Binary Options Legal Countries

Binary options can simplify trading to a 'yes' or 'no'—so long as you choose a reliable, trustworthy broker if you're a US trader.

Tim Fries

Tim Fries is the cofounder of The Tokenist . He has a B binary options algorithm . Sc . in Mechanical Engineering from the University of Michigan, and an MBA from the University . Reviewed by Shane Neagle

Shane Neagle

Meet Shane. Shane first starting working with The Tokenist in September of 2018 — and has happily stuck around ever since. Originally from Maine, .

Updated January 15, 2023 All reviews, research, news and assessments of any kind on The Tokenist are compiled using a strict editorial review process by our editorial team . Neither our writers nor our editors receive direct compensation of any kind to publish information on tokenist.com . Our company, Tokenist Media LLC, is community supported and may receive a small commission when you purchase products or services through links on our website binary options examples . Click here for a full list of our partners and an in-depth explanation on how we get paid.

Do you wish trading stocks was just a little bit simpler? 🥧

Good news: It can be.

Trading can be as simple as a yes or no answer when it comes to trading something known as binary options. If you think this sounds too good to be true, it’s for a good reason: Binary options can sometimes be unregulated and risky. Many equate the form of trading to gambling, as opposed to any type of investing.

But don’t worry too much because there are many parts of the world where trading binary options is regulated and safe. As long as you are well informed on how binary options work, they can serve as a legitimate means to make yourself some extra cash.

The only problem is that the world of binary options is full of scammers—it’s not uncommon for American and European investors to lose funds by choosing to use an unregulated investment platform for binary options trading. Long story short, the platforms are shell companies that all-too-common sneak certain ‘withdrawal requirements’ into their terms of service.

Don’t let this scare you, because there are several perfectly safe ways to make money by investing in binary options. So if you think that a simplified trading method like binary options might be for you, keep reading in order to learn the best and safest ways to do so while residing in the United States.

What you’ll learn

How Do U.S. Binary Options Work?
Benefits of Trading Binary Options U.S.
Limitations of Trading Binary Options U.S.
Legality of Binary Options in the U.S.
Where Can I Trade Binary Options in the U.S?
What Are the Fees on U.S. Binary Options?
U.S. Binary Options Markets
Conclusion
US Binary Options Trading FAQs
Get Started with a Binary Options Broker

Introduction Binary Options Legal Countries

Binary options are a unique type of options trading where an individual can profit off of the price fluctuations of an underlying asset without actually having to own the asset. Binary options are a financial instrument with their own unique risk, reward, and liquidity structure.

There are a couple of different types of binary options, and the most commonly traded is the high low option, also known as a fixed-return option. With a fixed-return option, a trader will bet on a certain outcome, and if the outcome proves to be true, they will be paid. But if the outcome is not true, they will lose the funds they invested.

For example, a binary option could essentially contain the following: Will the price of Tesla stock be above $190 at 2:00pm? If you think yes, then you would purchase the binary option. If you think it will not, then you will sell the option. A binary option is always purchased for between $0-$100 and always pays out the same. So, the above Tesla binary option could be priced at $55.

Once the binary options contract expires, the prediction you made is either true or false—and you either win or lose the bet.

Binary options are also always settled at $0 or $100, so if you bought the Tesla binary option, and the price was indeed above $190 at 2:00pm, you would be paid $100. You would subtract your original investment from this, as well as any fees, to find that you made around $45. If you were incorrect and the price was not above $190 at 2:00pm, you would lose your entire $55 investment.

In the United States, it is only legal to trade binary options on a certified exchange. This requires the company to register with the SEC and makes it less likely that you will be scammed by trading binary options on an unregistered platform.

How are Foreign and U.S. Binary Options Different? 💡

Although foreign binary options work very similarly to American ones, there is one major difference, in other countries like India, binary options tend to be unregulated. This means that traders will buy binary options directly from brokers who will typically pay them directly from the money they gain from other losing trades.

Because stockbrokers are typically unregulated, this increases the risk that traders will take on when trading binary options. Additionally, this risk is typically reflected in the price as it will cost more to play certain trades to be sure that the broker is able to make money. And when you place a losing trade, you will often lose more than you earn on winning trades.

Despite the risk involved in foreign binary options, there are a couple of reasons people still choose to engage in them—mainly because there are typically more options for traders to choose from, as well as a lower commission structure. When trading binary options on an American government-approved platform, you will be giving some of what you make back to the platform and this simply isn’t true with some foreign brokers.

The Benefits of Trading Binary Options in the U.S. 🇺🇸

At this point, you are probably wondering if it’s worth it to trade binary options in the US. And the truth is, there are many pros and cons when it comes to trading binary options.

Despite some of the controversy surrounding binary trading options, there are several pros to engaging in the practice. This is especially true if you are newer to the stock trading world.

You Can Trade on a Small Budget 💲

The number one reason that many people get involved in binary trading is because it allows you to trade on a smaller budget than other types of stock and options trading. This means you can get started as a trader with as little as a few hundred dollars in your pocket. Generally, most binary trading platforms will let you start with just a $500 deposit.

You Can Make Big Returns Fast 💰

What makes binary trading so unique is that even though you can start with very little money, it is possible to make big returns if you know what you are doing. And unlike in other aspects of investing, where you have to worry about things like margin, and legal trading requirements, in binary options, what you see is what you get..

There Are Many Strategies 📓

As mentioned above, there are several different types of binary options. This means that if you learn about them all, it can be easy to develop an investing strategy for binary options that will offer you a high return on your initial investment. And if something doesn’t seem to work for you, it is also easy to change your strategy without incurring a large loss of money.

It’s Easy to Learn 📚

Binary options are very easy to learn, and, generally, you can learn to trade them within minutes. This means that you won’t need to spend hours learning a platform or developing your above strategy. This makes binary options very attractive, especially to those new to the trading world.

The Limitations of Trading Binary Options in the U.S. 🚫

Like with anything in life, there are always a few cons. And when it comes to binary trading, it’s important to review the cons before you begin because they might just change your mind.

Scams and Unregulated Brokers 🚧

Although all services in the U.S. which offer binary trading services must be registered with the SEC, there is nothing to stop a random broker from starting its own binary options trading firm. Of course the government will eventually find out and close it down, but this could be after an illegal broker operates under the radar for months and takes money from thousands of unsuspecting people like one particular brokerage platform in Vietnam, which was able to take millions from investors before the local government caught on to the scam.

Low Trading Limits 🏗️

Because all of the legitimate binary options trading websites are regulated, this means that there are limits to how much binary options trading you can do in one day. Although this may not affect a beginning trader just investing a few hundred dollars, this can be a huge hindrance for someone wanting to invest thousands in binary options.

You Can Get Swept Up in the Ease of Trading 📗

Trading binary options is so easy that it is a bit like putting your money on red in a casino. This likens the trading of binary options to be something akin to gambling. Therefore, if you are prone to have issues when it comes to gambling, you will likely have the same issues when it comes to trading binary options.

A binary option is a financial exotic option in which the payoff is either some fixed monetary amount or nothing at all.

This could cause you to lose more money than you would in a traditional stock trading environment. Not to mention that trading binary options is deceivingly simple enough that you may not think you need a strategy, or you may pick a strategy that is improper—causing you to lose a large portion of your bankroll.

Limited Testing Capabilities ⚠️

If you are new to binary options, you may want to test out how it works on a specific trading platform before you begin putting your hard-earned money on the line. The problem? Well, most companies don’t allow demos on their binary options trading. This means you will have to go into it blindly and learn as you go along—which could cause you to make a mistake.

Legality of Binary Options in the U.S. ⚖️

Before you jump into the binary options trading world, you may be wondering if it is legal or not. And the answer is, trading binary options in the U.S. is legal as long as you do so with a regulated, registered provider.

You need to be careful, however, as there are many websites out there offering binary options that are not regulated. And although it is illegal for non-American firms to solicit Americans for binary options, this doesn’t mean that they still don’t try.

Engaging in binary options on these unregulated websites is illegal. Not to mention that many of them are scams according to the CFTC, and if you put your money on their platform, you are liable to lose everything because they could disappear with your money without paying you out for the binary options you have purchased.

The best way to be sure that the platform you are using to trade binary options is legal is by checking the following items before creating an account.

☑️ Check to see where the company is located (must be the USA!)
☑️ Check that the website mentions that it is certified by the CFTC.
☑️ Be sure you are in control of your own account, and it isn’t a broker trading for you.

If this sounds a little bit complicated, don’t worry, as it basically boils down to the fact that you need to avoid anyone who offers to trade binary options for you and is based outside of the U.S. as this is illegal. And even if they have a story about how much money you could make, you need to realize that besides losing your money, they could also steal your identity. Thus you should never give any money or information to an unregulated exchange.

Where Can I Trade Binary Options in the U.S?

Unfortunately, because binary options are so highly regulated, it is very difficult to find places to trade them in the United States. In fact, those wishing to trade binary options will find that they have very little selection when it comes to trading platforms to use.

Don’t despair, because there are several popular US binary options brokers. Just be sure that you always use the checklist from the section above before you begin trading on a platform. And know that using any site to trade binary options that is not CFTC regulated increases your risks of being involved in a scam or becoming a victim of identity theft.

What Are the Fees on U.S. Binary Options? 📉

Before you grab your traders hat and delve into the world of trading binary options, it’s important to remember that any trades you place will be subject to fees. And you need to take fees into account before you begin to be sure trading on a certain platform will actually be profitable for you.

The fees you pay on binary options will depend on the platform you choose to use. But be prepared that most platforms charge at least $1 to purchase a binary option, then take a portion of the payout if your option is successful. These payout fees can be a large portion of your profit, but are generally capped somewhere around $10 depending on the platform.

But, some platforms could have even higher fees, so always take a look at how high these fees will be before you place your money into any sort of binary option.

U.S. Binary Options Markets 🏛️

When it comes to binary options, there are several different types of commodities you can trade. Besides just trading in the basic indices, there are several topics on which binary options are offered that you wouldn’t expect. This makes it easy to pick your area of expertise to invest in binary options.

Major Indices 📈

When people think of trading in the stock market, they typically think of the major indices such as the Dow 30, Russell 200, Nasdaq 100, and S&P 500. And you most certainly can engage in these types of securities when investing in binary options.

Most major U.S. options markets will have all of the above indices as well as some foreign indices as well. These can be fun to trade, just be sure that you take time zones into account when you place these binary options as the expiration of the option will always be placed in the local time zone.

Forex 💸

Speaking of international indices, you can also purchase binary options for exchange rates. This is done by choosing whether or not you think a certain exchange rate between two currencies will change in one way or another before a specified time. This is called forex trading, and there are many binary options available in this space.

Forex trading can be an exciting and lucrative activity, but it can also be tough, especially for beginners.

Just like with trading international indices, it’s important to double-check with the site you are using what time zone these forex binary options are in. This is because timing has a huge impact on forex trades (a currency is active when its country is awake) and could be the difference between making or losing a large amount of money.

Commodities 🤑

And of course, no options market would be complete without offering trading options for commodities like gold, silver, and oil. For binary options, there are additionally some platforms, like Nadex, that offer options on major crops like corn and soybeans as well.

News Events 📰

What might surprise you most, however, is that you can actually purchase binary options on news events! Sites like Nadex offer you binary options that you can buy and sell based on if you think the Federal Reserve will raise interest rates, as well as the unemployment rates when compared to yearly censuses.

When trading binary options on news events, it’s important to note the expiration. This is because rather than being listed in days or hours, it could be listed based on the release of some sort of news.

Cryptocurrency 🪙

One of the newer types of binary options available to trade are those predicting the prices of cryptocurrencies like Bitcoin. This type of binary option is often harder to find, and when you do find a platform that offers it be sure that it is a legal platform.

Recently, the Australian news called out several overseas operators for illegally offering cryptocurrency binary options to its residents. Thus, it is highly likely that as an American, similar opportunities may be illegally extended to you.

No matter which of the above binary options you decide to trade, it’s important to remember that things like market uncertainty and perceived volatility have a huge impact on binary options pricing. Therefore, whenever you are invested in binary options, it’s important to keep an eye on news events, market sentiment, as well as any government policies. You will additionally want to spend time researching a binary option before you purchase it to be sure you know what you are investing in.

Conclusion 🏁

Overall, if you are looking for an easier way to get involved in the stock market when you don’t have much capital, selecting binary options can be a great way to go. Whether you select to invest in binary options regarding market indices, or major news events, there is plenty of money to be made in binary options that don’t involve having to wait a long time for an investment to payout.

Just be sure that when you are choosing a binary options trading platform, that you select one that is legal for you to use as an American, which is backed by the CFTC so that your investment will be protected. This way you can enjoy all of the rewards of binary options trading without exposing yourself to unnecessary risks. If you’re not a US resident, it’s a good idea to research the top binary options trading platforms that facilitate trading in your specific jurisdiction.