Forbidden binary options strategies
Conclusion A ban on binary options has been in place since 2nd July in Europe.
EU Traders can avoid the ban, however, and continue trading. So what are the options for traders impacted by the ban?
They were convinced that this measure would protect consumers and resolve the deluge of complaints they had received over the previous decade. The ban was originally implemented temporarily, for three months. Extension Since the original ruling, both the ban on binary options and the related restrictions have been extended: From 1st July to the 1st of October Then from October forbidden binary options strategies the 1st January And again from January to 1st April On February the 18thESMA confirmed they would extend the ban again, this time to forbidden binary options strategies June During this period, very little in the way of research has been done by ESMA, to see how effective the ban has been.
For example, the original scams were already breaking the law — so have they adhered to the ban?
Common Misconceptions About Binary Options
They have however, branched out into cryptocurrencies — another area where regulators are years behind. The official text on each extension has been exactly the same, bar the dates. With that said, it seems certain that the ban will remain in place, restricting the availability of binary trading to traders in the EU.
So what can traders do? There are positives and negatives to all of them, but it is possible for traders to carry on, and that is the important thing. Firstly, trading with an unregulated broker that still accepts EU traders is to be avoided at all costs.
403 - Forbidden
This is not a safe route. Here are some methods to continue trading in a safe, legal way. Alternative Products Many reputable brokers have created new products to fill the gap left by the ban.
Brands are looking at new products all the time, so look out for marketing information. Non-EU Branches One less well known choice for traders, is to move their account to a regulated arm of their existing broker.
That is right, you might be able to carry on with your existing broker… There are two key points here. Firstly, this is only possible where the broker has multiple regulated brands, in other words, separate brands in each jurisdiction or off-shore.
For example. It is possible for you to request an account with the Non-EU or off-shore branch of the business.
ESMA allow this to happen — but brands are not allowed to market the possibility. The request has to come from the trader, and not be prompted by the firm themselves or marketing sources. Use A Professional Account This choice will only be available to certain traders. To register as startup option, traders must prove a certain level of trading experience 2 years in a financial service role for example.
June 18, 2020
They must also prove a certain level of trading capital k — though this can be spread between multiple accounts. In addition to opening up binary options again, registering as a professional will also mean traders can trade CFDs and Forex with much higher levels of leverage.
The trade off is that professional traders lose regulatory protection. Conclusion So there we have it.
Hedging Binary Options
The binary options ban does not have to mean the end of you trading binaries. If the ban stops uninformed traders getting their fingers burnt — but experienced traders can binary options with a minimum deposit demo on using them, then the industry, while smaller, will be better off long term.