Binary Trading – Why Do I Need a Broker?
Interested binary options tradingThe simple layman, registering a trading account with a broker, takes it for granted. And they do not even think why they need a broker and what function it fulfills in trading binary options. And it does not pay much attention to the differences between the various brokerage companies. We want to slightly lift the veil of information and provide at least a minimal explanation why a client needs a broker.
So, what is Binary Options Broker? Most citizens in the former Soviet Union, who grew up on anti-capitalist propaganda, have little understanding of the structure of the global financial market. In their understanding a broker is a person who, being in some hypothetical hall with an address on Wall Street, vigorously waves his hands and thereby makes machinations with big profit. Yes, maybe that was once the case. But we live in the age of information technology, and we’re talking about binary options trading. So in this variant, the broker is first of all a legal entity – a company that provides you with the services of access to the financial market, on which the trader, that is you, performs operations independently. A broker of binary options would be more correctly called – a company providing brokerage services. This is a rather significant difference. The fact that brokers can be divided into two categories – the brokers, which carry out operations on behalf of the client and at the expense of the client, and the second – brokers, which carry out operations on their own behalf, but at the expense of clients. The second category is often large financial corporations where clients are investors and receive a percentage of the company’s total profits. But the first variant is just those companies whose services we use in binary trading.
Take a broker, for example Binomo: Once you have established a trading position, you simply submit a request to open a transaction on the financial market on your behalf. The company is able to execute your contract on the market, because it has a broker’s license and is accredited on one of the stock exchanges. Of course, if we look at these companies from the point of view of a classic brokerage company, it is more like a dealing center, collecting trade requests and bringing them to the market. In this case the company’s earnings consist of a small commission from your turnover, which you don’t even notice, because it is put in the percentage of profitability of the option contract.
What is the difference between brokers
This question can be discussed endlessly, so let’s focus on the main indicators, which are worth studying so as not to run into scammers or the so-called “kitchen” – the companies that do not take positions on the market, trading in which occurs between traders – clients of the company.
- First, a normal broker always has a license for the right to conduct financial operations in the market. But here it is worth double-checking everything, because the information about the license is not a guarantee of its presence in reality (there were cases of falsification). So double-check the license on the regulator’s website.
- Secondly, a normal broker, under its terms of service, will not extort a large sum of money for depositing a trading account. If you see that the company offers access to the market with a deposit of $ 1000 and above, then immediately run away from there. Even if you earn something there, you will not be able to monetize your profits. Let’s go back to our examples, to the broker Binomo and 24option: trading there starts at $10 and $200, which already causes trust in the companies
- And thirdly – pay attention to the trading terminal, which your broker will offer you for trading binary options. In fact, the “kitchens” do not invest in new developments. Their goal is simply to make a quick profit at your expense with a minimum investment. If the broker’s trading software is not very informative, does not offer additional functions or is a cut-down version of a popular trading platform, then you are obviously at an untrustworthy broker’s website. A normal broker cares about his clients and the profitability of their trading, so he spares no expense to develop new service products.
To sum up, a brokerage company is an intermediary between the client and the financial market, which has legally regulated access to financial transactions on exchanges. Therefore, the use of brokerage companies’ services by private traders is a necessity due to the lack of material and legal possibility for a private person to obtain a broker’s license. But when choosing the broker it is necessary to study accurately all information available to you about the company, in order not to get into the clutches of swindlers.
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Reviews
Take even the terminal, can you imagine how much money you would have to pay just to buy it? I think that in any case this product is subject to licensing, it would be very expensive to buy a licensed program on your own.
It often happens when they don’t pay out money, so who will you make a claim to if you find yourself in this situation?
Is it possible to check on the regulator’s website for the license of any broker or only those registered in the territory of the Russian Federation? What about foreign ones?
Imagine what would happen if brokers did not exist at all. I don’t think it would be possible to start trading with 10 c.u. then. Brokers take care of a lot of things, which makes life very easy for us as traders.
If brokers did not exist, there would be no binary options. This is what would have happened and so we would never have known what great opportunities lie behind it.
The main thing now is that there should be more normal and honest brokers, so that they do not cheat traders, because many people get rich on other people’s money. There needs to be more control.
If there were no brokers at all, we wouldn’t be able to make money from it. This is like a platform, like an opportunity that everyone has been waiting for for a very long time.
To be honest, I have never really thought about the differences between brokerage companies, I have always chosen the broker that was recommended to me. Usually, if you look at the rating, they are among the 10-20 best brokers at the moment.
Traders think about it over time. All the same, this information will never be superfluous and even for general development will not hurt anyone.