Can University Students Trade Binary Options? A Complete Guide to Age Requirements, Tax Tips, and Parental Concerns

Many university and high school students are interested in binary options. However, before getting started, you may have questions like "Can university students actually trade binary options?" or "What about tax dependents and taxes?"

In this article, we explain age requirements, taxes, and dependent status for university students looking to start binary options trading. Tax reform has changed the requirements for the working student deduction, so please read through to the end.

Can University Students Trade Binary Options?

In short, university students can trade as long as they meet certain age requirements. Here we explain the differences in age restrictions between domestic and overseas brokers, and whether high school students can trade.

What You'll Learn in This Section

• University students can trade from age 18 depending on the broker
• Whether 18-year-old high school students can trade varies by broker
• Domestic and overseas brokers differ in age restrictions, regulations, and tax treatment

The Verdict: Overseas Brokers Allow Trading from Age 18

Binary options brokers are broadly divided into domestic and overseas, and each has different age requirements for trading.

• Overseas binary options: Generally available from age 18 (varies by broker)
• Domestic binary options: Generally available from age 18 (varies by broker)

Previously, many domestic brokers required traders to be at least 20 years old. However, following the 2022 civil code revision that lowered the age of majority to 18, binary options trading is now generally available from age 18. That said, some brokers still set their own rules, such as requiring traders to be 20 or older.

Overseas binary options brokers also generally allow account opening from age 18 and above.

Differences in Age Restrictions Between Domestic and Overseas Brokers

In addition to age restrictions, domestic and overseas brokers differ in tax treatment, trading rules, and various other aspects.

Domestic brokers are supervised by the Financial Services Agency (FSA) and are subject to strict regulations designed to protect investors.

Can 18-Year-Old High School Students Trade? Practice with Demo Trading

Since the requirement is 18 and above, you might wonder "Can high school students who are 18 also trade?"

The answer depends on each broker's rules. For example, many overseas brokers allow account opening for anyone 18 or older regardless of occupation, but the treatment of high school students varies by broker. Please check each broker's terms of service to confirm whether 18-year-old high school students can trade.

Until you meet the age requirement, we recommend practicing with demo trading. Demo trading is a simulation service that lets you practice trading with virtual funds without using real money. Many binary options brokers offer demo trading for free without requiring account registration.

With demo trading, you can mainly do the following:

• Learn how to operate the trading platform without any risk
• Experience the flow of trading and time management
• Practice and test technical analysis (indicators, etc.)

Before you meet the age requirement and start trading, make sure to build your trading skills and experience through a demo account.

Benefits of Binary Options Trading for University Students

Starting binary options during university is a great opportunity because students have more free time and financial flexibility. Here are three key benefits of binary options trading for university students.

What You'll Learn in This Section

• Students have ample free time, making it easier to study and practice investing
• Develop interest in economics and current events, which benefits future career and job hunting
• Start with small amounts (from a few hundred yen) compared to stocks or FX, with minimal initial costs

Make the Most of Your Time

A university student's greatest advantage is having plenty of free time. Binary options have relatively easy-to-understand rules and don't require large capital like futures trading, so you can start with just pocket money.

There are also smartphone apps available, so you can trade during commute times or university breaks. University students can flexibly use time between classes or around club activities, making it easy to balance trading and studies.

Additionally, gaining investment experience during university helps with asset building and understanding economic news even after entering the workforce.

Develop Interest in Economics and Society

After trading binary options for a while, you'll realize that you can't easily win on intuition or luck alone. This is because the underlying assets of binary options, such as currencies, are closely linked to politics and economics. Exchange rates don't move randomly — they are closely linked to global events and the world economy. These large-scale factors affecting markets are called "fundamentals."

Through binary options trading, you'll naturally become interested in economic news and global affairs. This knowledge will be useful in university classes and seminars, and may give you an advantage in future job hunting.

Low Setup Costs

Binary options don't require much in setup costs. If you don't have a computer, you'll need to purchase one, but high-end specs aren't necessary for trading. You can also trade on your smartphone, though having a computer is advantageous.

Many brokers also allow minimum trades starting from a few hundred yen, which is another benefit of learning to invest with small amounts. Compared to stock or FX investing, initial investment requirements are low, making it easy to start with money saved from a part-time job.

Important Considerations for University Students Starting Binary Options

When starting binary options as a university student, there are several important considerations regarding financial risks and the danger of scams.

What You'll Learn in This Section

• Treating binary options like a part-time job is dangerous — approach it as a serious investment
• Never fall for fraudulent solicitations promising "guaranteed profits" — heed FSA warnings
• Borrowing money to trade can lead to financial ruin and must be absolutely avoided

Treating It Like a Part-Time Job Is Dangerous

Many university students mistakenly believe that "binary options = guaranteed income." Treating binary options like a part-time job is extremely dangerous.

While binary options are easy to start, they are a legitimate form of investment with inherent risks. Without proper analysis and thorough capital management, your mental health can quickly deteriorate.

Trading while mentally distressed can lead to desperately trying to recover losses after a defeat. To avoid this, thorough preparation and capital management should be established before you begin trading.

Warning: Beware of Suspicious Solicitations Targeting University Students

Scams and suspicious solicitations targeting university students are increasing through social media and university communities. Fraudulent operators approach with sweet promises like "guaranteed profits" or "grow your money with zero risk."

The Financial Services Agency (FSA) has issued the following warnings regarding binary options trading:

Source: Please Be Cautious About Binary Options Trading! (Financial Services Agency)

Never fall for sweet promises like "easy wins." Building proper knowledge and analytical skills on your own is the best defense against fraud.

Beware of Financial Ruin

In the world of investing, some people lose their composure trying to recover losses and end up making things worse.

• Borrowing money from parents or friends to trade
• Turning to consumer finance companies
• Applying for suspicious jobs to get trading funds
• Getting involved in binary options fraud schemes

Binary options should only be traded with surplus funds, and should never involve dipping into living expenses or tuition fees.Never borrow from consumer finance companies or apply for dangerous jobs. Making poor decisions out of desperation for trading funds can ruin your life.

Taxes on Binary Options for University Students

Even university students are subject to income tax on binary options profits. If your profits exceed a certain amount, you'll need to file a tax return, so understanding the basics of taxation is important.

What You'll Learn in This Section

• Even students' profits are subject to income tax and may require a tax return
• The threshold for filing is 200,000 yen or 480,000 yen depending on whether you have a part-time job
• If annual profits exceed 480,000 yen, you may lose your parents' dependent deduction, increasing their tax burden

Tax Returns Are Required When Annual Profits Exceed 200,000 Yen

Whether you need to file a tax return depends on whether you have other income (such as from a part-time job).

Note that the above are guidelines and may not apply if your annual income exceeds 20 million yen or if you are a sole proprietor.

Additionally, binary options profits are taxed differently depending on whether you use domestic or overseas brokers.

• Domestic brokers: Separate self-assessment taxation (tax rate 20.315%)
• Overseas brokers: Comprehensive taxation (classified as miscellaneous income)

Profits from overseas binary options brokers are treated as "miscellaneous income" and subject to comprehensive taxation (progressive tax rates) combined with salary income and other earnings.

Note that the "200,000 yen" and "480,000 yen" thresholds refer to income, not revenue. Income is calculated by subtracting necessary expenses (computer costs, internet fees, information subscriptions, etc.) from revenue (total binary options profits).

For example, even if your total profit is 240,000 yen, if expenses are 50,000 yen, your miscellaneous income would be 190,000 yen, meaning a student with a part-time job wouldn't need to file a tax return. You must keep receipts for expenses claimed. Consult a tax office or tax accountant for detailed guidance.

At What Amount Do You Lose Your Parents' Dependent Status?

Whether you can receive your parents' dependent deduction depends on your total annual income.

If your total income exceeds 480,000 yen, your parents may no longer be able to claim you as a dependent for tax deduction purposes, which could increase their income and resident tax burden. If the situation is borderline, consult your parents' employer's year-end tax adjustment office or the tax authority.

Dependent status determination can vary based on parent's year-end tax adjustment and income level, so consulting a professional is recommended.

Does the Working Student Deduction Apply?

The working student deduction is a system that reduces income tax for students at designated schools who earn "income from employment" such as part-time jobs.

The conditions for qualifying for the working student deduction are as follows:

• Must have income from employment such as salary
• Total income must be 850,000 yen or less (*Note 1), with non-employment income not exceeding 100,000 yen
• Must be a student at a designated school

Binary options profits do not qualify as "income from employment." Furthermore, if "income other than employment income (such as binary options profits)" exceeds 100,000 yen, this deduction cannot be applied.

In other words, when university students earn substantial profits from binary options, they generally cannot benefit from the working student deduction in practice.

*Note 1:
Previously, the working student deduction required a total income of 750,000 yen or less, but from fiscal year 2025 onward, the upper limit has been raised to 850,000 yen. Please check the National Tax Agency's guidance for details.

Reference: FY2025 Tax Reform Q&A (Revision of Basic Deduction, etc.) (National Tax Agency)

Conclusion

Starting binary options during university is an opportunity to gain investment experience with ample time and small amounts. However, since there are few constraints, lack of self-control can lead to addiction or financial ruin, so caution is needed.

Also, due to tax reforms, deduction requirements have changed from previous years, so make sure to check the latest information regarding taxes and dependent status.