Binary Options Trading USA
The USA is a tricky place to trade binary options from. With regulation and law constantly changing you may be asking yourself if the information you have is correct, up to date and if there is anything else you need to know. Firstly, it is "not" illegal to use binary options in the US. However you may find it more of a challenge when choosing a broker since the government labelled options trading as gambling.
That said binary options trading is not as regulated as compared to Forex or other trading types so the restrictions are not as tight. It is very important though to make sure you trade with a reputable, regulated broker whether USA based or international as long as they legally accept US traders.
With the recent spotlight on online trading many traders now find themselves using a broker that has no legal US licence, who can you open an account with and are there are any other regulations that you should be aware of? Well we are here to answer those questions and provide you with advice through our constantly updated list of brokers all based on our extensive knowledge and research.
We offer our advice based on research into thousands of brokers. Here we examine:
- The benefits of using a US based broker as opposed to an international one
- The legal issues and regulations surrounding binary options trading in the US
- How we achieve our broker recommendations and what our reviews are based on
Our Top Recommended Websites Updated: April 2018
Local Broker Benefits
While binary trading in the US is legal, the government classed options trading as akin to gambling and put in place sanctions and legislation similar to those that govern casinos. This has prevented many international firms from advertising their services and soliciting US traders which has in turn led them to stop accepting new sign-ups. This has restricted the choice of international brokers available to trade with and leads traders to choose a local based broker. This, however, doesn’t leave them with much choice.
While it is difficult to find an international broker that accepts US traders, and there aren’t many US brokers, there are still some good ones to choose from. With increased regulations, many brokerages have now chosen to move their head offices to locations like London and Cyprus making it hard to find a good USA broker. So, in such a heavily regulated market, what should you be looking for and how do you know which broker to choose? We take a look at some of the things you should be looking out for:
Licensing And Regulation
When something is as heavily restricted as binary options trading is in the US, there will be companies that try and trade under the radar! Exercise caution and make sure you choose a broker with reputable licensing and regulation.
Asset And Trade Types
With a restriction on brokers that you can choose from, you want to make sure that you pick one that offers everything you are looking for. Make sure they offer the range of assets that you are looking for and a variety of trade types.
Mobile Trading Features
Trading on the go has become critical to many of you. Who has the time to be stuck behind a computer in this era of modern technology? Check that the broker offers an app or at least a good mobile trading experience.
Free Demo account
Check out the various demo accounts and the restrictions that apply to using them. Can you use it without making a deposit and is it reloadable? Are you able to carry on using it to complement and enhance your trading skills?
Given the unknown quantity of external brokers and the restrictions of those available to them many people, when faced with a choice, will choose a local broker sadly missing out on some of the great offers available from international sites. Following our recommendations and reviews will ensure that you get a good trading experience whoever you choose to use.
Legal And Regulation
Whilst there are some questions surrounding binary options regulation and the legalities of trading we are here to remove any areas of uncertainty and provide you with fact based knowledge. Whilst it is perfectly legal to trade binary options in the USA and for traders to register with any broker it is illegal for offshore companies to solicit traders unless they have a CFTC license.
Because of this difficulty of entering the USA market and the red tape surrounding it many international brokers do not accept US traders with many leaving for countries like England and Cyprus.
There are some big name brokers that are widely known and accepted and that save the trader from having to go looking for an appropriate offshore broker. There are also plenty of CFTC licensed companies that are allowed to trade in the USA that haven't been deterred by the legislation.
Without spending time and effort researching these options though many people tend to stick with what they know. We, however, think that the choice should be there for you to make and so we use our expertise and experience to research the market and bring you the best binary options brokers that are licensed to trade in the US.
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Paying Taxes And Fees
USA law states any profits earned from trading are subject to US tax. The income must be reported as either capital gains or income to the IRS. If you are just earning a small amount, then the money can be declared as income however if it is a large amount then it must be declared as capital gains tax.
Of course, your winnings can be offset by any losses so you must declare the overall income earned taking into account money lost. As brokers aren't classed as casino's they don't have to send the trader a tax form so it is the responsibility of the trader to ensure they declare the revenue in the appropriate tax year.
Aside from taxes there are a few other small fees to consider:
While these fees aren't huge, it is worth shopping around for the best payment providers and brokers that don't charge fees for deposits and withdrawals. Consider making fewer, larger deposits and withdrawals to minimise the set fees.
How we Recommend Brokers
For US traders it can be a lengthy process finding an appropriate broker to trade with. The legislation and regulations mean that you can't just find one that you like the look of and open an account. Not only should you be comparing their offering to that of others but you need to check that they are licensed to trade in the USA.
We understand that you don't have unlimited time to go through a long list of brokers to find the one that offers the best benefits to you then to find that they wont accept your business. To help you and save you much time we have put together a list of recommendations to ensure that you find the best account for you without having to spend hours finding it.
It doesn't matter what country we're reviewing when it comes to binary trading, the USA gets the same treatment. Our recommendations and reviews are based on a number of key points. These include the benefits such as great bonuses, the quality of the signals service, the usability and functionality of the trading platform and the payouts on offer. We have a team of experts whose purpose is to investigate fully the offerings of each broker to find the best US binary options brokers, review them and recommend them to you.
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Frequently Asked Questions
Is binary trading in the USA legal and safe?
Similar to Japan or Turkey, it is legal to trade binary options but it is illegal for any company to solicit business and trade unless they have a local license. This means that many international brokers do not accept US traders and instead focus their efforts in Europe and Asia. There are a few local websites which include some big names but not as many as there might be. In terms of safety it is perfectly safe to trade with a reputable broker but the usual risks should be considered.
Do I need to pay taxes on my trading profits?
The IRS require that all residents declare any income and pay any taxes according to federal law. It is not the responsibility of the brokers to keep a record of all traders' deposits and withdrawals or is their job to inform the IRS. This is the responsibility of the individual and they should do so when they file their taxes. All monies owed should be paid according to regulations, on time and in full.
Can I test brokers before trading with real money?
A demo account is a key feature of any reliable and reputable broker. It is one of the incentives they use to try and secure new traders to open an account. With a demo account a new account holder can register and take advantage of this demo feature before they have to use their own money. Some companies apply conditions to the demo account like having to use it within 48 hours of signing up. The good thing is that the trader gets to learn from their mistakes using the demo facility.
Is it easy to make deposits and withdrawals?
As long as you have a way to make a deposit like a widely accepted credit card or an e-wallet or even the facility to use a wire transfer then you can deposit into a trading account. When you wish to withdraw from an account then you just make the request and the process will begin. It can take between 3-5 days but some sites now offer quicker turnaround times for withdrawals. For holders of exclusive or elite accounts the withdrawal times can be quicker.
Can I trade using my mobile or tablet device?
Mobiles have taken over our day to day lives. If we want something we generally use our smartphone or tablet. There isn't a lot that we can't do and online trading is no different. Many good brokers offer a reliable mobile site and an app for iOS and Android. If the broker that you are looking at doesn't offer a good mobile solution then you have to question their reliability and ability to keep up with technology.