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Binary Options Trading in the UK
Everything you need to trade binary options successfully.
Research. Find a broker. Trade.
For UK investors, trading with binary options is a tax free form of investment with very quick results – minutes rather than months or years. The word binary is used because there are just two possible outcomes – either the trade is successful, and the investor gains a significant return (usually between 75% to 95%) – or the trade is unsuccessful, and the full investment amount is lost.
During 2020 however, European regulators have prohibited the sale or promotion of binary and digital options to retail investors in the EEA. This includes the UK. Only professional clients or professional accounts are now permitted to trade binaries with regulated firms. A professional trader must meet 2 of these 3 criteria:
- Open at least 10 trades of ‘significant size’ per quarter (brokers define ‘significant’ differently)
- Own a portfolio or trading capital of €500k or more
- Have worked for 2 years in the financial industry, or have experience with complex trading instruments.
Unregulated firms may not adhere to the new ESMA rules, and will continue to accept UK traders. This does increase risk for the trader, and makes finding a trustworthy broker even more important. It is however, possible to find brokers regulated outside of the EU that will accept EU traders, and are still regulated by respected bodies.
So ‘binaries’ (or ‘digital options’) are a high risk form of investment, but that risk is offset by the potential for very high rewards with minimal waiting time. Most brokers are regulated, offering consumers the sort of protection they would expect while using financial instruments of this type. Returns from binary trading are also currently viewed as tax free by HMRC.
Top Brokers in the UK 2020
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|£250||From 0.1 lots – £100,000||–||Review||» Visit|
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What Are Binary Options?
Binary option meaning – Binary options are a derivative, traded on any asset or market. For example a stock price (Twitter, AstraZeneca etc), indices (FTSE, DAX, Nikkei), commodity value (gold, crude oil) or foreign exchange rate (EUR/USD, GBP/USD). Even cryptocurrencies such as Bitcoin or Ethereum can be traded.
The main difference between more traditional stockbroker trades, and binaries, is the clear identification of risk and reward before the trade is made. An investor knows exactly how much is at risk, and crucially, also knows the exact value of any potential returns. No calculator, formula, or maths degree is needed to work out profit and loss on a binary option.
This structure of the trades is what has led to the terminology of “all or nothing” , or “cash or nothing” being widely used.
The only decision for a trader is if the value of the underlying asset will rise or fall. The degree of the price change is not important. The trader is purely speculating on whether the price will be higher or lower than the current price, at a specific time in the future.
Short term price movement can be triggered by news stories or headlines, quarterly statistics, buyout rumours or even global security fears.
Trading binary options offers a Yes/No proposition. Although there are variations on the High/Low option, this type of investment will always have a black and white, Yes/No, binary outcome. Where trades can be closed, redeemed or sold mid-trade, payouts have absolute figures of 0 and 100 and prices move between as the market dictates – until closure.
Every binary option is offered with an expiry time. This is the point at which the trade will end. So the price at expiry is the one that will decide whether an option has won or lost (“in the money”, or “out of the money” in binary jargon). These expiry times can vary from just 30 seconds or 1 minute, (known as ‘turbos’), to a full day (‘end of day’), to even longer in some circumstances – rolling up to a full year.
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Generally however, a binary option is used for short term trading – usually under 30 minutes (5 minutes are the most popular). Longer term expiries – and the element of fixed risk – does make them useful tools for hedging or diversifying other holdings.
Payouts change dependant on the asset and the expiry time. Differences can be significant so traders looking to use binary options long term, need to shop around to find the best payout for the asset class (or classes) they intend to trade.
Video Tutorial – Binary Trading Explained
Watch this video tutorial of the IQ Options platform, which shows how to place a binary trade:
Although binary trading is in a period of growth, it remains a relatively unknown product. Over time, this is likely to change. As digital options (as they are also known) offer a very simple fiscal arrangement. They are a legitimate way to play the financial markets.
Binaries offer a clear trading choice, but they are also high risk / high reward. There is however, no leveraged exposure with a binary trade, so the risk and reward ratio is also simple to manage.
Are Binary Options Safe?
Binary options suffer from a poor reputation. This is basically a result of dishonest and irresponsible marketing and cyber crime, more than an issue with the product itself. With tighter regulation, and a better understanding by the wider public, these options can – and will – move into the financial mainstream. Which was where they originally developed.
While FCA regulated agents and businesses may still have their flaws and faults, they are not fraudsters. The angry emails we receive focus entirely on unregulated brokers promising “easy money”, or a route to “get rich quick”. Read our section on avoiding scam brokers below.
Advantages Of Binary Trading
Many of the advantages of using binaries are related or linked. Here we list some of the benefits to using this form of investment – not just for the retail investor, but also to the market makers or brokers:
Managing risk when trading binary options is clear cut. The amount of the trade is the full amount that is at risk. This clarifies the risk not only for the trader, but for the broker too. Their pricing model reflects the accurate knowledge of their liability.
Trading Fees And Spreads
The certainty of risk provides a solid foundation for brokers to work within and manage. This leads to low trading feed, tighter spreads and higher payouts. To protect themselves further, they may use a liquidity provider or hedge their own positions. The expensive broker costs of clearing houses becomes unnecessary.
Leverage, or gearing, is not generally available with binary trading. This benefits the broker again, as it means all trades must be funded in full. In other words, no trader can default on a trade. With leverage, if things go wrong, there is a real risk of the broker not being paid. This is a big difference vs spot forex or spread betting.
Layers of complexity can be added to the standard fixed payout option. From a ladder option, to boundary trades or more advanced ‘nesting’ of options to create ‘strangles’ etc – binaries can be used in a huge variety of ways.
A binary trade offers the greatest level of flexibility. They even provide a mechanism to speculate on a market remaining flat, arbitrage, or to take a view on the trade volume of the underlying asset.
Robots and Auto Trading
Auto trading robots (‘bots’) often rely on signals and algorithms triggered by price graphs. Again, these robots attract many of the undesirable operators, and the automatic nature of the trades increasing risk further. New traders should be especially careful. A large amount of ‘due diligence’ is required when trying to find the right robot service.
An alternative approach is for traders to build their own robots using their own entry points. A growing number of brokers now offer traders the ability to put their own trading robot or program together, using simple tools. These hacks allow combinations of technical analysis settings, such as moving averages, Bollinger bands or RSI / MFI patterns, that then open trades when those criteria are met. It has made binary options ‘pro’ robots available to everyone.
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Binary trading itself is legitimate, and not a scam. There are however, brokers and signal providers that are untrustworthy and operate scams or frauds.
It is important not to write off the concept of binary trading, purely based on dishonest brokers. These fraudsters continue to drag down the image of this form of trading. Regulators, and rule makers are slowly starting to get to grips with these operations and the industry is being cleaned up. If you want to complain about an operator to our watchdog, please let us know via our Contact Us page.
Avoid scams with these simple checks
- “Make money online” or “Get rich quick” marketing. This is a huge red flag. Binary options are a high risk / high reward investment vehicle – they are not a get rich quick scheme and should not be sold as such. A “no loss” system does not exist. Operators making such claims are being dishonest. A binary options millionaire is almost certainly fake. The Brit Method is one high profile example – swerve it.
- Cold Calls. Reputable brokers will rarely make cold calls – they do not need to. Cold calls are from untrustworthy brokers. This could include email contact.
- Bonus Terms and Conditions. If taking a bonus, read the terms and conditions. Some terms include tying in any initial deposit or capital until turnover requirements are met. The deposit is still the trader’s money – honest brokers will not lay claim to it before any trading has been done. The better brokers will also offer the option of cancelling a bonus if it does not suit the trader. CySec, the leading regulator, has recently banned the use of deposit match bonuses as they believe it leads to clients ‘over-trading’.
- Account Managers. Be very wary of any account manager, tipster or ‘guru’ wishing to trade on behalf of clients. There is an obvious conflict of interest – they have jobs with the broker. These managed accounts generally encourage traders to trade with figures way beyond their means. This “upselling” is very harmful. The intensely risky Martingale system is a frequent tactic, and results in many quickly blown balances.
- Celebrity Endorsement. Sporting legends or team sponsorship is usually fine – and verifiable. Where this backing should worry rookie investors, is where the name of a mega rich billionaire or credible source is ‘pushed’ as a selling point. Warren Buffet, Richard Branson and Martin Lewis have all been presented as backing certain propositions when they actually have zero involvement – other than to sue the perpetrators for damages via a lawsuit.
- A trader must know their broker. Seems obvious – but some operators ‘funnel’ clients to a brokers of their choosing, not yours. If the merchant demands new clients sign up with a particular broker, or they pick the broker from a limited list – do not proceed. A trader should know the broker they are going to trade with!
Being aware of the above methods should help those new to binary trading to avoid the less responsible brands. Improved regulation and more awareness should hopefully reduce these types of complaints. This in turn can allow binaries to move forward.
Already fallen victim? The services of MyChargeBack.com might be of help.
The recent ban of binaries in the EU is ill-thought out, and could well end up pushing more traders towards scams.
Our strategy pages covers over 20 known systems, drawn from a range of forum and club chats, plus expert tips and advice. From high risk Martingale, to intricate systems like the Rainbow. We also cover more specialist subjects, like forex , technical analysis, the best price action indicators, trading signals and winning strategy. All this is aimed to help you gain an edge, and win.
Signals are an alert, sent to traders. They are designed as a trading tool, helping traders to spot opportunities. They can be communicated via a range of methods – email, SMS or from a live signal website or group. Much of the irresponsible marketing associated with binary scams is linked to signals – or auto trading robots utilising them. There are some very good providers out there too. However, in general, learning how to trade binaries is a safer route than using signals to compensate for a lack of trading knowledge.
Do signals work?
Sometimes, but rarely in isolation. Some providers deliver a combination of education alongside signals and that represents a good mix. Traders must be able to fully assess a signal before they can judge the quality of them. We also highlight some of the best providers on the signals page.
Brokers And Reviews
A binary option can be used in a number of ways, and across a huge array of commodities and markets. This means finding the best dealer, best account, or best trading platform, really depends on the needs of the individual investor.
For example, some brokers may focus on forex (foreign exchange) and trading the Japanese Yen, Euro or sterling. Others may be strong on commodities and only offer a handful of FX markets. Likewise, the returns (or payouts) may differ between asset classes, and with these varying by as much as 25%, it is easy to see the importance of making the right selection.
White label platform providers such as SpotOption, Tradologic or TechFinancials also dictate what products the host site can offer, so a proprietary broker with a bespoke design might be preferable. Payment methods merit some thought – if traders want to use Skrill, Paypal, Neteller or Wire transfer, they need to check the broker delivers that.
Mobile trading apps delivered by brokers or binary agents can vary in quality too. Some specifically program for the features of specific models, like iPad or iPhone. Others ensure cross platform compatibility, catering for android, blackberry and windows tablets and devices. Some traders may have tailored demands for any hand held app, others less so.
Trade size limits may point some investors either to, or away from, certain trading accounts. Some brokers offer minimum trades of just £1, while others cater for investors willing to invest £200,000 in a single trade. So every investor needs to consider their own trading style before deciding to open an account. Even working out the ‘cheapest’ broker is not as easy as it sounds.
How To Compare The Best Trading Platforms
Our comparison table delivers a quick summary of the key points when comparing brokers. Our detailed reviews then allow potential new users to assess some of the finer points that might confirm their decision. Here is a list of some of the vital comparison points for brokers;
- Over the counter or exchange traded options
- Minimum deposit (Plus deposit and withdrawal methods)
- Minimum trade / Maximum trade
- Trading platform
- News events feeds
- Asset lists (Extended lists might include ETFs, bonds and trusts)
- Charts / Charting tools (Graph types, forecasting tools)
- Expiry times available
- Regulation (FCA, CySec, CFTC etc)
- Range of options available (Boundary, Ladder, High Yield etc)
- Welcome Bonuses
- Complaints / Customer feedback
- Account Types and Benefits (VIP, Basic, Platinum)
- Plugins and Integration. (E.g. MT4 / MetaTrader4 / MetaTrader 5)
- Promo perks, Competitions, Leaderboards or Contest Prizes
Some points might be more important to certain traders than others. So finding the “best” will be an individual choice for each new client. A speculator taking a position on the monetary policy of the Bank of England or ECB might be best served by one broker, while the person looking to bet on growth in the Apple, Facebook or Vodafone share price might want another.
Most top brokers offer demo trading accounts. These allow new clients to try the services on offer. They can see if the range of markets and investment scales suit them and only proceed to a funded account when they are happy that the right trading account has been found.
Those brokers that do provide practise or virtual balances, have confidence in their trading platform. They are prepared to let new traders see it, and try it out, risk free. The review for each broker will include whether it offers a demo in the “Key Details” section.
Top 10 UK Binary Options Brokers by TradersAsset
Welcome to the TradersAsset list of UK approved Binary Options brokers. These brokers are recommended to all traders from the UK and have been tried and tested to prove that they can provide an excellent online trading experience.
As you may or may not be aware, the Financial Conduct Authority (FCA) is tasked with overseeing and regulating all financial service companies based in the UK. As the UK is part of Europe, you are free to sign up and trade at any Binary Options broker that is licensed in any other European country.
You can of course sign up and utilize the services of any Binary Options broker or trading site licensed outside the UK or Europe. However, we would advise you to use the sites listed here at TradersAsset, as each of these has a solid track record for giving their customers a safe and secure trading environment.
Top 10 UK Binary Options Brokers
Recommended Binary Options Brokers for UK Traders
The following Binary Options brokers have a range of different banking options that allow UK based traders to have access to low cost deposit and withdrawals. You will find each site listed at TradersAsset offers their own unique incentives to both new and existing traders. Each broker has 24 hour customer support, accessible via instant chat, email or toll free phone lines.
British Traders Guide
Binary options trading in the UK has become very popular in recent times. In some countries like the US this type of trading is regulated but as yet the UK has not introduced the same kind of rules. Now while this makes it easy for many to trade without restriction, it does bring with it other threats and issues.
For those looking to invest in the EU, it is essential to check that your broker is at least regulated by the Cyprus Securities and Exchanges Commission (CySEC). This is the ultimate protection that can be achieved by brokers serving the UK market until such a time when local regulations are introduced.
We understand the need to feel comfortable and protected when trading online, which is why we work to provide transparent and clear recommendations and reviews of the best binary options brokers available. We have selected only the most trusted UK safe brokers to make finding a legal broker a simple process.
In this article, you will learn:
Traders in The UK
When it comes to binary trading, many UK investors prefer to trade options with a locally based broker. If you’re in the UK, most traders would expect to see an office based in London at a familiar address among all the other financial institutions. Being a small country geographically there is a sense that nothing is too far away in the event of an issue. While there are many reliable and reputable UK brokers, there are many international brokers that also have a lot to offer. How do you choose and what do you need to consider when making your choice?
Licensing And Regulation
UK regulation is highly regarded, but there are also many other hugely reputable licensing bodies. These include CySEC (Cyprus) MiFID (EU) and ASIC (Australia). Often the best brokers originate in Europe or Australia, and there are plenty to choose.
Mobile Trading Tools
Ease of use of the platform and whether it is mobile friendly is a huge consideration. You need to make sure that the platform is compatible with your phone or tablet and that you find it easy to navigate.
Demo Account Features
The demo account is a huge benefit for both new and experienced traders. If you are new to trading it allows you to get acquainted with the functionality, the various assets and trade types and the different charts, data etc. If you are more familiar with trading, it offers you the opportunity to try new things.
Bonuses And Incentives
Like a demo account, a bonus also gives you the chance to get better at trading. Whether it’s a no deposit bonus to get your first trades free or a deposit bonus to make your money go further, they will both save you money.
We have put together a list of recommended brokers based on our experience and knowledge of the UK binary options market. The tireless efforts of our experienced and skilled team will help you to make a more informed decision when it comes to choosing the right broker for you.
Broker Fees And Tax
Like earnings in most countries when trading binary options, the UK government officials state profits gained are subject to income tax by HMRC. The level of tax that an individual is liable for will very much depend on the earnings of the individual but will range from 20% to 50% depending on the level of annual income.
If an individual pays their salary tax through PAYE, any additional income gets declared through self-assessment. Any profit will be subject to income tax if the earnings for that individual is above £11k per annum. It is the responsibility of the individual to self-assess and declare this income for the appropriate tax year.
Trading options are not subject to any fees. The amount of profit an individual makes gets calculated and rewarded to the individual as stated in their payout terms. The individual may encounter small fees if trading in a foreign currency and may incur the weakness of one currency converted to another.
If a trader is trading through a US broker and deposits currency in dollars the withdrawal may be subject to small fees from the broker or the bank on top of any changes in the conversion rate that mean they won’t earn as much as they might ordinarily.
Other fees are incurred for using a credit card that charge fees or any method of e-banking that charges a fee for deposits or withdrawals.
Currently, there are no specific financial regulations that apply to binary options trading in the United Kingdom. It has been expected for some time that regulation and legislation is imminent and that the United Kingdom would try and align with the rest of the European Union. A decision on this matter is expected in July 2020 however the EU referendum may have changed this, and it could be a longer wait than previously expected.
Now it would be reasonable to assume that the government will hand over regulation of brokers to the Financial Conduct Authority (FCA) but until this happens options trading is classed as gambling and comes under the control of the Gambling Commission. Once responsibility for UK binary options brokers is transferred over to the FCA one would expect to see suitability or wealth checks to ensure no miss-selling of products and a rigorous dispute resolution process amongst other legal stipulations.
These checks won’t necessarily make it harder to trade, but it will offer greater protection to the trader. While this won’t have an impact on those that operate from outside of the UK to UK citizens, it will increase the standards of brokers that are UK based. There may be regulations applied like those of the USA that make it illegal to solicit business from United Kingdom traders, however, at this time, it is still ok to trade without any stipulations or rules.
Binary options trading in the UK has become very popular in recent times.
How we Recommend Brokers
Our recommendations apply to regulated binary options brokers across the globe in countries like Australia, South Africa, Russia and Canada to name but a few. To ensure that we provide you with the best, up to date and accurate knowledge we are regularly reviewing the market place, ensuring we are at the forefront of any developments and familiarising ourselves with all the ins and outs wherever you are in the world.
We have a team of specialists who are very experienced in investing and trading and know the more delicate details of the market. We analyse every single broker to check what they offer and how it stacks up against the competition. When we investigate a broker, we are looking for the following:
We give our best UK binary options brokers a star rating for each aspect of their service so that you can see, at a glance, if that broker offers what you need. We do this research to enable us to provide you with a comprehensive overview of what is available and how relevant it is to you and your trading requirements.
Frequently Asked Questions
Is binary trading in the UK legal and safe?
It is indeed legal to trade binary options. If you choose a reliable broker then other than the obvious risk of losing money your money will be safe.
Do I need to pay fees and taxes on my profits?
Yes, you do need to pay taxes on profits in the United Kingdom. If you get paid through PAYE, then it is your responsibility to self-assess and declare any earnings outside of your salary.
Can I test brokers before trading with real money?
The typical answer is yes. If you are new to trading, it is advisable to opt for a broker with a demo account facility so that you can trade with virtual money while you get used to dealing.
Is it easy to make deposits and withdrawals?
Just open an account and make the required deposit. Withdrawals happen to the same method that was used to make the initial deposit. Withdrawals can take anywhere up to 5 days.
Can I trade using my mobile or tablet device?
The best brokers now have a platform that works on all types of devices including mobiles and tablets. Their mobile offering is often a specially designed app available from the App Store or Google Play.
Jacob has been an author for us since our launch in 2020. He has over forty years’ experience in the financial sector and has held a variety of positions within financial services corporations and venture capitalist organisations.
Best Binary Options Brokers 2020: