The landscape of binary options brokers is vast, and rapidly increasing. Low deposit binary options are amongst the wide array of marketing tactics used by binary options brokers to attract new clients. Binary option trading is a fairly new facet of trading, and is also not internationally regulated. This means that binary options brokers are not held under the scrutiny of any designated authority established to maintain compliance with any regulations, set to protect investors. Simply put, there are no official fiscal qualifications for creating a binary options brokerage, and there is no intergovernmental oversight in place to keep companies honest.The low minimum trade position, is another offering used by binary options brokers to entice investors to open new accounts with their companies. Just as with the low deposit policies, the low minimum position brokerages are not necessarily the best, and are subject to liquidity issues subsequent to their low-cost offerings. We will cover some of the most important things to consider when looking for brokers offering binary options with a low deposit, and low minimum trade positions.
Binary Options Brokers with Deposits of Less than 100$
So, you have heard about binary options, and you are excited about the opportunity to participate in one of the fastest growing trading sectors available online. Perhaps you have come across a few binary options strategies, and have even done some independent demo trading using these strategies, and have found them to be sound. Now, you are ready to begin live trading, and want to find a good binary options broker with an online trading platform. Since you consider yourself a newbie, you want to risk as little of your capital as possible. There are several brokers offering low deposit binary options accounts, and some of them are offering accounts for less than $100.An estimated 90-percent of new binary options traders lose their initial investments; the companies that offer these accounts with low deposits know this. The smaller amount that you invest, the greater chance you have of losing your initial investment. Offering accounts with such small amounts, means that these discount brokerages have less capital on hand for payouts. It is an unsustainable practice to provide lower deposits, in hopes that most of your clients will lose this investment.
Possible Payout Issues
Most investors keep their profits in the brokerage account with intentions of having it available to trade; and, discount deposit binary options brokers are also counting on this. These brokers are susceptible to facing cash flow problems, because their business model does not consider the fact that extreme circumstances can hinder the liquidity of the broker. There are various conditions that can seriously affect a broker’s ability to cover payouts.For instance, let’s say there is a low deposit binary options broker that has had some issues with their trading platform’s functionality, and this has caused many clients to become irate. After a rash of complaints, account holders begin to demand refunds for their investments; and many are even closing their accounts due to this malfunction. While this is an unlikely worst case scenario, the fact that this company allows clients to open accounts for less than $100 may pose a problem at this point; if they do not have sufficient capital on hand to cover payouts.While a broker requiring a larger minimum deposit, may have enough capital on hand to cover the claims and payouts; a company that is accepting such small deposits and trade order positions, may not have enough capital on hand to handle a multitude of requests of this sort. This instance may result in delayed payments; and in a most extreme circumstance, even render the company insolvent. Again, this is a worst case scenario; and offering low deposits and positions does not necessarily mean that a company is not capable of meeting payout obligations. However, there are many more factors to consider when shopping for the right broker. This is why it is important to know what to look for in a good binary options broker.
How to Choose a Worthy Broker
There are a host of factors to evaluate when shopping for a good binary options broker. Bank of Trade knows and understands the learning curve that can come along with being new to binary options trading. Since most binary options brokers have similar website functions and navigation, you can find the answers to most of your questions about the broker’s website in the FAQ section of the website. This FAQ page is usually accessible by scrolling to the bottom of the broker’s webpage to the sitemap area.Below you will find a list of key factors to consider when choosing a binary options broker:
- Investment Conditions – this refers to the binary option brokers’ minimum and maximum account deposit amount; minimum and maximum trade position amounts; and the binary options deposit methods. If you can avoid starting out at the lowest level, it is probably best to do so. If you are looking to deposit $250, using a broker with a $200 minimum will assure that are coming in at the lowest level. Believe it or not, many brokers offer better support to bigger investors, than they do on those classified as starting with the minimum deposit.
- Deposit Promotions – it is pretty customary for binary options brokers to offer deposit promotions. These promotions generally come in the form of the broker matching the amount that is invested. A broker may offer to match your deposit of $500 or more. This means that if you deposit $500, the balance in your account will be $1,000. Every broker is different, so be sure to read the details of these promotions closely.
- Payout – the payout is reflected by the profit potential of each trade. This profit potential is shown in percentage value. The payouts offered differ from broker to broker, but typically range from 60% – 95% return on investment. When on the losing side of a trade, the loss can be between 80% – 100% of your investment depending on your broker.
- Available Assets – it is common for traders to have a specific list of assets they typically like to trade. This is usually because they are familiar with the nature of the asset, and how it normally behaves. When choosing a broker the available assets will surely be a major factor to consider. You may wish to open up two or more accounts with different brokers to facilitate the trades for all of your preferred assets.
- Trading Hours – the trading hours of most binary options brokers is dictated by the actual market itself. Binary options brokers tend to shut down on Friday evening at 5pm in New York, and open on Monday at 9am in Asia (which is 5pm on Sunday in New York).There are some options brokers that offer special trading during hours when markets are closed. An example of this is “One Touch” trading, which has a higher payout, but is much riskier than traditional binary options trading.
- User Interface – the user interface describes the look and functionality of the broker platform. The ease of use and navigation, trade execution difficulty, tools offered, and the overall function of the service is determined by the user interface. With binary options it is important to have large buttons that allow you to respond quickly when you are ready to execute a trade. Other factors with user interface may be the amount of visible assets on the screen at any given point, and tools provided by the broker to assist with making trading decisions.
- Customer Support – At some point, a trader will likely have to contact the customer service department of his broker. The customer service department is responsible for answering questions regarding: deposits, payments, technical issues, withdraws, and platform functionality. The ability to get your questions answered concisely and in a timely fashion is very important also. Some brokers have a “Call Me” button on their site, and guarantee an answer within 10 minutes during business hours.
- Trade Room Support – aside from customer support, many binary options brokers offer trade room support. Trade room support offers information specific to trading in efforts to assist you with trade related inquiries. You want to choose a broker that is dedicated to offering the training and support you need to have the best broker/client interaction possible.
- Knowledge Base and Courses – nearly every binary options broker provide educational material and/or training of some kind. This may come in the form of one-on-one instruction from a senior trader, an e-book, online workshop, or course; to help new traders. Learning is a vital element when first starting as a trader, and having a broker that has sufficient training materials can make all of the difference in the world.
- Alerts – some brokers offer alerts that are designed to give updates about specified assets. Alerts can be set to indicate that a chosen price point has been reached, and is suitable to trade. The options for alerts vary based on broker, but usually includes: audible alert that sounds from within the platform itself, email alerts, and mobile phone text alerts.
- Withdraw Process – the withdraw process is different for each broker, and all brokers are required to clearly outline the process and timing for withdraws. Make sure to pay close attention to this before signing up to a broker, because if the process for withdraw is drawn out, it could delay the delivery of your profits.
Binary Options Deposit Methods
Since binary options are traded internationally, binary options brokers tend to offer a wide variety of deposit methods for funding trading accounts. This is done to make it easier for traders worldwide to open accounts with their perspective companies. It should be relatively simple to find a broker that accepts your preferred deposit method. Here we will describe the most popular methods for funding a binary options trading account.
Credit Card Deposit
The credit card deposit is the most widely used option by traders to fund accounts. All brokers accept credit card deposits. Beware if you come across a broker that does not accept credit cards. Be advised that it is not recommended to register with any broker that does not allow credit card deposits. Visa, Master Card, and American Express are accepted by most brokers, but the Discover card is not accepted by many binary option brokers.
Wire Transfer Deposit
While most binary options brokers charge an additional fee for wire transfer deposits; the wire transfer is among the safest of the binary options deposit methods. Most brokers only accept wire transfers from banks located in the United States of America.
Electronic Wallet Deposit
Electronic wallets are websites that operate as online wallets; allowing you to make online payments without having to give vendors your personal information. PayPal is arguably the most trusted of these websites. There are a host of e-wallet websites that are available for deposits to binary options brokers. Keep in mind that there is a delay that can take up to 5 days when transferring money from your bank account to your e-wallet account. To see what e-wallet sites are accepted by any given broker, simply search in the FAQ section of the broker’s site, or contact customer support.
What is the Minimum Position?
The minimum position refers to the minimum required to place an order for an asset. This is not to be confused with the minimum deposit. Once the deposit is made, and the account is funded, you are ready to trade, and this is where the minimum position concept comes into play. Minimum position requirements differ based on the broker used, and can be as low as $1; but are typically in the $5 – $10 range.
Why is the minimum position a criterion for choosing a binary options broker?
The minimum position can offer advantages to a trader by allowing binary options traders to:
- Minimize Risks – risk management (also called “money management”) is a basic principle in managing investment capital. This process consists of investing smaller amounts, diversifying your investment, and not investing all of your capital. As a rule of thumb, only invest 5% of the capital in your account on any particular trade.
- Train to Trade – novice traders have the ability to trade with a live account, without risking much capital when first beginning to trade binary options. The emotions of fear and greed that are often associated with binary options trading are minimized when trading with the lowest minimum position.
- Multiply Chances to make Money – by choosing the lowest minimum position, you are able to engage in more trades, thus improving your chances as making a profit. If your initial investment is $200 and you have a trade using the lowest minimum position of $5, you can trade 40 times, as opposed to only being able to trade 10 times at a $20 minimum position.
As you can see, finding a broker that offers low deposit binary options accounts, is the least of the factors to consider when looking for a good binary options broker. Before deciding to register with a binary options broker based on low minimum deposits; it is best to keep in mind the overall functionality of the platform. You should also take into consideration the amenities, education, and support provided by the broker. In conclusion, instead of looking for brokers offering binary options with low deposits; look for the broker that will offer an all-around fulfilling trading experience.