At the core of every digital options transaction sits the binary options trading platform. Often overlooked, this software is what facilities pricing, allows contracts to be bought and sold in the market and generally makes the industry tick.
It is wise to cast a critical eye over the dealing software that the broker offers you. You not only need to make sure that it is reliable and functional, but importantly it should be closely matched to your particular trading requirements.
Here I take a look at some of the key areas of the major platforms that you will benefit from assessing when making a decision on a platform to trade with.
The return gained on each contract that is placed is commonly the main focus of the trader. This will ultimately be decided by the broker and their trading platform. The sustainability of the brokers operation is based on complex mathematical algorithms. These help to ensure that its contract obligations to clients can be met, while at the same time ensuring it can make a profit.
As there is no dealing fee associated with investing in binary options, the brokers profits have to be balanced by the platform. Revenue is generated by both the volume of turnover and the ratio of wins to losses on each contract.
The margin that the broker makes can be adjusted by the broker. They may choose to ‘up’ the potential return that a trader can earn or alternatively offer a rebate when they lose. In managing the trading software it is possible to generate a ‘sweet spot’ where both the trader is happy to continuing dealing and broker is able to maximise their operational profits.
When choosing a platform for dealing you have to consider the model that you most want to use; higher profits when you win, or reduced losses when you lose.
Range Of Contracts
You may be surprised to learn that the range of contracts offered on each platform varies. All brokerages offer the ‘classic’ binary option known as the Call/Put, but beyond this each solution is different. One Touch and Boundary contract options are offered by some, but not all companies, while sixty second binaries have now become widely available on most platforms.
It is however important to check the exact parameters to which each of these contracts works. While they may seem the same on the surface, differences in execution and available expiry times can a have a profound effect on the execution of a strategy.
Increasingly binary trading platforms are now being offered that allow traders to price up their own contracts. With these contracts it is possible to define both the expiry time and strike levels (where applicable) within specified boundaries. A unique payout level will then be offered by the broker based upon the parameters which are set.
This new feature is commonly available SpotOption trading platform. This is one of the most popular core software platforms employed by brokers with in excess of one hundred brokerage operations using this ‘white label’ product. The feature is generically referred to as ‘OptionBuilder’ and is offered by the majority of options brokerages which conduct their operations on this software.
Managing Your Account
While most people will focus on the trading aspect of the investment software, the account management side is just as important. As well as providing the facility for binary trading, the trading platform also needs to be able to manage client effectively to enable the client smooth operation of their account functions.
This is particularly important when it comes to payment processing, both in and out of your account. Employing a good binary trading system with a range of deposit and withdrawal options will help to make your account management a simple and painless process. In addition using software that has built in methods of contacting your broker will give them the opportunity to provide a quick response to any queries you may have.
Up until now, brokers offering binary options have not been subject to regulation. However this is due to change moving into 2013. CYSEC Cyprus Securities and Exchange Commission have announced the need for all brokers operating within its region to comply with its operational regulations. You can view the full announcement here. This has seen binary options trading platform providers implement a range of new changes and process to assist brokers in meeting these new requirements.
With most accessible brokers operating from this region there is little for the trader to do here, other than check the registration of the broker to ensure compliance. This move to towards regulation will help to make each broker more accountable for its platform and provide a fairer playing field for binary transactions to take place.
Note; This post was written by contributor Phil Moore.