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Old 06-16-2013, 07:33 AM   #1

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Ways Binary Options Brokers Earn Money

I have been collating information for my new website. One of the things I want to research is 'How do Binary Options Brokers Earn Money'. This topic will put an end on the following topic and will give traders a new insight on how binary options works.

Is Binary Options a Scam
Is Binary Options a Gambling



So here are the information I collected. Brokers make money from their customers by the following ways.

One of them is from people trading live. For example there are 10 clients. The 5 trade $10 that the EUR/USD currency pair will drop within the next hour. The other 5 traders invested $10 that the EUR/USD will rise within the next hour. By now, the total amount of money pooled on the EUR/USD is $100, $50 on Put and $50 on Call. Finally, we find that the EUR/USD did fall leading to 5 traders to close in the money. Assuming the payout ratio for the EUR/USD is 70%, this mean for those who bet on the EUR/USD to fall, they will each get back $17. The broker has to pay out $85 to those who close in the money. If we subtract the payout from the total market pool of $100, there will still be $15 left in which the broker can get from this trading.
Another way which binary options brokers earn is by offering prices that reflect actual market prices. It means that prices had already been marked up by the brokers after they obtained the initial pricing from their liquidity providers.



If you know other ways Binary Options Brokers earn money, please do not hesitate to reply on this thread.

Thanking you in advance.
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Old 06-16-2013, 10:49 AM   #2

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Re: Ways Binary Options Brokers Earn Money

Why somebody should try binary options trading?
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Old 06-16-2013, 11:40 AM   #3

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Re: Ways Binary Options Brokers Earn Money

maybe it will let me post here. msg me if u have any questions, i am a young trader as well and have seen both sides of the binary options game.
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Old 09-15-2016, 10:41 AM   #4

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Re: Ways Binary Options Brokers Earn Money

It is no news that the way Binary Brokers make their money is simply keeping the money of traders who lost. A report was put out last year with data from binary options trader in Japan showing that 85% of traders lose their money! That means that it is very profitable to be a binary options broker. There is still that 15% of traders, who manage to take money out of the broker.
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Old 09-15-2016, 10:43 AM   #5

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Re: Ways Binary Options Brokers Earn Money

How Scam Brokers Make Money
The ways that scam binary options brokers make money are a few ways.

In order to provide a facade that they are legitimate, they offer to help you make money. The will get your permission to trade on your behalf, and manipulate the software so that your trades are winners.

The broker will give you an automatic bonus, thereby locking up your deposited funds so that you cannot withdraw it. They will place unauthorized charges on your credit card.

The broker will become your best friend to build up your trust and get you to deposit $10,000.

Everything will seem fine and good with the broker until you ask to withdraw your money, and then the problems start.

Withdrawing money from an unlicensed and shady broker is almost impossible. Since they are not a bank, you cannot automatically withdraw your money. All withdrawals are processed manually by a clerk.

In the event that you did not receive a bonus, and you are eligible to withdraw your cash, they make the process difficult. They start asking for a ton of verification paperwork. The salesman gets on the phone and starts pitching you to deposit more money for an unbelievable trading opportunity.
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Old 09-16-2016, 06:37 AM   #6

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Re: Ways Binary Options Brokers Earn Money

Isn't there any means they could make profit except from the lost of traders? I really don't know, but there should be. If not, then all brokers are scams. Regulated or not.
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Old 09-16-2016, 10:06 AM   #7

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Re: Ways Binary Options Brokers Earn Money

Binary options is not a bad tool itself - it's just that they're to easy to be manipulated by frauds and scammers.
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Old 10-13-2016, 05:38 AM   #8

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Re: Ways Binary Options Brokers Earn Money

Quote:
Originally Posted by JoelDarr »
Binary options is not a bad tool itself - it's just that they're to easy to be manipulated by frauds and scammers.
In my opinion binary options trading has introduced a new approach on trading options in a new way and they can be good tool to hedge against forex trades as well. However there are still a lot of traders complaints regarding binary options scam brokers so i guess we need to choose our broker wisely by looking at their repute as well as traders' insight which can be checked online on many reviews sites like forex peace army etc.
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