Today, traders from all around the globe have easy access to binary options, the simplest form of trading. There is plenty of controversy surrounding binary options and rightly so. The main reason is there is lack of regulation. As many brokers soar under the radar without any regulation or operate illegally the amount of consumer complaints piles up. In countries, where a binary option trading is illegal, brokers use offshore companies, where there is no law.
Malicious minded people find ways to steal money from desperate new traders aiming to earn quick cash. It is due to new trader’s ignorance that makes them get involved with some shady person impersonating to be a broker. However, all brokers are not scammers. As binary options industry is plagued with con artists, it is hard to read optimistic review even about some good broker. In fact, reviews should all be taken with a pinch of salt as many of these review sites are nothing more than a marketing arm of one or many binary options brands.
Why choose regulated broker?
New traders need to recognize that broker they choose has to be regulated. It is crucial because you will deposit funds in their trading account. Anyone will desire to associate with a regulated entity and not a stranger, where money is involved.
Regulatory bodies give the broker a license number. For getting regulated the broker needs to follow special conduct and rules, while doing business. If the regulatory finds unethical practice then the license gets suspended and the broker gets significantly penalised.
Regulation is an expensive process. Brokers who don’t desire to spend cash find other ways. They register their platform offshore without being controlled becomes easy.
Importance of regulation for trader and broker
Without regulation broker is followed by a dark shadow. The main aim for regulation is to defend consumer’s interest.
According to regulations, broker cannot handle the received funds, as they desire. This means, the broker will not touch funds deposited in traders account. They will be deposited in a custodial bank [separate account]. Broker’s earnings will be made from fees and commissions. Thus, trader’s and broker’s interests get aligned in same direction.
Legal scamming ways
‘Welcome bonus’ is a popular and legal tactic to scam traders. Brokers offer attractive bonus but it also accompanies some condition like withdrawal only after specific trading volume. The broker is well aware that the more trades made means you will take more risk, which ultimately will make you lose all the deposit.
Independent Binary options broker reviews and ratings
Besides regulation, it is crucial to check review and scam listing websites. In respect to reviews, you need to be sceptical because people are paid to write reviews. Moreover, binary options scam list helps to avoid getting involved with scam brokers.
A good broker does not have minimum deposit condition. Even if it does, the amount is very small. The trader can deposit what they can afford. The broker ensures that you get the best trading experience from their platform. Starting from getting registered to making withdrawals, there are no flaws involved.
Offering a demo account for trial trading or the choice for a bonus to use the broker’s trading app are certainly features of good broker but should always be dealt with caution – the key is in the details. In the end, everything depends on regulation.