2017 – Year of the Low-Deposit Brokers and CFDs
Well, well, another year is almost gone and I’m glad to see that Binary Options are finally starting to mature and to turn into a more well-rounded product. A bunch of the scam brokers have gone out of business (YES!) and the good ones that are still active have started to offer both Binary Options and Contracts For Difference (CFD). Maybe the biggest thing is that more and more brokers are starting to offer very low deposits, which makes them more appealing to newcomers and even to experienced traders that have been scammed in the past and are now afraid to invest a lot of money.
Low Deposits Brokers – The Key To Money Management
Brokers like IQOption, Ayrex, HighLow, OlympTrade and a select few others have finally started to understand what binary options are all about – a platform to easily trade, without thousands of strings attached, without account managers and without having to make a huge investment. Yes, I don’t want to make a big investment! At least not from the start. Maybe I read 10 reviews about a broker and I finally decide to open an account but a review will never show me the full trading experience. That’s why I need to trade with that broker and see if I like it. Here’s where the minimum deposit comes into play: if they ask me for 250 bucks and once I start trading I see that I don’t like their platform or the assets they offer, I’m stuck with that account until I blow it or until I can withdraw.
On the other hand, if the minimum deposit is 10 or 50 bucks, I will risk that without too much fuss. Come on, it’s 10 bucks, if I don’t like the broker, it won’t be the end of the world. And there’s another thing: usually, the brokers with low deposits have low trade amounts, meaning they will let you open trades with $1 or $5 and this, of course, limits the risk. Later if I decide I like the broker and I want to invest more, I will have a lot more room for error. Let me explain: on a $250 broker I can usually trade a minimum of $25. That means that if I lose 10 trades, I will blow my account. Sure, that’s the worst-case scenario, but it can happen. Now, if I am trading with a low-deposit broker (remember, most of these brokers let you invest $1 per trade) and I deposit $250, I can lose 250 trades before I blow my account. See the difference? A low deposit broker allows you to have a lot more flexibility, without imposing limitations.
Low-Deposit Brokers Equals Low-Tier? No Way!
Some people believe that a low-deposit broker is in a lower tier, or somehow worse than a high-deposit broker. This is definitely not the case! I consider that low-deposit brokers are what is needed for binary options because, like it or not, there’s a negative vibe surrounding this industry, due to all the scams that have happened. During 2017, the regulatory authorities have really stepped up their “game” and finally cleared some of the mess, but people are still reluctant to commit large sums to brokerages, so they are more comfortable with lower deposits.
The brokers that are allowing you the liberty to choose how much you want to invest are actually letting you try “before you buy”. Come in, deposit as little as you want, trade as little as you want and then invest more if you feel like it. It’s a great way to build trust and to make the client feel more in control of their money.
Contracts For Difference – The Binary Options Replacer?
2017 has been the year when Contracts For Difference (CFD) have emerged. Lots of binary options brokers have introduced this new form of trading and others have totally switched from BO to CFD (as a side note, CFDs have been around for a very long time, they are just new for binary options brokers).
CFDs are definitely more complicated than binaries, so on paper, you would think that people would prefer BO but so many of the big BO brokers are focusing more on CFDs now. What’s the reason? Well, in my opinion, it’s the bad reputation that surrounds binary options and the fact that until 2017, the regulators were not actively trying to stop the scam. However, this is starting to change, mainly because regulators like CySEC, FCA, ASIC, etc. are stepping up their game and showing their “teeth” with chunky fines and severe warnings. Several brokers (bad ones) have gone out of business and what we’ve been saying all along is finally happening: scam brokers will go away and only the trustworthy ones will remain.
Goodbye 2017! Welcome to 2018!
It’s been a good year for Binary Options although CFDs have entered the scene and I say that because I like how regulators are putting their foot in the door and adopting a tighter stance. We are still far away from a scam-free environment but it’s definitely better than in 2016. I am sure that in 2018 we will see more brokers with low deposits, more CFD trading and more regulation. All these are great news for us traders Fingers crossed and Happy Trading!