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The governing and regulatory agency for financial products in Australia is the ASIC (The Australian Securities and Investments Commission). Until recently, the ASIC had not known to have any formal structure for online binary options trading. However, ASIC has recently made a public statement to inform both investors and the all those involved in binary trading those binary options are in fact to be accepted as a by-product in Australia, meaning that all brokers who service Australian residents must be fully licensed.
Any company that provides any type of financial service for Australia must have an Australian Financial Service License. As of this writing there are no regulated ASIC binary option brokers available. Please refer regularly to the ASIC website for any updates regarding this. We advise that all traders do extensive research and come to their own conclusion, regardless of their locale, as there is a high element of risk involved in trading binary options.
As we do not provide any type of services for Australian residents or elsewhere globally, we have compiled a list of those binary options brokers which we have found to be regulated and trusted but however are not ASIC licensed.
How Easy is it to Trade Binary from Australia
Binary options online trading has a long withstanding history in Australia. If you reside in Australia, you should find no issues regarding legality when registering with any of these features binary options brokers and trading platforms. You will also find a plethora of ways to trade on the aforementioned websites.
Payment and Banking Options
It is true that certain countries will provide the widest area of banking options. Fortunately, this is true for those who happen to reside in Australia. You should be able to easily deposit and make withdrawals from any of our recommended binary options trading accounts with a debit or credit card or web wallet. You also will have the option of utilizing bank transfers to fund your account and withdraw your earnings from any of our suggested binary options trading websites.
How Safe Are Binary Options
Many people are interested in investing in binary options but the question remains: How safe are binary options?
With Binary options you have more control over your wins and losses compared to other forms of trading, because you are trading on a fixed amount of investment.
Or take a look at our can a beginner make money with binary options? article for a complete guide on how to get started.
The trading system is as easy as making a yes or no prediction and this is the reason why many new traders are attracted to it. Binary options trading seems easier to traders because it is carried out on an online trading platform.
If you want to get started with binary options trading, then check out FXMaster Bot. This is an awesome free software (no downloads) that does binary options auto trading for you.
FXMaster Bot – Free Auto Trading Software
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Earnings and Losses in Binary Options are Predictable
The payout percentage and the potential earnings you will make are displayed on the platform so you know how much money you will make. The risk is capped so you never lose more money than what you originally invested.
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The profits will not be affected by the price after the expiry. Binary trading allows you to make money on both directions of the price movement. You will make money when you successfully predict whether the price will go up or down by the expiry.
In forex and stock trading, you only make money when the price of the asset is rising but those types of trading are also safe.
On average, many brokers allows you to earn between 80% – 90% on standard call/put options. Standard call/put options with long expiry time are safer to trade compared to one touch options. If you lose the trade, you may get back some of your money if the broker offer refund. You get to decide the amount of money you want to invest and you can also set the timeframe.
Constant Fluctuation of Price Due to the Economy
Binary options is risky because of the nature of the fluctuation of the economy of the country. There are a lot of factors that affect the price of the asset so you can never know for sure whether the asset you are trading will be profitable.
The key is to have a good knowledge in the type of asset you want to trade if you want to have a higher winning rate. The lack of trading tools is another reason why many traders lose money in binary options trading.
Another reason why binary options is risky is because there are many scam brokers operating around. Scam brokers are usually new brokers that have not yet obtained licensed and has many negative reviews from previous traders. Scam brokers can lie by claiming that they are regulated and putting the regulated broker seal on their website.
It is your responsibility to do research and determine whether the broker is licensed. If the broker is licensed with a recognized broker regulator, you will have to check whether the license is valid and not yet expired.
Complaints about these scam brokers can be found all over the web so if you just Google up a broker, you should be able to find out if it is a legitimate broker that operates as advertised. There are all kinds of complaints including customers who complaint that broker freeze their account for no reason, identity theft and the use of a software to cause traders to lose trades.
To trade safely, you should always choose a licensed broker that has been in the binary options industry for many years. If the broker is recommended by many traders and review sites, then it is safe to say that the broker is legitimate.
Choose a Regulated and Licensed Broker
There are a few recognized broker regulators responsible for governing brokers in different countries. For example, CySEC governs brokers in the European Union while NADEX acts as a regulator for brokers that are operating out of the North America. The regulator will perform inspection on the brokers from time to time to make sure that they adhere to the rules.
With a licensed broker, your money will be safe as it will be deposited in a bank with good standing. Besides, they will also offer insurance coverage for up to a certain percentage on the money in your trading account. You can get a peace of mind because the site of a reputable broker is secure and protected with a powerful encryption system.
Binary options trading carries risks just like other forms of trading but you can minimize this risk by increasing your knowledge. It is best to stick to trading with a licensed binary options broker that offers reasonable minimum deposit requirement, good educational resources and many trading tools.
We recommend trading with a trusted broker that has a good reputation. This way your money is safe and you won’t be scammed. We recommend HighLow for non-US traders:
HighLow – Regulated Binary Options Broker
Highlow is considered to be one of the safest binary options brokers at the moment. They have a valid ASIC license and the broker is regulated in Australia. Read the HighLow review here.
- Up to 200% Payouts
- Minimum Deposit is only $50
- Valid Australian License
What do you think, which binary options broker is safe? Let us know in the comments. And leave a like if this articles has helped you.
If you want extra safety and anonymity when trading online then you should use a VPN. Go to this website to find which VPN is best for you.
As you see, binary options are safe if you pick a trusted broker and if you follow simple rules. However there is no guarantee that you will make a lot of money if you don’t have a good strategy.
How to Succeed with Binary Options Trading 2020
Welcome to the largest expert guide to binary options and binary trading online. BinaryOptions.net has educated traders globally since 2020 and all our articles are written by professionals who make a living in the finance industry and online trading. We have close to a thousand articles and reviews to guide you to be a more profitable trader in 2020 no matter what your current experience level is. If you wish to discuss trading or brokers with other traders, we also have the world’s largest forum with over 20 000 members and lots of daily activity. Read on to get started trading today!
Top Brokers in Russia
What is a Binary Option and How Do You Make Money?
A binary option is a fast and extremely simple financial instrument which allows investors to speculate on whether the price of an asset will go up or down in the future, for example the stock price of Google, the price of Bitcoin, the USD/GBP exchange rate, or the price of gold. The time span can be as little as 60 seconds, making it possible to trade hundreds of times per day across any global market.
Before you place a trade you know exactly how much you stand to gain if your prediction is correct, usually 70-95% – if you invest $100 you will receive a credit of $170 – $195 on a successful trade. This makes risk management and trading decisions much more simple. The outcome is always a Yes or No answer – you either win it all or you lose it all – hence it being a “binary” option. The risk and reward is known in advance and this structured payoff is one of the attractions.
Exchange traded binaries are also now available, meaning traders are not trading against the broker.
To get started trading you first need a regulated broker account (or licensed). Pick one from the recommended brokers list, where only brokers that have shown themselves to be trustworthy are included. The top broker has been selected as the best choice for most traders.
If you are completely new to binary options you can open a demo account with most brokers, to try out their platform and see what it’s like to trade before you deposit real money.
Introduction Video – How to Trade Binary Options
These videos will introduce you to the concept of binary options and how trading works. If you want to know even more details, please read this whole page and follow the links to all the more in-depth articles. Binary trading does not have to be complicated, but as with any topic you can educate yourself to be an expert and perfect your skills.
The most common type of binary option is the simple “Up/Down” trade. There are however, different types of option. The one common factor, is that the outcome will have a “binary” result (Yes or No). Here are some of the types available:
- Up/Down or High/Low – The basic and most common binary option. Will a price finish higher or lower than the current price a the time of expiry.
- In/Out, Range or Boundary – This option sets a “high” figure and “low” figure. Traders predict whether the price will finish within, or outside, of these levels (or ‘boundaries’).
- Touch/No Touch – These have set levels, higher or lower than the current price. The trader has to predict whether the actual price will ‘touch’ those levels at any point between the time of the trade an expiry.
Note with a touch option, that the trade can close before the expiry time – if the price level is touched before the option expires, then the “Touch” option will payout immediately, regardless of whether the price moves away from the touch level afterwards.
- Ladder – These options behave like a normal Up/Down trade, but rather than using the current strike price, the ladder will have preset price levels (‘laddered’ progressively up or down).These can often be some way from the current strike price.As these options generally need a significant price move, payouts will often go beyond 100% – but both sides of the trade may not be available.
How to Trade – Step by Step Guide
Below is a step by step guide to placing a binary trade:
- Choose a broker – Use our broker reviews and comparison tools to find the best binary trading site for you.
- Select the asset or market to trade – Assets lists are huge, and cover Commodities, Stocks, Cryptocurrency, Forex or Indices. The price of oil, or the Apple stock price, for example.
- Select the expiry time – Options can expire anywhere between 30 seconds up to a year.
- Set the size of the trade – Remember 100% of the investment is at risk so consider the trade amount carefully.
- Click Call / Put or Buy / Sell – Will the asset value rise or fall? Some broker label buttons differently.
- Check and confirm the trade – Many brokers give traders a chance to ensure the details are correct before confirming the trade.
Choose a Broker
Options fraud has been a significant problem in the past. Fraudulent and unlicensed operators exploited binary options as a new exotic derivative. These firms are thankfully disappearing as regulators have finally begun to act, but traders still need to look for regulated brokers.
Note! Don’t EVER trade with a broker or use a service that’s on our blacklist and scams page, stick with the ones we recommend here on the site. Here are some shortcuts to pages that can help you determine which broker is right for you:
- Compare all brokers – if you want to compare the features and offers of all recommended brokers.
- Bonuses and Offers – if you want to make sure you get extra money to trade with, or other promotions and offers.
- Low minimum deposit brokers – if you want to trade for real without having to deposit large sums of money.
- Demo Accounts – if you want to try a trading platform “for real” without depositing money at all.
- Halal Brokers – if you are one of the growing number of Muslim traders.
The number and diversity of assets you can trade varies from broker to broker. Most brokers provide options on popular assets such as major forex pairs including the EUR/USD, USD/JPY and GBP/USD, as well as major stock indices such as the FTSE, S&P 500 or Dow Jones Industrial. Commodities including gold, silver, oil are also generally offered.
Individual stocks and equities are also tradable through many binary brokers. Not every stock will be available though, but generally you can choose from about 25 to 100 popular stocks, such as Google and Apple. These lists are growing all the time as demand dictates.
The asset lists are always listed clearly on every trading platform, and most brokers make their full asset lists available on their website. This information is also available within our reviews, including currency pairs.
The expiry time is the point at which a trade is closed and settled. The only exception is where a ‘Touch’ option has hit a preset level prior to expiry. The expiry for any given trade can range from 30 seconds, up to a year. While binaries initially started with very short expiries, demand has ensured there is now a broad range of expiry times available. Some brokers even give traders the flexibility to set their own specific expiry time.
Expiries are generally grouped into three categories:
- Short Term / Turbo – These are normally classed as any expiry under 5 minutes
- Normal – These would range from 5 minutes, up to ‘end of day’ expiries which expire when the local market for that asset closes.
- Long term – Any expiry beyond the end of the day would be considered long term. The longest expiry might be 12 months.
While slow to react to binary options initially, regulators around the world are now starting to regulate the industry and make their presence felt. The major regulators currently include:
- Financial Conduct Authority (FCA) – UK regulator
- Cyprus Securities and Exchange Commission (CySec) – Cyprus Regulator, often ‘passported’ throughout the EU, under MiFID
- Commodity Futures Trading Commission (CFTC) – US regulator
- Australian Securities and Investments Commission (ASIC)
There are also regulators operating in Malta and the Isle of Man. Many other authorities are now taking a keen a interest in binaries specifically, notably in Europe where domestic regulators are keen to bolster the CySec regulation.
Unregulated brokers still operate, and while some are trustworthy, a lack of regulation is a clear warning sign for potential new customers.
Recently, ESMA (European Securities and Markets Authority) moved to ban the sale and marketing of binary options in the EU. The ban however, only applies to brokers regulated in the EU. This leaves traders two choices to keep trading: Firstly, they can trade with an unregulated firm – this is extremely high risk and not advisable. Some unregulated firms are responsible and honest, but many are not.
The second choice is to use a firm regulated by bodies outside of the EU. ASIC in Australia are a strong regulator – but they will not be implementing a ban. This means ASIC regulated firms can still accept EU traders. See our broker lists for regulated or trusted brokers in your region.
There is also a third option. Traders who register as ‘professional’ are exempt from the new ban. The ban is only designed to protect ‘retail’ investors. A professional trader can continue trading at EU regulated brokers such as IQ Option. To be classed as professional, an account holder must meet two of these three criteria:
- Open 10 or more trades per quarter, of €150 or more.
- Have assets of €500,000 or more
- Have worked for two years in a financial firm and have experience of financial products.
Strategies and Guides
We have a lot of detailed guides and strategy articles for both general education and specialized trading techniques. Below are a few to get you started if you want to learn the basic before you start trading. From Martingale to Rainbow, you can find plenty more on the strategy page.
Signals and Other Services
For further reading on signals and reviews of different services go to the signals page.
If you are totally new to the trading scene then watch this great video by Professor Shiller of Yale University who introduces the main ideas of options:
Education for beginners:
Types of Trades
How to Set Up a Trade
The ability to trade the different types of binary options can be achieved by understanding certain concepts such as strike price or price barrier, settlement, and expiration date. All trades have dates at which they expire.
When the trade expires, the behaviour of the price action according to the type selected will determine if it’s in profit (in the money) or in a loss position (out-of-the-money). In addition, the price targets are key levels that the trader sets as benchmarks to determine outcomes. We will see the application of price targets when we explain the different types.
There are three types of trades. Each of these has different variations. These are:
Let us take them one after the other.
Also called the Up/Down binary trade, the essence is to predict if the market price of the asset will end up higher or lower than the strike price (the selected target price) before the expiration. If the trader expects the price to go up (the “Up” or “High” trade), he purchases a call option. If he expects the price to head downwards (“Low” or “Down”), he purchases a put option. Expiry times can be as low as 5 minutes.
Please note: some brokers classify Up/Down as a different types, where a trader purchases a call option if he expects the price to rise beyond the current price, or purchases a put option if he expects the price to fall below current prices. You may see this as a Rise/Fall type on some trading platforms.
The In/Out type, also called the “tunnel trade” or the “boundary trade”, is used to trade price consolidations (“in”) and breakouts (“out”). How does it work? First, the trader sets two price targets to form a price range. He then purchases an option to predict if the price will stay within the price range/tunnel until expiration (In) or if the price will breakout of the price range in either direction (Out).
The best way to use the tunnel binaries is to use the pivot points of the asset. If you are familiar with pivot points in forex, then you should be able to trade this type.
This type is predicated on the price action touching a price barrier or not. A “Touch” option is a type where the trader purchases a contract that will deliver profit if the market price of the asset purchased touches the set target price at least once before expiry. If the price action does not touch the price target (the strike price) before expiry, the trade will end up as a loss.
A “No Touch” is the exact opposite of the Touch. Here you are betting on the price action of the underlying asset not touching the strike price before the expiration.
There are variations of this type where we have the Double Touch and Double No Touch. Here the trader can set two price targets and purchase a contract that bets on the price touching both targets before expiration (Double Touch) or not touching both targets before expiration (Double No Touch). Normally you would only employ the Double Touch trade when there is intense market volatility and prices are expected to take out several price levels.
Some brokers offer all three types, while others offer two, and there are those that offer only one variety. In addition, some brokers also put restrictions on how expiration dates are set. In order to get the best of the different types, traders are advised to shop around for brokers who will give them maximum flexibility in terms of types and expiration times that can be set.
Trading via your mobile has been made very easy as all major brokers provide fully developed mobile trading apps. Most trading platforms have been designed with mobile device users in mind. So the mobile version will be very similar, if not the same, as the full web version on the traditional websites.
Brokers will cater for both iOS and Android devices, and produce versions for each. Downloads are quick, and traders can sign up via the mobile site as well. Our reviews contain more detail about each brokers mobile app, but most are fully aware that this is a growing area of trading. Traders want to react immediately to news events and market updates, so brokers provide the tools for clients to trade wherever they are.
What Does Binary Options Mean?
“Binary options” means, put very simply, a trade where the outcome is a ‘binary’ Yes/No answer. These options pay a fixed amount if they win (known as “in the money”), but the entire investment is lost, if the binary trade loses. So, in short, they are a form of fixed return financial options.
How Does a Stock Trade Work?
Steps to trade a stock via a binary option;
- Select the stock or equity.
- Identify the desired expiry time (The time the option will end).
- Enter the size of the trade or investment
- Decide if the value will rise or fall and place a put or call
The steps above will be the same at every single broker. More layers of complexity can be added, but when trading equities the simple Up/Down trade type remains the most popular.
Put and Call Options
Call and Put are simply the terms given to buying or selling an option. If a trader thinks the underlying price will go up in value, they can open a call. But where they expect the price to go down, they can place a put trade.
Different trading platforms label their trading buttons different, some even switch between Buy/Sell and Call/Put. Others drop the phrases put and call altogether. Almost every trading platform will make it absolutely clear which direction a trader is opening an option in.
Are Binary Options a Scam?
As a financial investment tool they in themselves not a scam, but there are brokers, trading robots and signal providers that are untrustworthy and dishonest.
The point is not to write off the concept of binary options, based solely on a handful of dishonest brokers. The image of these financial instruments has suffered as a result of these operators, but regulators are slowly starting to prosecute and fine the offenders and the industry is being cleaned up. Our forum is a great place to raise awareness of any wrongdoing.
These simple checks can help anyone avoid the scams:
- Marketing promising huge returns. This is clear warning sign. Binaries are a high risk / high reward tool – they are not a “make money online” scheme and should not be sold as such. Operators making such claims are very likely to be untrustworthy.
- Know the broker. Some operators will ‘funnel’ new customer to a broker they partner with, so the person has no idea who their account is with. A trader should know the broker they are going to trade with! These funnels often fall into the “get rich quick” marketing discussed earlier.
- Cold Calls. Professional brokers will not make cold calls – they do not market themselves in that way. Cold calls will often be from unregulated brokers interested only in getting an initial deposit. Proceed extremely carefully if joining a company that got in contact this way. This would include email contact as well – any form of contact out of the blue.
- Terms and Conditions. When taking a bonus or offer, read the full terms and conditions. Some will include locking in an initial deposit (in addition to the bonus funds) until a high volume of trades have been made. The first deposit is the trader’s cash – legitimate brokers would not claim it as theirs before any trading. Some brokers also offer the option of cancelling a bonus if it does not fit the needs of the trader.
- Do not let anyone trade for you. Avoid allowing any “account manager” to trade for you. There is a clear conflict of interest, but these employees of the broker will encourage traders to make large deposits, and take greater risks . Traders should not let anyone trade on their behalf.
Which Are The Best Trading Strategies?
Binary trading strategies are unique to each trade. We have a strategy section, and there are ideas that traders can experiment with. Technical analysis is of use to some traders, combined with charts, indicators and price action research. Money management is essential to ensure risk management is applied to all trading. Different styles will suit different traders and strategies will also evolve and change.
There is no single “best” strategy. Traders need to ask questions of their investing aims and risk appetite and then learn what works for them.
Are Binary Options Gambling?
This will depend entirely on the habits of the trader. With no strategy or research, then any short term investment is going to win or lose based only on luck. Conversely, a trader making a well researched trade will ensure they have done all they can to avoid relying on good fortune.
Binary options can be used to gamble, but they can also be used to make trades based on value and expected profits. So the answer to the question will come down to the trader.
Advantages of Binary Trading
The main benefit of binaries is the clarity of risk and reward and the structure of the trade.
Minimal Financial Risk
If you have traded forex or its more volatile cousins, crude oil or spot metals such as gold or silver, you will have probably learnt one thing: these markets carry a lot of risk and it is very easy to be blown off the market. Things like leverage and margin, news events, slippages and price re-quotes, etc can all affect a trade negatively. The situation is different in binary options trading. There is no leverage to contend with, and phenomena such as slippage and price re-quotes have no effect on binary option trade outcomes. This reduces the risk in binary option trading to the barest minimum.
The binary options market allows traders to trade financial instruments spread across the currency and commodity markets as well as indices and bonds. This flexibility is unparalleled, and gives traders with the knowledge of how to trade these markets, a one-stop shop to trade all these instruments.
A binary trade outcome is based on just one parameter: direction. The trader is essentially betting on whether a financial asset will end up in a particular direction. In addition, the trader is at liberty to determine when the trade ends, by setting an expiry date. This gives a trade that initially started badly the opportunity to end well. This is not the case with other markets. For example, control of losses can only be achieved using a stop loss. Otherwise, a trader has to endure a drawdown if a trade takes an adverse turn in order to give it room to turn profitable. The simple point being made here is that in binary options, the trader has less to worry about than if he were to trade other markets.
Greater Control of Trades
Traders have better control of trades in binaries. For example, if a trader wants to buy a contract, he knows in advance, what he stands to gain and what he will lose if the trade is out-of-the-money. This is not the case with other markets. For example, when a trader sets a pending order in the forex market to trade a high-impact news event, there is no assurance that his trade will be filled at the entry price or that a losing trade will be closed out at the exit stop loss.
The payouts per trade are usually higher in binaries than with other forms of trading. Some brokers offer payouts of up to 80% on a trade. This is achievable without jeopardising the account. In other markets, such payouts can only occur if a trader disregards all rules of money management and exposes a large amount of trading capital to the market, hoping for one big payout (which never occurs in most cases).
In order to trade the highly volatile forex or commodities markets, a trader has to have a reasonable amount of money as trading capital. For instance, trading gold, a commodity with an intra-day volatility of up to 10,000 pips in times of high volatility, requires trading capital in tens of thousands of dollars. However, binary options has much lower entry requirements, as some brokers allow people to start trading with as low as $10.
Disadvantages of Binary Trading
Reduced Trading Odds for Sure-Banker Trades
The payouts for binary options trades are drastically reduced when the odds for that trade succeeding are very high. While it is true that some trades offer as much as 85% payouts per trade, such high payouts are possible only when a trade is made with the expiry date set at some distance away from the date of the trade. Of course in such situations, the trades are more unpredictable.
Lack of Good Trading Tools
Some brokers do not offer truly helpful trading tools such as charts and features for technical analysis to their clients. Experienced traders can get around this by sourcing for these tools elsewhere; inexperienced traders who are new to the market are not as fortunate. This is changing for the better though, as operators mature and become aware of the need for these tools to attract traders.
Limitations on Risk Management
Unlike in forex where traders can get accounts that allow them to trade mini- and micro-lots on small account sizes, many binary option brokers set a trading floor; minimum amounts which a trader can trade in the market. This makes it easier to lose too much capital when trading binaries. As an illustration, a forex broker may allow you to open an account with $200 and trade micro-lots, which allows a trader to expose only acceptable amounts of his capital to the market. However, you will be hard put finding many binary brokers that will allow you to trade below $50, even with a $200 account. In this situation, four losing trades will blow the account.
Cost of Losing Trades
Unlike in other markets where the risk/reward ratio can be controlled and set to give an edge to winning trades, the odds of binary options tilt the risk-reward ratio in favour of losing trades.
When trading a market like the forex or commodities market, it is possible to close a trade with minimal losses and open another profitable one, if a repeat analysis of the trade reveals the first trade to have been a mistake. Where binaries are traded on an exchange, this is mitigated however.
Spot Forex vs Binary Trading
These are two different alternatives, traded with two different psychologies, but both can make sense as investment tools. One is more TIME centric and the other is more PRICE centric. They both work in time/price but the focus you will find from one to the other is an interesting split. Spot forex traders might overlook time as a factor in their trading which is a very very big mistake. The successful binary trader has a more balanced view of time/price, which simply makes him a more well rounded trader. Binaries by their nature force one to exit a position within a given time frame win or lose which instills a greater focus on discipline and risk management. In forex trading this lack of discipline is the #1 cause for failure to most traders as they will simply hold losing positions for longer periods of time and cut winning positions in shorter periods of time. In binary options that is not possible as time expires your trade ends win or lose. Below are some examples of how this works.
Above is a trade made on the EUR/USD buying in an under 10 minute window of price and time. As a binary trader this focus will naturally make you better than the below example, where a spot forex trader who focuses on price while ignoring the time element ends up in trouble. This psychology of being able to focus on limits and the dual axis will aid you in becoming a better trader overall.
The very advantage of spot trading is its very same failure – the expansion of profits exponentially from 1 point in price. This is to say that if you enter a position that you believe will increase in value and the price does not increase yet accelerates to the downside, the normal tendency for most spot traders is to wait it out or worse add to the losing positions as they figure it will come back. The acceleration in time to the opposite desired direction causes most spot traders to be trapped in unfavourable positions, all because they do not plan time into their reasoning, and this leads to a complete lack of trading discipline.
The nature of binary options force one to have a more complete mindset of trading off both Y = Price Range and X = Time Range as limits are applied. They will simply make you a better overall trader from the start. Conversely on the flip side, they by their nature require a greater win rate as each bet means a 70-90% gain vs a 100% loss. So your win rate needs to be on average 54%-58% to break even. This imbalance causes many traders to overtrade or revenge trade which is just as bad as holding/adding to losing positions as a spot forex trader. To successfully trade you need to practice money management and emotional control.
In conclusion, when starting out as a trader, binaries might offer a better foundation to learn trading. The simple reasoning is that the focus on TIME/PRICE combined is like looking both ways when crossing the street. The average spot forex trader only looks at price, which means he is only looking in one direction before crossing the street. Learning to trade taking both time and price into consideration should aid in making one a much overall trader.
Binary Options Legal Status Guide
Recently, however, the industry has undergone a massive upheaval. More and more countries have moved to put a hard ban on binary options trading.
This guide will help you figure out the legal status of binary options trading in the following countries: Australia, Belgium, Canada, Cyprus, France, Israel, Japan, Malaysia, Malta, the Netherlands, Russia, Singapore, South Africa, the United Kingdom, the United States.
Please keep in mind also that none of the information in this guide constitutes legal advice. We are not legal experts in any capacity, and if you choose to trade binary options or offer them to the public, you do so entirely at your own risk. We are not liable for any losses or legal consequences you may incur.
The information on this article was last updated on July 23, 2020.
Trading binary options is legal in Australia, though the Australian government does caution traders to be wary of investments.
The relevant financial regulatory body in Australia is the Australian Securities & Investments Commission (ASIC). ASIC maintains a publication called “Money Smart,” where they have published a brief for consumers on binary options.
The article makes it quite clear that it is fully legal for Australian citizens to invest in binary options. The guide does state the following:
Make sure the binary option provider has an Australian financial services (AFS) licence or is authorised by an AFS licensee, regulated by ASIC. To see if a company holds an AFS licence, search ASIC’s Professional registers.
This seems to be a strong suggestion, rather than a legal stipulation, but just to be safe, you should probably follow ASIC’s recommendations.
Looking toward the future, however, it is possible that ASIC will decide to put a ban on binary options. In a June 26, 2020, media release, ASIC announced that it is deciding whether to take product intervention measures against binary options and CFDs, similar to those in Europe. The public is allowed to provide input on the proposed measures by August 7, 2020, after which ASIC will reach a regulatory decision. This decision will be published in September 2020.
Best Practice: Australia urges consumers to think twice before investing in binary options, but takes a relatively liberal stance toward them. You can legally trade binary options if you are an Australian citizen, but you should stick with those that are regulated by ASIC or have an AFS license. You should also keep a close eye on the news, as binary options trading may soon be banned in Australia.
This is a country where trading binary options is illegal. As of August 2020, the Financial Services and Markets Authority (FSMA) in Belgium banned all binary options brokers from doing business with Belgium citizens.
As of the start of 2020, the FSMA has reported that it has been receiving more and more complaints from consumers regarding binary options as well as other “financial products and services.” In total, 792 messages were received last year. This accounted for almost half of all the complaints which the FSMA received, and represents an increase in 45% versus the volume of complaints for 2020. FSMA also continues to add new companies to its list of untrustworthy binary options and cryptocurrency brokers.
There will not be any regulatory changes since binary options are banned in Belgium already. But this does mean we shouldn’t expect the FSMA to reverse that decision anytime soon. It also has broad relevance to the increasing awareness of binary options scams around the world.
Best Practice: Binary options trading is banned in Belgium altogether. Do not trade binary options as a resident of Belgium.
The Canadian government has never been fond of binary options, despite the popularity of binary options in Canada.
The main regulatory body in Canada in charge of handling binary options concerns is the Canadian Securities Administrators (CSA).
Over the past few years, Canada has moved to restrict binary options trading progressively more and more. It started with an investor alert in 2020, which originally urged traders to “exercise caution when considering an investment in binary options.”
There are no registered individuals or firms permitted to trade binary options products in Canada.
This was followed by a ban which went into effect in December 2020.
Best Practice: If you are a Canadian citizen, do not trade binary options.
In Cyprus, binary options brokers are regulated by the Cyprus Securities and Exchange Commission (CySEC). The CySEC is notoriously loose about its regulatory criteria, which is why most binary options brokers seeking regulation choose to go through the CySEC.
Historically, The CySEC was notoriously lax with regulatory criteria, which is why most binary options brokers seeking regulation chose to go through the CySEC.
All of that has changed now. The CySEC started to talk about tightening up regulations on binary options trading in February 2020. That same month, they imposed a rule requiring brokers regulated through The CySEC to inform them if they were offering their services to clients outside the European Union.
All of that became irrelevant later, as Cyprus is a member of the European Union, and the ESMA has passed a ban (see the relevant section below) on binary options trading. That applies to Cyprus.
The CySEC sent out a circular on June 4, 2020, addressed to Cyprus Investment Firms. The circular (#C271) concerns the ESMA product intervention decision on binary options which goes into effect on July 2, 2020. As you likely are aware, this “intervention” amounts to a ban on binary options.
The circular clarifies that the geographic location of the client is irrelevant where the new regulations are concerned. Here is the exact statement:
CySEC has escalated the issue to ESMA who have confirmed that the application of the product intervention powers under Article 40 of MiFIR are not limited to clients who are based within the EEA. ESMA explained that the MiFID II/MiFIR regime does not discriminate on the basis of the location of clients, but rather it applies to services provided by investment firms which are authorized in the EEA.
Since then, there have been more changes in CySEC and throughout Europe with regards to binary options.
ESMA will no longer be renewing its temporary product intervention measures, but CySEC will not return to allowing binary options trading. On July 10, 2020, it announced its own permanent ban on binary options:
The Cyprus Securities and Exchange Commission has issued a directive banning binary options following instructions by the European Securities and Markets Authority (ESMA).
Best Practice: Under the new regulations, you may no longer trade binary options legally in Cyprus.
In 2020, the regulatory body Autorité des Marchés Financiers (AMF) implemented a ban on advertising of all binary options, Forex and CFD products which included leverage at levels of 1:20 and up. Note that this was a partial ban.
Since then, AMF has continued to take aggressive action, going so far as blocking advertisements of binary options products to French consumers.
The AMF also continues to meet regularly with the High Court of Paris to take action against websites which are illegally offering binary trading services to French citizens. Earlier this month, the regulator put out a new press release (in French) which summarizes the success of its efforts. The regulator reports that over a period of three years beginning after 2020, 138 illegal sites were blocked. As of May 2020, there are 445 firms in total on the blacklist.
France is a member nation of the European Union, so under the ESMA’s temporary product intervention measures, citizens of France were not allowed to trade binary options at all.
With those measures now at an end, the AMF decided to adopt national intervention measures. The notice states:
Following a public consultation conducted in spring 2020, the AMF has decided to take over the ban on the marketing, distribution and sale of binary options to retail investors, in France or from France.
Best Practice: Do not trade binary options in France, as they are banned.
Israel used to be the center of the binary options universe. It was such a big industry in Tel Aviv that thousands of people relied on it for their income. Unfortunately, it was scam central as well.
The Israeli parliament passed a ban in October 2020, forbidding Israeli brokers from doing business with customers overseas. This was the final nail in the coffin because Israeli brokers have been banned from doing business with Israeli customers since the prior spring.
A push was made to appeal the ban to the Supreme Court, which affirmed parliament’s decision. The ban on binary options in Israel has been in effect since January 26, 2020. With scandals continuing to be exposed in Israel and around the globe, it is unlikely this policy will be reversed anytime soon.
Indeed, there has been a string of raids and arrests. You can read about the FBI’s raid of SpotOption in Tel Aviv, and learn about the indictment of Lee Elbaz. You can also read about the mass arrest in the Philippines, which included 8 Israelis.
Best Practice: Do not trade binary options if you are Israeli.
In Japan, the regulatory body which is responsible for addressing binary options is the Financial Futures Association of Japan (FFAJ).
Japan has not placed any sort of ban on binary options trading, though it does have a lengthy document stipulating the rules for binary options transactions with Japanese customers. For example:
- Binary options trades should never be shorter than 2 hours in length.
- Pricing and payout information should be transparent.
- Clients should be assessed before they are offered services.
If you are a resident of Japan and you want to trade binary options, you should go over this document (FFAJ Guidelines for OTC Binary Options Transactions) to make sure that you are dealing with a broker that is following the rules.
Best Practice: You may trade binary options in Japan, but you need to make sure that you are doing business only with companies which observe the guidelines set by the FFAJ.
The regulatory body you should familiarize yourself with in Malaysia is the Bank Negara Malaysia, which is the central bank of Malaysia.
The Bank Negara Malaysia seems to have very little to say regarding binary options at all. If you run a search on the official site, very little comes up.
One article is the one on illegal Forex trading. Here is one passage:
Illegal Foreign Exchange Trading Scheme refers to the buying or selling of foreign currency by an individual or company in Malaysia with any person who is not a licensed onshore bank or any person who has not obtained the approval of Bank Negara Malaysia.
From this statement, it seems reasonable to assume that one should trade with caution in Malaysia, dealing only with licensed companies.
Best Practice: Before you trade binary options in Malaysia, run a search on the company you are thinking of using to see whether they have obtained the central bank’s approval.
Binary options trading is currently banned in Malta, but a little discussion of Malta’s past involvement in the binary options industry is of interest.
Originally, binary options in Malta were categorized as gaming products. But in 2020, the Malta Financial Services Authority (MFSA) announced that binary options would henceforth be categorized as investment products subject to Markets in Financial Instruments Directive, 2004/39/EC, (MiFID) rules.
As with the CySEC in Cyprus, the MFSA used to license binary options websites in Malta.
When ESMA’s temporary product intervention measures went into effect, binary options trading was banned in Malta since Malta fell under the ESMA’s jurisdiction as a member nation of the EU.
While the ESMA has abandoned its temporary product intervention measures, it has done so because so many member nations are adopting product intervention measures of their own.
As expressed by the title, this document described MFSA’s proposed national product intervention measures against binary options trading and requested feedback.
If you read through the responses from MFSA to industry comments, it is clear that the regulator plans to go forward with a permanent ban on binary options in the country.
Best Practice: If you are a citizen of Malta, you cannot trade binary options.
Even before the new ESMA rules, binary options trading in the Netherlands was essentially banned. The relevant announcement was made on September 16, 2020, by Minister of Finance Jeroen Dijsselbloem while taking questions from Parliament. Dijsselbloem said during the session that he would be partnering with the Netherlands Authority for the Financial Markets (AFM) to set up an advertising ban on binary options.
Merel van Vroonhoven, chair of the AFM Executive Board, stated:
We consider it very important to introduce an advertising ban on binary options and other toxic investment products. Advertising for these investments entices consumers with the prospect of earning money fast, but it is actually the case that you can easily lose all of the money you have put in.
Under the ESMA’s rules, the ban on binary options trading in the Netherlands became total.
Now, following the dissolution of the temporary product intervention measures from the ESMA, it should come as no surprise that the Netherlands is pursuing a permanent ban on binary options as well. You can read more about that in this document titled ESMA OPINION UNDER ARTICLE 43(2) MIFIR (AFM_BO).
Best Practice: Do not trade binary options in the Netherlands.
Russia is one of the more unusual and ambiguous cases when it comes to binary options regulation. Until very recently, the country took next to no interest in regulating binary options at all. This is one of the reasons binary options products are so popular in Russia.
The Bank of Russia is the authority which is responsible for deciding what to do — or not do — regarding the regulations of binary options in Russia.
Recently, the Bank of Russia has started to look into possibilities for regulation. Financial One even mentioned first deputy chairman Sergey Shvetsov promising “that in the near future, binary options and CFDs will be banned for sale to unqualified investors.”
Thankfully, as of May 2020, an actual official statement was released in the central bank’s Annual Report for 2020. This report discusses a called, “Amendments to the Federal Law on Securities and Other Legislative Acts of the Russian Federation.”
Under this bill, binary options would be regulated as a gambling product. There are not a lot of details available yet on exactly how this would play out, but essentially binary options would be legal, but only within a gambling context.
This seems like quite a sensible response to the entire controversy surrounding binary options. The product itself is not the cause of severe monetary losses for consumers so much as the false advertising which has been used to market it. If Russian consumers see binary options products marketed solely as gambling products, they can make informed decisions about how to responsibly manage their funds.
Best Practice: If you are a Russian citizen, you are free to trade binary options anywhere you want at this point in time. In the future, it is likely that binary options will be regulated as a gambling product. Just make sure you do your homework and pick a trustworthy broker that is not going to scam you.
The relevant regulatory body in Singapore, when it comes to binary options, is the Monetary Authority of Singapore (MAS). On the whole, the MAS has been very lax about binary options.
In March 2020, the MAS issued a warning to investors concerning binary options trading, specifically on platforms which are unregulated. This warning was released in response to complaints received by the MAS.
In May 2020, the MAS has published a warning in conjunction with the Singapore Police Force regarding unregulated trading platforms. According to the warning, the Commercial Affairs Department (CAD) of the Singapore police Force received 40 complaints from consumers in 2020 who lost money trading on platforms online which were unlicensed. In 2020, there were 142 complaints, which represents a major jump. In total, the losses for 2020 added up to S$7.8 million.
The complaints in question concerned not only binary options platforms, but also platforms for Forex, commodities, shares, and other assets. MAS would like to remind citizens to check the Financial Institutions Directory, Register of Representatives, and Investor Alert List on their official site before doing business with any online broker.
If you believe you have been scammed by an unlicensed broker or you want to report a company you suspect of fraud, you can submit your report at Police page.
Best Practice: As advised by the MAS in the linked notice, Singapore citizens should only trade with binary options brokers that are regulated and listed in the MAS Financial Institutions Directory. Citizens should also avoid those which are listed in the MAS Investor Alert List.
In South Africa, the agency in charge of financial regulation is the Financial Services Board (FSB). From what is known at this point, the FSB is not particularly involved with binary options and does not currently regulate any binary options brokers.
The FSB does routinely issue warnings to the public about doing business with various binary brokers. For example, FSB warned traders against Binary Tilt in September 2020.
The FSB usually concludes these warnings by reminding the public that one should always look up a broker with the FSB to check whether they are “authorized to render financial services.”
As such, it seems the FSB would prefer that traders in South Africa only do business with companies regulated by the FSB. But it can also be inferred from these specific blacklist warnings that the FSB has not instituted a complete ban on binary options trading.
Best Practice: The FSB’s position on binary options is extremely vague. It appears you can legally trade if you are a citizen of South Africa, but you should exercise caution.
Binary options are presently banned in the United Kingdom under ESMA rules. But a discussion of binary options in the UK requires more depth, especially since the situation has changed dramattically on March 29, 2020.
In the United Kingdom, the Gambling Commission used to be in charge of regulating binary options brokers. This applied exclusively to brokers with remote gambling equipment located within Great Britain.
Under the Gambling Commission, consumers in Britain were able to use the services of domestic and overseas binary options sites.
That meant even brokers that were not regulated by the Gambling Commission could legally offer services to UK customers.
All of that changed on January 3, 2020. The authority to regulate binary options passed from the Gambling Commission to the Financial Conduct Authority (FCA) through an amendment. Binary options switched from being regulated as a gambling product to being regulated as an investment product.
The Gambling Commission retained its database of license holders as well as its guide to binary trading.
All firms trading in binary options need to be authorized by us. Below is a list of firms without authorization that we understand are offering binary options trading to UK consumers.
That was another change. It meant that regardless of location, all binary options companies needed to be regulated by the FCA for UK customers to use them. While that did not imply that it was a crime for UK citizens to trade with unauthorized companies, it did imply that it was a crime for those companies to operate in the UK without FCA approval.
Like the Gambling Commission, the FCA maintained a general information page on binary options. It also maintains the FCA Register of Financial Service Firms. There is a list of unauthorized binary options firms as well as a page where consumers can view recent warnings.
The UK is still a member of the European Union, but you likely know that the Brexit completion is presently scheduled for 23:00 GMT on October 31, 2020.
This previously raised a lot of questions about what the UK was intending to do about binary options after leaving the European Union. But there have been a couple of developments since then which have answered those questions. For one thing, the ESMA is no longer maintaining separate product intervention measures against binary options.
For another, the FCA decided on its own to maintain a permanent ban on the sale of binary options to retail consumers:
Following consultation feedback, the Financial Conduct Authority (FCA) is today confirming all firms acting in or from the UK are prohibited from selling, marketing or distributing binary options to retail consumers.
That notice was published in March 2020, and the ban went into effect on April 2, 2020.
Best Practice: Do not trade binary options in the UK, where they have been banned by the FCA permanently.
In the United States, the Commodity Futures Trading Commission (CFTC) is in charge of regulating futures, swaps, and other financial markets.
The CFTC is notoriously rigid in its stance toward binary options trading. Ironically however, the US is now one of the few countries which has not passed a complete ban on binary options trading. Then again, this is the upside of tight regulation. It prevents the kind of rampant corruption which would require a ban.
Here is what the CFTC has said about binary options:
It is against the law to solicit U.S. persons to buy and sell commodity options, even if they are called ‘prediction’ contracts, unless they are listed for trading and traded on a exchange or unless legally exempt.
It is difficult to interpret this, but it should be noted that the key word here may be “solicit.” Basically, it is against the law for brokers to deal with USA customers unless they are approved by the CFTC. The CFTC regularly penalizes companies that break this rule quite harshly.
The CFTC also maintains the Fraud Advisories page for consumers. The main idea of the advisory is summarized in the following paragraph:
Because of their lack of compliance with applicable laws, if you purchase binary options offered by persons or entities that are not registered with or subject to the oversight of a U.S. regulator, you may not have the full benefit of the safeguards of the federal securities and commodities laws that have been put in place to protect investors.
This does not actually state that trading with an unregulated broker is illegal. It essentially implies, “let the buyer beware.”
The CFTC does suggest that US traders take the following steps before trading binary options:
- See if the platform is registered with the SEC.
- Make sure the platform is an actual exchange.
- Find out whether the platform is a designated contract market.
- Use the BASIC database provided by the National Futures Association (NFA) as well as FINRA’s BrokerCheck to verify the status of a broker.
Right now, very few brokers are registered with the CFTC. The main one is the North American Derivatives Exchange (NADEX).
The CFTC makes ongoing efforts to add untrustworthy brokers to its RED List.
Many recent headlines surrounding arrests and indictments has focused on US cases. For example:
- The CFTC has charged a resident of Colorado named Dillon Michael Dean with swindling customers in a Bitcoin and binary options scheme to the tune of $1.1 million. The CFTC is attempting to penalize Dean $1,497,792.12. Dean however has gone missing. He took the time to pack his possessions and clear them out of his residence, but he has not turned up since. It would seem he is on the run.
- In July of 2020, the CFTC filed a complaint with the United States District Court Middle District of Florida in Jacksonville against Jason Scharf and A&J Media Partners, Inc. in conjunction with a binary options scam called “Millionaire Money Machine.” Now, Finance Feeds reports that the court has sided with the CFTC, and will be issuing an Order of Permanent Injunction and Other Statutory and Equitable Relief against the accused.
- In April 2020, the CFTC has decided to take an additional step to educate the public about the widespread scams, which have plagued the binary options industry, by releasing a video titled The Truth Behind Binary Options Fraud.
This was followed up by a series of videos that further expounded upon the same topic. Titles in the series include A Silvery Slope: Bob’s Story, True Fraud Stories: Binary Options Fraud Ep. 1, and True Fraud Stories: Binary Options Fraud Ep. 2.
All of the videos are available to watch at the CFTC SmartCheck Videos section.
Erica Elliott Richardson, CFTC Director of Public Affairs, does well summarizing the situation:
Binary options can be helpful hedging tools for some traders, but there are only a few entities that can legitimately do business with individual investors in the U.S. These videos serve as a call to investors to check the registration of the company they are trusting with their money.
Indeed, this is one of the fairer assessments that you may read from a financial regulator on the subject of binary options. Binary options can be legitimate tools, and they can be used profitably — but right now there is a lot of dross out there, and consumers need to be very careful.
We can only hope that after the scammers are dealt with, binary options as a legitimate investment vehicle will receive more positive press, and it will be easier for consumers to find trustworthy brokers to work with.
Best Practice: If you are a US resident, you are best off trading with a broker which is operating legally. That means a broker like NADEX.
Google and Facebook
In February 2020, Facebook announced that it would stop running ads for binary options, ICO products, and cryptocurrencies. This decision was made at the urging of Canadian and US authorities.
On March 14, 2020, Google followed suit. Scott Spencer, the Director of Sustainable Ads at Google posted a notice titled An advertising ecosystem that works for everyone.
If you scroll down near the bottom of the document to the heading “New policies to tackle emerging threats,” you can read the following statement:
This year, we updated several policies to address ads in unregulated or speculative financial products like binary options, cryptocurrency, foreign exchange markets and contracts for difference (or CFDs).
If you click through to the link above, it takes you to an article titled Financial Services: New restricted financial products policy (June 2020). Here the company is much more explicit about its intentions, stating:
In addition, ads for the following will no longer be allowed to serve: Binary options and synonymous products.
This applies to aggregators and affiliates as well.
Google Play also introduced a new binary options policy which states simply:
We do not allow apps that provide users with the ability to trade binary options.
Essentially this comes down to a full ban on the part of Google against binary options.
Now, we need to circle back around to Facebook. Just a few months later in June 2020, Facebook decided to reverse its ban on the cryptocurrency advertisements. So far, there is no indication that they will be extending that reprieve to binary options or ICO ads, which remain banned.
Summary: Advertising binary options is currently banned on both Google and Facebook.
A sweeping change came to the financial markets in Europe as of January 3, 2020: MiFID II.
In case you are not familiar with MiFID, it stands for “Markets in Financial Instruments Directive.” MiFID went into effect in 2007, and applies across the entire European Union. It is a regulatory framework which helps to reduce abuses in European financial markets while setting authorization requirements and boosting transparency.
MiFID II is a revision to the original MiFID, and will seek to provide even more transparency in the markets.
The impact that this new regulatory framework will have on the binary options industry was complex from the off. For example, a lot of binary options brokers immediately threw out match deposit bonuses with high turnover requirements in order to conform to the new rules.
Finally, let’s summarize the history of ESMA regulation concerning binary options.
Rumors that the European Securities and Markets Authority (ESMA) might ban binary options first cropped up in 2020, followed by an official announcement from ESMA in December of that year.
In January 2020, ESMA opened consultation on the new set of rules they were proposing. During the consultation period, ESMA accepted comments from the public.
In April 2020, ESMA announced that they would proceed with the complete ban of binary options trading. This is the same ban which has been mentioned in many of the sections above for European countries. Under the ban, companies were forbidden from engaging in the marketing, distribution or sale of binary options to retail customers throughout the EU.
Factors cited include:
- Poor transparency
- “Structural expected negative return”
- Differences between the returns that are expected and the risk of loss, which tends to be significantly higher
- Marketing and distribution concerns
- Conflicts of interest (most brokers profit when their traders lose, and vice versa)
According to the ESMA, around 74–89% of retail investors end up in the red, typically anywhere from €1,600 to €29,000. The ESMA Chair Steven Maijoor states:
The combination of the promise of high returns, digital platforms, in an environment of historical low interest rates has created an offer that appeals to retail investors. However, the inherent complexity of the products and their excessive leverage – in the case of CFDs – has resulted in significant losses for retail investors.
In June 2020, the ESMA has put out a press release stating that they have adopted the final product intervention measures on CFDs and binary options.
In the press release, ESMA states:
…the measures have been published in the Official Journal of the European Union (OJ) today. They will start to apply from 2 July 2020 for binary options and from 1 August 2020 for CFDs.
The wording for the binary options ban is as follows:
Binary Options (from 2 July 2020) — a prohibition on the marketing, distribution or sale of binary options to retail investors.
The ban was temporary in nature, with the option to renew at the end of a timeframe. The ESMA then began a period of successive renewals of the temporary prohibition on binary options every three months.
That practice came to an end on July 1, 2020. On that date, the ESMA published a notice titled ESMA CEASES RENEWAL OF PRODUCT INTERVENTION MEASURE RELATING TO BINARY OPTIONS.
The notice explained:
As most national competent authorities (NCAs) have taken permanent national product intervention measures relating to binary options that are at least as stringent as ESMA’s measure, ESMA will not renew its temporary prohibition.
The notice also added that the ESMA will “continue to monitor activities in relation to these and other related speculative products to determine whether any other measures may be needed.”
Summary: The ESMA is done with temporary product intervention measures against binary options, but only because most member nations are adopting permanent bans against binary options.
Q: Can I get around my country’s ban on binary options?
A: It can be frustrating to find out you live in a country, which has completely banned binary options. This may make you wonder if you can just use a VPN to access an offshore broker and make a deposit.
While this may seem tempting, you should not do it. First of all, at some point (probably when you withdraw), the broker will require you to verify your identity. At that point, you will be unable to complete the process. You might lose your investment, and/or get banned from the platform.
Secondly, you could be reported to your country’s authorities, and might incur a penalty as a result.
Q: How do I know a regulator is legit?
A: Sometimes while you are researching binary options brokers, you might stumble across “regulators” that do not appear to have any financial authority. This may leave you feeling a little confused.
One example is the Financial Market Relations Regulation Center (FMRRC) in Russia. On first glance, this might sound like a real regulatory body. But if you look a bit closer, you will discover it is not one.
The FMRRC is an independent organization. It was put together to provide certifications to binary options brokers in Russia since the Central Bank of Russia does not provide any sort of legal regulatory status. In fact, it was actually a broker that started the organization.
To that end, the FMRRC has no legal authority. It is not a real regulator. It does offer oversight, but it is hardly unbiased, and the interests of brokers are the overriding concern, not the interests of consumers.
It is totally up to you if you want to take certifications like those offered by FMRRC seriously. Just remember that membership in an organization like this does not represent real regulatory status.
Real regulatory bodies are always either government entities or independent organizations that work closely with government authorities to provide fair, oversight.
Q: What if my country’s stance on binary options is unclear?
A: You should never take any chances. In a lot of countries, binary options exists in a legal gray area. If you are unsure if what you are doing is legal or not, always call the financial regulatory agency in your country and ask directly.
Q: Is binary options trading dead?
A: Not necessarily. The industry as we knew it is certainly coming to an end, but that does not mean that binary options trading will remain banned in so many countries forever. After this period of upheaval, it is possible that a few legitimate brokers will emerge with licenses to do business with serious customers. Policies are always up for reconsideration. Hopefully the next incarnation of this industry will be a more honest one.
Q: I cannot trade binary options in my country anymore! What do I do?
A: If you are unable to trade binary options in your country, that does not mean that you cannot profit by investing in stocks, currencies, commodities, or indices. It simply means that you need to invest in these assets through different platforms (e.g., Forex brokers). As other platforms tend to offer more in the way of tools and control, you may find that you are happier and more profitable by doing so anyway.
The Bottom Line: This Is a Tough Time for Trading Binary Options
With the temporary product intervention measures of the ESMA behind us and more and more countries passing permanent bans on binary options trading, we find ourselves in a challenging new era for the industry.
Nonetheless, binary options trading is not banned universally around the globe. If you are in a country where it is still legal, you can still participate, but you should play it safe and use a regulated broker. If in doubt, always contact your country’s financial regulatory authority and ask questions before you engage in new investments.
If binary options trading is no longer allowed in your country, consider trying other forms of investing instead. Many of the skills you developed as a binary options trader should translate easily to other forms of trading.
Good luck, follow your country’s laws, and stay safe.
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