Binary Option Trading for USA Traders
Posted on | Tuesday, August 11, 2015 | No Comments
First off, let's explain what binary options are. Binary options are limited risk contracts based on a simple yes/no market proposition like will the markets go up by the end of the trading week. Binary options offer traders ways to trade the most active stock indices, commodities, forex, event and bitcoin markets with relatively low collateral.
As with all investments, binary option trading for us traders has it's ups and downs. One of the biggest challeges out there for those in the united states is to weed out all the scam sites. Being relatively new, binary option trading has given scammers a whole new platform in which to use, and even the most seasoned investor can find himself with a huge "account balance" that will never make it to their bank account! Even the largest and most respected binary option trading sites pose a huge problem for us traders. The USA has certain regulations and restrictions in place that prevent us traders from using most of these sites as they are not based inside the usa and therefore not required to to be regulated. This basically says that if you get ripped off by one of these sites, it's your own fault! You can even get yourself in trouble using an unregulated binary option trading platform as it would fall into the gambling category. So how does a us trader get into binary options while still protecting themselves? Make sure the site you are suing is regulated by the CFTC, Commodity Futures Trading Commission. This is the only way a united states trader can make sure they are protected and legal.
The Commodity Futures Trading Commission (CFTC) is a government agency that oversees the regulation of futures, options and swaps trading on regulated U.S. exchanges. The CFTC's mission is to protect market users and the public from fraud, manipulation, abusive practices and systemic risk related to derivatives that are subject to the Commodity Exchange Act, and to foster open, competitive, and financially sound markets.
According to the CFTC, the largest and most trusted is Nadex, a Chicago-based derivatives exchange designed for the retail trader. How does Nadex protect you you may ask. Their Binary Option and Spread contracts have built-in floor and ceiling levels, which provide the same protection as a stop order without the risk of being stopped out. With Nadex, the price of your contract always remains between the floor and the ceiling, so you know your maximum potential profit or loss in advance. Unless you choose to close your position early, it always remains open until expiration. You never get stopped out, no matter how much the market moves against you. And you can never lose more than your initial collateral. There are no margin calls and your risk is always capped. According to the Nadex website, "We operate legally within the U.S. and can offer a layer of protection that other offshore binary option providers cannot give. Designed primarily for retail traders, Nadex provides you with direct access to contracts based on a range of global markets – without the need of a broker to act as a middleman. And we protect your funds by holding all member funds in segregated accounts with major U.S. banks."
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