. The rest are headquartered outside the US, and many of these brokers do not accept US clients. Therefore, this leaves Nadex to be the best broker for US residents, but there are still a few brokers outside the US that can be trusted.
The North American Derivatives Exchange (Nadex) is an exchange based in Chicago that specializes in offering binary options. It is regulated by the CFTC and was the first exchange in the US that dealt primarily with binary options. Besides these, they also offer spreads, but binary options remain to be their main business.
There are several features that have made Nadex the top binary options broker in the US, and some standout offerings include:
Multiple financial instruments to trade
Nadex gives you access to binary options for:
- forex currency pairs
- stock indices like the Dow Jones or the S&P 500 in the US and even foreign indices like the Nikkei 225 in Japan and FTSE 100 in the United Kingdom (Trading stock indices)
There is also the option to trade binary options for financial news events on the Forex calendar. With this tool, you can bet whether the news announcement will go one way or the other, for example, whether the unemployment rate in a certain country will be higher or lower.
This wide variety of financial assets to trade gives traders the freedom and ability to choose whatever they are most comfortable with. It is also great for hedging against risk, thereby helping you to maximize profits
Various trading terms
Traders will appreciate the flexibility offered by Nadex in the variety of trading opportunities. You can trade weekly, daily and hourly contracts, although you can’t go to a lower timeframe than that.
The hourly contracts are suitable for traders who prefer to trade within short timeframes, and the contract will expire at the end of the hour since the trade was placed. Daily contracts will expire when the trading session ends at the end of the day. For example, a daily contract on the NYSE will expire at 4pm EST when the New York session ends (How to trade on the NYSE). For those traders who prefer to trade even longer timeframes, the weekly contracts are a great option as the weekly contracts will expire at the end of the week.
All the timeframes available for trading have their advantages, and the choice allows you to adjust your trading strategy according to your risk appetite. In addition, Nadex can allow you to close your trades before the expiration date you had set before. This can be a huge benefit to the trader if they feel like the trade might turn against them.
The fees charged for trading with Nadex are fixed at $0.90 per contract both on entry and exit. This means that you will be charged $0.90 when you enter a trade, either a call or put action, then $0.90 will be deducted if your trade expires in the money. If the trade goes bad and expires out of the money, there will be no additional charge at the time of settlement.
What’s really great about Nadex fees is that the $0.90 fee per contract is capped at 10 contracts, meaning that the maximum fee is $9. Therefore, if you trade, say, 100 contracts, the fee will not go beyond $9 because the fee is capped at 10 contracts. This is a really great offer that allows you to trade more with less charges. Also, because they don’t charge a settlement fee for losing trades, it helps to reduce the losses on your account.
Nadex’s fee structure is different from other binary options brokers who pay out a percentage of the earnings, which will always lead to a significant deduction as your earnings increase.
Dealing with an exchange
As an exchange, Nadex does not take the opposite side of your trades, and they only match your orders with another party, usually a market maker of futures commission merchant (FCM). This obviously eliminates any conflict of interest, ensuring that your trades are fair and not being manipulated. Some unregulated brokers have been found engaging in such actions, whereby they keep extending the expiration date until your trade becomes a loser. Nadex has no need to do this because they are an exchange.
Several trading platforms
You can trade binary options offered by Nadex through their web-based platform or the mobile application which is available for iOS and Android. Some traders may not like that they don’t have a downloadable desktop software, but the web-based application is still quite powerful and packed with essential features.
Brokers outside the US accepting US clients
Since most binary options brokers do not accept clients from the US, we chose those that do so that US clients can find reliable brokers they can work with.
You might be wondering why the broker is not one of the FCA regulated Forex brokers despite being in the Isle of Man which is a British Crown dependency, but you should not be worried. The Isle of Man Gambling Supervision Commission can be trusted and even meets the requirements of UK’s Gambling Commission. It shows that the regulator is good, and this is why they are allowed to advertise in the UK.
Due to being licensed and thus trusted, MarketsWorld has become one of the top binary options brokers around the world. That they accept US clients is a bonus for such clients, and they are recommended. Their reviews on various real Forex broker reviews are also great, showing that they are trustworthy.
Some standout features of MarketsWorld include:
- Favourable returns – unlike Nadex which charges a fixed fee, MarketsWorld pays out between 75% and 91% of the earnings, keeping the rest as the fee. This may be a bit costlier compared to Nadex, until you consider that Nadex is an exchange and MarketsWorld a broker
- Variety of tradable instruments – you gain access to various tradable instruments through this broker. There is a wide enough variety for trading binary options, especially considering you can do it all on one platform (Trading commodities)
- Flexible expiration periods – with MarketsWorld, you can trade binary options for as short a period as 60 seconds. Given that they accept minimum trades of $1 and a minimum deposit of $20, it is possible for anyone to participate regardless of their account size and place numerous trades in a day
You’re probably going to be disappointed that Finpari is not regulated by any financial regulatory body, but it remains trusted. From the reviews on the internet, Finpari gets mostly favourable reviews, which shows that people are still using their services.
It was only founded in 2014, and they still do not have a locense, but they are based in Aberdeen, Scotland. Some standout features by this broker include:
- Use of SpotOption – this is a favourite platform for trading options, just like MetaTrader is for Forex traders (See MetaTrader 4 advanced features). The use of a popular trading platform allows traders to access trading signals and familiar tools, making their trading simpler
- Favourable fee structure and returns – the payout by Finpari could be between 80% to 87% depending on the risk posed by the financial instrument. However, it takes $250 to open an account, which is higher that the two previous brokers’ minimum deposit, but still favourable
- Tradable instruments – stocks, indices and currency pairs are available for trade, and this is enough variety to hedge against risk and maximize profits (Basics of stock trading)
Choosing Finpari, which is unregulated, may be a bit of a risk, and there are some traders that won’t like this fact. Nevertheless, it’s common for a brokerage which is just starting up to lack regulation but still maintain integrity. If you’re not entirely comfortable, start with a small deposit and then increase the funding as you develop confidence in the company.
To understand the growth of binary options trading in the US, here is a short video: