One of the issues that people have with binary options brokers is that the brokers are not regulated. And while this might be true of some, it isn’t the case for all, or even most of them. Many brokers fall under the jurisdiction of one of the handful of regulatory bodies. Most of these are located in the European Union, and these are mainly recognized by EU financial ministers as official regulatory bodies. One of the first things that you should do when checking out a new binary broker is to see if they are regulated, and if so, by which body. It’s a small step and it only takes a couple minutes, but it is an important measure when it comes to protecting yourself and your money.
The buzz within the United States is that binary options are not trustworthy because they don’t fall under the Security and Exchange Commission’s jurisdiction. This makes sense when you think about it, though, because binaries do not include securities. They are for predicting price motion on underlying assets, and no change in ownership is ever made or alluded to for the future. However, just because the U.S. government doesn’t regulate or license binary options brokers does not mean that they are not kept in check. There are many independent governing bodies in this marketplace, many of which are very thorough in how they do their jobs. For example, CySEC, a Cyprus based regulator, is a widely recognized authority on binary options brokerage site regulations, and they are recognized throughout the EU as such. The United States government doesn’t currently accept this as enough, though. So, regulation is sometimes dependent upon where you are currently located.
This can make things tricky for the beginning trader. However, you do need to realize that regulation is a good thing. It protects you the trader from being ripped off or for easily falling for a scam. Even in today’s high tech world, binary options scams do exist, although they are not nearly as common as you might think. The big reason why this is is due to regulation, like what CySEC provides. While this does help, you still need to be diligent in protecting yourself. There are ways around being regulated, so for the most part, as a trader, you should make sure that your site of choice is reputable well before you ever deposit money with them. Check for regulatory body affiliation, read online reviews, and research their history. It is far less likely that a well liked, established broker will be scamming you out of your hard earned money. Being monitored and under the authority of a governing body is a start, but sometimes not enough.
One drawback that you will notice right away with using a highly regarded broker that utilizes a top regulator is the fact that many of these sites will not allow traders from certain countries, including the U.S. If you live in one of these countries, you will find that it’s easier to go with a broker that is unregulated. Again, if you do this, just make sure that you are not falling for a scam.
One other drawback of regulation is the fact that it is very easy for an unregulated site to say they are regulated. If you see a site that has a regulation link or symbol on it, make sure that it is real before you go with them. Anyone can make a link on their site to a regulatory body, but this doesn’t prove anything. Do your own research, and you will be much safer with your binary options investment.