If you are a newcomer, you probably ask yourself, Are binary options trading platforms safe? Luckily, most of them are, and with a little knowledge, you can immediately distinguish safe platforms from unsafe ones. This article Are binary options trading platforms safe? will provide you with this knowledge. You will learn:
- Which indications prove a platform’s safety,
- How to quickly identify safe binary options trading platforms,
- Which trading platforms you should stay away from.
Once you have understood these three concepts, you will be able to navigate the binary options trading world 100 percent safely.
Are binary options trading platforms safe?
Most binary options trading platforms are completely safe. Trustworthy brokers use the same security mechanisms as your bank for your online banking and can guarantee a similar level of safety.
Unfortunately, as in any industry, there are also some black sheep in the binary options world. The easiest way to avoid these black sheep is to choose a broker from our top list. We have tested all brokers for their demos and only recommend the brokers you can trust 100 percent.
If you want to learn how to distinguish safe platforms from unsafe ones yourself, you need to understand these five criteria:
1. SSL encryption
The most vulnerable point of any online business is the communication between you and the business. When you send your password and your username, you need to make sure, that nobody can intercept your data. The SSL encryption protocol is ideal for this purpose, offering a 100 percent secure way to transmit data between you and your broker.
Of course, the SSL protocol is not available for free, which is why untrustworthy brokers try to avoid the extra costs and offer you no encryption or an unsafe protocol. Never sign up with one of these brokers! Even if you get lucky and nobody steals your money, with such an unsafe platform, you will end up broke in one way or the other.
2. Government regulation
Aside from SSL encryption, government regulation is the best sign of a safe binary options platform. Most brokers are regulated by the European Union, which has passed strict regulations in the wake of the 2007/2008 financial crisis. Any platform that subjects itself to these strict rules can generally be considered safe.
To find a government regulated broker, look for the sign of CySEC, the Cyprian Securities and Exchange Commission, which enforces the European Union’s legislation for companies registered in Cyprus. For tax reasons, many binary options brokers choose Cyprus as their European home base, which is why they are subject to CySEC’s regulation.
In addition to the CySEC, some brokers also subject themselves to regulation by other government authorities, for example authorities from Russia or other European countries. This additional commitment is recommendable, but not necessary. As long as your broker is regulated by one European institution, it will offer a safe platform.
European regulations also apply to customers from outside of Europe.
3. Proofing process
A thorough proofing process is a strong sign for a safe binary options trading platform.
Untrustworthy businesses have no problem dealing with crooks. Legitimate businesses, however, only deal with legitimate customers. Consequently, legitimate businesses need a process to distinguish one kind of customer from the other. By evaluating this process, you can learn a lot about the safety of your platform.
A safe platform should have some way of identifying their customers and of preventing money laundering. Most commonly, trustworthy brokers as you to provide pictures of two documents before they allow you to withdraw money with a new withdrawal method:
- Your ID: Any government issued ID with a picture and an expiration date.
- A proof of residence: Anything that proves that you truly live where you claim to live, for example a utility bill.
With these two documents, your broker can clearly identify you. This proofing process guarantees that only you can withdraw money from your account, thereby greatly increasing the security of your money.
Additionally, trustworthy brokers ask for a picture of the credit card you want to withdraw with and only allow withdrawals to credit cards that were used for deposits. This process is important because money launderers love only businesses. Without this process, criminals could deposit money with one credit card and withdraw it to another, thereby disguising their tracks.
Make sure that your broker employs a thorough proofing process, and you should deal with a safe trading platform.
4. High-profile partners
Some brokers have high profile partners. 24option, for example, partners with soccer giant Juventus Turin and tennis legend Boris Becker, other brokers partner with Liverpool FC or prominent racing teams.
Such high-profile partners are a sure indication that a broker’s trading platform is safe. These partners have a lot to lose if they partnered with an untrustworthy business. Imagine the headlines if a partner of one of the biggest soccer clubs in the world offered an unsafe business that cost a lot of traders a lot of manage. The damage to the soccer team’s image could be huge and cost them millions.
To avoid such a disaster, all high-profile athletes and teams have their lawyers test every potential partner thoroughly before they agree to sign up with them. Any broker that has high-profile partners apparently has passed this test, which is a sure indication the broker offers a safe platform.
While high-profile partners are the perfect sign of a safe platform, the absence of any partners does not mean that the platform is necessarily unsafe. Many brokers focus on other issues and simply do not want any partners, which is no reason to distrust them.
For this reason, high-profile partners are ranked the lowest in this list. If a broker has them – great. If not, check the first three points on this list before you form an opinion about the broker.