Binary options trading are the fastest growing investment vehicle in the world. The main reason for this is accessibility.
This form of trading is easier to start investing in than almost any other. You do not require any experience or expert knowledge. No degree or license is needed, either.
Nor do you have to have a large amount of capital to make good money with binary options. Because trading is done so rapidly, and the returns are so high, it is possible to turn even a modest initial investment into a considerable amount.
All told, it is easy to understand how binary options work, and how you can make money on them. This really is the easiest way to make money in the financial markets today.
The only drawback is that this is not true for US residents. Whereas overseas investors can open an account with any binary broker, based anywhere in the world, US residents cannot.
US residents are required to trade with brokers that are licensed to operate in the US market. Not many brokers have such a license, so the choice of binary broker available to US traders is limited.
In this article we look more closely at the reasons why the binary options market is different for US residents than for traders elsewhere. We also present the best US brokers operating in the current market.
Most binary brokers do not accept US traders
The simple fact is that most binary brokers are based in other countries than the USA. Many are registered in the EU, whereas as several operate out of Latin American jurisdictions.
All conduct their business via the internet. Thereby, they are easily accessible to a global market place, regardless of their country of origin.
When you do a web search for binary brokers, you will find dozens such companies.
However, the vast majority of these will specify on their websites that they do not accept US-based traders as customers. For this reason you have to search extra hard to find a broker if you live in the US.
International regulations differ from US laws
The schism between US binary brokers and overseas binary brokers is caused by a unique quirk of US legislation.
Whereas binary options are regulated as one type of investment in the rest of the world, US lawmakers define them differently.
This means that the laws that govern binary options trading in America differ widely from applicable laws in other jurisdictions.
Basically, business practices that are perfectly permissible in foreign countries, such as in Europe or elsewhere, contravene the US regulations.
Because international brokers obviously comply with the legal framework in place where they are registered, they cannot at the same time follow US law.
International brokers are not permitted to allow US clients
Because international brokers cannot simultaneously follow US and international regulations, they are not able to accept US traders as clients.
In order to get a US license, the brokers would obviously be required to adhere to US law. But this would not make sense seeing as their business practices are adapted to follow a completely different set of rules.
The brokers cannot adjust their entire way of operating in order to comply with one country’s laws.
The lack of a US license means that it would be illegal for them to offer their services to US residents.
As a consequence, the pool of available brokers for US traders is small, compared to the amount available to traders from most other countries.
International brokers are law-abiding entities – the just follow non-US laws
The fact that binary options brokers from other countries do not comply with US regulations, does not mean that they are in any way suspicious.
The truth is that they follow the laws that apply where they are registered. They have licenses issued by local governments. This compels them to operate in accordance with local laws and regulations.
International law is every bit as strict as the US regulations. It is just different. By complying with the applicable laws, the binary brokers run their businesses in a professional and trustworthy manner.
International brokers have millions of customers on a global basis; a clear indication that they are running reliable and trustworthy businesses.
Binary options are perfectly legal in the US
Now, one rumor that you might come across frequently online is that binary options are illegal in the US. This is entirely false.
As we have already accounted for, the reason that US investors are not permitted to open accounts with international brokers is that the brokers are not licensed to operate in the US market – NOT because binary options are in any way banned in the USA.
There are specific regulations a broker has to comply with in order to get a US license. Once a binary broker has such a license, the company is perfectly within its rights to offer its services to US investors. Obviously, all US residents are free to conduct their business as they wish with a binary broker that has a US license to operate in this market sector.
US citizens can only trade with a US brokers
So, just to make the main gist of this article perfectly clear: if you are a US citizen, who is resident in the USA, you cannot open an account with a binary broker that does not have a US license.
You are required by law to conduct your binary options trading through a US binary broker.
This means that you must seek out a US broker if you want to make money on binary options. You will not break the law by opening an account with an overseas broker, but the broker will. Clearly this is not an ideal starting point for investing your capital.
Instead, it is much more advisable to take the time to find the best US broker that you can. This will ensure that you and your broker are operating within the law.
These are the best US brokers today
In the current market, the amount of US binary brokers is limited. This means that you – as a US resident – are faced with a far more narrow choice than your overseas counterparts.
Fortunately, the small number of brokers does not mean low quality. There are several very decent brokers that operate in the USA at the time of writing.
Particularly three US brokers enjoy a great reputation in this marketplace. They have all attracted a large number of happy customers over the course of several years. They are:
- EDX Capital
Nadex is the most well-established of the three. The broker is based in Chicago and has been operating for a number of years. Nadex is considered the best US-based binary options broker.
If you prefer to conduct your business with an organization that is physically based in the USA, Nadex should therefore be high on your list.