best binary options brokersWhile there are many sites that offer lists of the Best Binary Options Brokers they are often quite misleading.  In the United States, a binary options provider is actually an exchange not a broker.  The difference between an exchange an a broker is quite significant.

Best Binary Options Brokers

Brokers are actually middle men that serve as a medium between the client and the Exchange and they charge a commission (in addition to an exchange fee) on each trade.  An exchange on the other hand is the direct authority where the direct trade execution happens.  In order to trade on the exchange, traders must become “members” of the exchange.  Additionally, with binary options in the United States, the CFTC states:

It is illegal for entities to solicit, accept offers, offer to or enter into commodity options transactions (for example, foreign currencies, metals, agricultural products, etc.) with US citizens, unless those options transactions are conducted on a designed contract market, an exempt board of trade, or a bona fide foreign board of trade, or are conducted with US customers who have a net worth that exceeds $5 million.  (http://www.cftc.gov/PressRoom/PressReleases/fraudadv_binaryoptions).

In other words, for US traders, the CFTC and SEC have performed an intricate approval process that ensures binary option exchanges provide a fair and level trading field.  Since brokers are middlemen and not “exchanges”, binary brokers are not approved for binary options in the US.

Currently, there are only three binary options CFTC or SEC exchanges currently in the U.S. for forex, gold and other instruments.  They are the North American Derivatives Exchange (Nadex), Cantor Exchange LP and the CME, Inc.  Of those, Nadex offers the most instruments and expirations at the time of this article.  The New York Stock Exchange does offer the ByRDs (weekly binary options on stocks).  Therefore, the best binary options brokers for US Citizens is limited to these three — with Nadex being the best choice (remember Nadex is an exchange not a broker) in my opinion.

Additionally, an exchange, like Nadex Binary Options, is subject to regulatory oversight by the Commodity Futures Trading Commission (CFTC).  The CFTC’s mission is to foster open, transparent, competitive, and financially sound markets to avoid systemic risk, and to protect the market users and their funds, consumers, and the public from fraud, manipulation, and abusive practices related to derivatives and other products that are subject to the Commodity Exchange Act.

Gail’s new books, New Trader’s Guide to Trading Nadex Binary Options & Spreads and Trading Nadex Binary Options:  Keeping it Simple Strategies, provides more details on how your win/loss ratio affect your outcomes, helps you in understanding how to trade binary options and spreads, techniques for binary options trading and how you can overcome the typical obstacles that cause most traders to fail, and why Nadex is one of the best binary options brokers (which is actually not a broker but an exchange).  You can order her books online by clicking here.