German Traders Guide
As one of the leading economies in Europe and one of the world's most significant financial powers, Germany was one of the first countries to adopt binary options trading. Due to their commitment to their financial industry, they heavily regulate the financial markets. Any broker offering financial services to residents of Germany has to be licensed.
It is because of this position as a strong economy that there is an abundance of binary brokers either based in Germany or abroad. Having so much choice, and being able to trade binary options freely, means that your trading experience should be straight forward and enjoyable. It's easy to trade with whom you want and when you want.
With so many brokers to choose from the difficulty can come with knowing which one to open an account with. At this point, there are several factors to consider. To help you decide on a binary options broker in Germany, we bring you our shortlist of the safest, most reliable brokers to trade with.
In this article, you will learn:
- The brokers best suited to your needs
- What local payment methods are accepted
- Taxes and fees that apply to DE residents
Traders in Germany
TThere are many benefits to using a local German binary options broker. First, they will have an address in Germany. Knowing where a broker is based will often make you feel more comfortable and secure about them. They will also be licensed and regulated by the regulatory body that governs financial activity in Germany. In addition to this you need to ensure that they offer the following:
A Strong Trading Platform
The platform needs to be reliable, easy to use and intuitive. You must be able to navigate around it directly and to be able to place trades quickly and efficiently. If you are looking to trade on the move, you must ensure that the platform either has a mobile app or a mobile-friendly website.
Welcome Bonuses And Deals
To encourage you to open an account, many brokers offer welcome bonuses and other incentives to get you to trade, and to keep you trading. These are often really useful to the new trader especially when it comes to no deposit welcome bonuses. These can be used to trade on the platform and get used to it before you risk your funds.
Licensing And Regulation
As Germany has such strong stipulations when it comes to allowing brokers to solicit your business, the advertised brokers will be regulated. You are looking for the BaFIN and MiFID licensing logo on the broker website. Trading with a licensed and regulated broker carries far less risk than trading with one who isn't.
In addition to offering no deposit bonuses, most binary options companies have a demo platform for new traders who want to try out the platform without risking their funds. It is designed to allow you to get familiar with trading in virtual conditions, with virtual funds. If you plan to trade on multiple devices like mobile and a laptop you can use the demo account to get used to the trading conditions on both.
There are also many reliable, international brokers based in other countries that offer everything you could need and, as Germany allows offshore traders to solicit business from German residents, you are free to trade with who you choose.
Broker Fees And Tax
In Germany, you are expected to pay taxes on worldwide earnings. That means whether you trade with a local broker or a foreign broker, you will be liable to pay income tax on profits. Income tax rates in Germany range from 14% to 45% depending on the level of income that you earn. If you are making more than €8,821, then you will be subject to this tax.
There are many taxes in Germany to be aware of and penalties for not declaring and paying the right amount. Make sure that you offset your losses against your income. Keeping an accurate record of your trading will help you to be able to submit an accurate self-assessment when required.
In addition to this, you need to consider the fees charged by your broker. Costs will get deducted from your earnings after every successful trade. These fees will differ depending on the broker you are trading with but will be relatively similar. Costs that you are likely to incur are:
Make sure to factor in all of these fees and try to minimise them where possible. Every time you make a withdrawal, you will get charged, so it is worth making less frequent, higher volume withdrawals than many small ones. Check the fees that your bank or credit card might charge for currency conversion if using an offshore broker.
Brokers must be licensed and regulated to conduct binary options trading in Germany. The Federal Financial Supervisory Authority or BaFIN, as it is known, oversees the regulation of the whole financial industry in Germany. They are responsible for all financial institutions from banks and investment firms to Forex and binary options traders.
In addition to this all brokers, both local and offshore, must be MiFID licensed. Germany allows its residents to trade freely in financial markets like Forex and binary options while keeping a watchful eye over proceedings.
In fact, due to the expectations of BaFIN and MiFID, you will only find reliable brokers as the legal requirements do put some off. The threat of prosecution for any malpractice or misappropriation of client funds is enough of a deterrent for even some of the reliable brokers who don't want the red tape that they would need to incur to be able to market their services to German residents. The regulations work heavily in your favour as a trader as you are less likely to encounter the brokers that operate illegally.
There are many benefits to using a local German binary options broker.
How we Recommend Brokers
Quite simply, our job is to recommend the most relevant and reliable brokers to you. We research and test every broker, carrying out a full review of their services before we recommend them to you. When we rate a broker, we are looking at how they perform in some categories.
Do they have an easy to use, mobile friendly platform? How good is their customer service? In addition to this, we are looking at demo accounts, bonuses and deals, the payouts that they offer for successful trades and whether they are licensed and regulated.
Our experts test out the various brokers, scoring them on the multiple criteria before presenting the information in a comprehensive and detailed review. This information is then shared with you to help you to decide who’s platform to use. Our research will save you hours and hours trawling the web, researching all of this for yourself and instead presents you with a shortlist to select your favourite. Then all you have to do is open an account and start trading.
Frequently Asked Questions
Is binary trading in Germany legal and safe?
Yes, binary options trading in Germany is both legal and safe if you choose the right broker. There are strict licensing requirements that mean that you are unlikely to encounter any problems.
Do I need to pay fees and taxes on my profits?
Yes, German tax laws mean that you have to pay taxes on earnings above €8,821. Income tax levels start at 14% and rise to 45%. Remember though that you only pay tax on the profits.
Can I test brokers before trading with real money?
Yes, as long as they have a demo account or they offer a no deposit, welcome bonus. The demo account only lets you trade on the virtual platform with virtual funds, but it enables you to get acquainted with the site.
Is it easy to make deposits and withdrawals?
Making withdrawals and deposits is straightforward. Once you make a deposit your funds are available immediately. Making a withdrawal can take between three to five working days.
Can I trade using my mobile or tablet device?
As long as the broker has an excellent mobile platform or app, then yes, you can trade using a mobile device. You will be able to get a good feel for the website from having a look around and visiting a few pages.
Shelly is proud of her current position as Head of Brand for a well-known organisation that owns several brokerages in the trading sector. She’s consulted for us since 2015 and readers can benefit from her insider knowledge of how brokers work.