If you have been thinking about binary options trading, and you’re a USA resident or citizen, you probably have encountered the issue of not having as many brokers to choose from as the rest of the world. You might also wonder why.
Binary options trading has taken the world by storm. It is so popular because of its simplicity and the protection it provides from market spikes, while offering almost instant fixed returns on the simple premise that you predict whether a particular currency pair, index or stock will be higher or lower within a set time-frame.
You only need to think back on the recent unexpected devaluation of the Chinese Yuan against the Dollar, the impact of the Greek debt crisis and even the removal of the cap on the Swiss Franc earlier this year which caused a lot of regular Forex traders to lose a lot more than just their initial deposits, to see why binary options trading has suddenly become so popular.
Take a look at the drop in the USD/CHF below to see exactly what I’m talking about.
With binary options trading, you know beforehand exactly what your potential gains and losses will be, and you get exactly that, whether the market moved 1 micro-pip or a 1,000 micro-pips against you or for you.
With regular trading, an event like the USD/CHF move on 15 January 2015 could have made you an instant millionaire, probably more by luck than wisdom, but it also ruined the lives of a lot of regular traders who suddenly owed their brokers a lot more than what they deposited.
Thankfully I did not lose money on that day, but I immediately started looking for alternatives, and that’s when I discovered binary options trading which protects you against unexpected losses when there are big moves and spikes in the market that you did not expect.
When the People’s Bank of China announced the devaluation of the Chinese Yuan it caused a 2,000 pip movement in a matter of a minutes. The removal of the cap on the Swiss Franc caused it to lose over 2,600 pips in under 30 minutes, and although I enjoy Forex trading, the scale and frequency of such large and very unexpected moves in the Forex market, in particular, has scared a lot of people away from regular Forex trading.
Unless you’re more of a gambler than a trader, regular Forex trading has certainly become a lot more risky the last few months. This has ironically made binary options a much safer bet (pun intended), since in my opinion it provides you with a far better risk vs. reward structure, where you can actually control your exposure.
The rest of the world are spoiled for choice when it comes to binary options brokers. Here in America the options are slightly slimmer, but that does not mean that you cannot find a good broker, you just need to know where to look. Your binary broker options in the USA are limited due to the Commodity Futures Trading Commission (CFTC) rules which prevent non-USA regulated brokers from soliciting you to sign up with them. Currently one of the only binary options exchanges that has been approved by the CFTC is NADEX.com. All of this basically came about because the binary broker Banc De Binary aggressively pursued USA based traders, which included one particular individual who only had $1,000 to his name and no job.
Let’s just get something straight, if you only have a $1,000 to your name, you should not be trading, not binary options or anything else. All types of trading involve risk, and you should be able to manage that without going broke.
Among other things, they got sued for binary options trading in the USA by the CFTC for pursuing customers like that, which caused a lot of other binary brokers to back off from the US market. However, there are a number of non-USA regulated brokers available that accept US traders, but you are signing up with them at your own risk.
To me, the possibility of owing my broker thousands of dollars on a $100 trade that jumped over my stop-loss in a freak spike, far outweighs the potential risk of a binary broker cheating me out of a micro-pip or two if an expiry ends up being a close call. At least I know exactly what my risk is, and I know that I can get a return of 80% to 85% within a few minutes or in a day at most, without worrying about a market spike wiping out my account, and then some.
The truth is that you do get unscrupulous businesses out there (yeah, shocker, right?), and some businesses will be out to get your money whether they’re regulated, licensed, based in the USA or not.
If you trade binary options, withdraw any additional funds that you don’t need to trade with on a weekly or monthly basis. There’s no reason to leave all your money with them, it’s not like regular trading where you need a lot of money to cover your margin calls. Literally take your profits, manage your risk exposure and stay smart.
While I cannot promise to make more brokers available to you, I will hopefully help you to broaden your options, and guide you to make good choices out of the binary options brokers that are available to US traders.
I will be doing interviews with broker representatives, and get their take on why they believe their firms are the best, and hopefully also get some real user feedback so that you can get a better assessment of what your options are.