Many people new to FX options investing make the mistake of thinking they can go to Google, search for the “best FX options broker”, and instantly find their perfect broker on the first page. This isn’t necessarily the case, while you may happen to choose a trustworthy, well-established broker, there are several elements you need to first consider.
After all, the broker you choose to trade and invest in can mean the difference between making money and losing money.
Every FX options broker offers their own specific set of financial assets to trade, with the most popular being major currency pairs such as USD/JPY, EUR/USD, GBP/USD, etc. Brokers also offer indices like the DOW and DAX, in addition to commodities such as Gold, Silver, Oil, Wheat, and even stocks. If there’s a specific asset you trade, make sure the broker you’re considering using offers it in their asset index.
Types of Trades
All brokers offer standard High/Low FX options. Apart from this, there are several additional ways to trade FX options. This can include Range, One Touch, Pairs, Ladder, and much more. It’s important to have an understanding of the many available FX trade types before depositing money into a broker. Some brokers offer traditional Forex/CFD trading next to various other trade types, while other brokers may only offer High/Low options. Consider the number of ways a broker lets you trade before opening a real trading account.
Expiry times are important because it’s at the conclusion of these time intervals that us FX options traders make our money. The number of expiry times a broker makes available on any single trade can impact how we use our strategy to look for trade. Expiry times range from 60 seconds to several weeks and even months. Most brokers offer 5, 15, 30, and 1 hour expiries. It is best for beginning traders to not place too much emphasis on this part, sometimes less really is more.
While it’s important to consider the average payout a broker gives for their trades, don’t make the mistake of sacrificing quality for higher payouts. The average payouts for standard High/Low options is anywhere between 60% – 80%, which is dependent on the asset, expiry time, and trade type. Exotic options give traders higher returns – some even offer up to 400% payouts on One Touch. Again, even though payouts are important, they shouldn’t be the main reason for you choosing a specific broker.
Deposits and Withdrawals
Reliable brokers have secure deposit and withdrawal methods, along with a clear dedication to your privacy. Considering how a broker handles withdrawal requests is extremely important in the decision making process. After all, one of the main reasons the FX options industry has received a negative perception by a part of the investment community is due to the fact that some brokers find ways to refuse customer withdrawals. With this said, use Google to find broker reviews from real customers. If a broker has ever tried to get away a customer’s money, there will undoubtedly be a complaint about it online. It’s also important to consider the number of days it will take to deposit and receive your funds, and also have a clear understanding of how the broker handles withdrawal requests to stay safe.