ESMA Agrees To Prohibit Binary Options And Restrict CFDs To Protect Retail Investors
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Please note that CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. At average of 83 % of retail investor accounts lose money when trading CFDs. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
This is the hottest issue among traders in the USA at the moment, a country that has ever-changing laws and regulations. Before we get into specifics, we want to inform you first that it’s not illegal to trade binary options. It’s very much legal and regulated. The problem is that most US brokers are not legal and do not hold valid licenses. This makes the selection of legal US brokers a small one, but with enough quality.
Binary options are very simple, extremely popular and most important legal in the US. You are asked a simple yes or no question whether a market will be above a certain price at this time. If yes, you buy the option. If no, you sell. It’s a powerful way of making money provided you are good at predicting prices.
GFT allows traders to use proprietary software to trade; their DealBook platform has won awards and includes lots of great trading features like advanced charting tools and indicators. Once again, these are things which traders need to be successful in the long run. At the same time, the platform remains simple to use and understand. Traders can invest as little as £1. The maximum trade size varies depending on the currency in the trader’s account, but may go as high as £200 or equivalent for binary options. This is a bit restrictive, and may hinder traders with larger accounts.
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2. Contracts for Differences - a restriction on the marketing, distribution or sale of CFDs to retail investors. This restriction consists of: leverage limits Easy earnings on the Internet opening positions; a margin close out rule on a per account basis; a negative balance protection on a per account basis; preventing the use of incentives by a CFD provider; and a firm specific risk warning delivered in a standardised way.
For major currency pairs such as the EUR/USD or GBP/USD, Irish traders will be restricted to only 1:30 leverage, cryptocurrency traders will only have 1:2 leverage, while commodities such as gold, silver, and other exotics will have a leverage cap of 1:5.
NCAs’ analyses on CFD trading across different EU jurisdictions shows that 74-89% of retail accounts typically lose money on their investments, with average losses per client ranging from €1,600 to €29,000. NCAs’ analyses for binary options also found consistent losses on retail clients’ accounts.
The ESMA restrictions will soon be meeting their deadline, and it seems like most of the European states saw some kind of benefit of having these new laws on their financial markets. Ireland is just a few steps behind countries like France and Austria.
However, you should always keep in mind that trading with a non-regulated broker is a bad choice. And although regulation does not automatically earn the broker quality, it offers security to the trader. Quality comes with the good customer service, fast payouts, fair trades and quality service all of which makes for a well-earned reputation. Therefore, always look for reputable and regulated brokers.
Carefully read opinions and reviews from other traders. A broker’s reputation says about the quality he offers. Go through all of the fine details about that broker and study the entire website including the T&Cs and FAQ. See if he is certified with a regulatory agency.
Access to the Pocket Option trading real account is available after registration. To open an account, you just need to specify your email and come up with a password. You can log in with your Google or Facebook profiles.
You as a US citizen can also trade binary options with the help of brokers located outside of the US. But, that can be a bigger challenge because not all of them accept US traders. If you live anywhere in the rest of the world, you will not experience troubles in getting to trade binary options with any broker. As a US trader, you would.
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