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exbryan

Ways Binary Options Brokers Earn Money

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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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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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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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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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i dont know about binary, its like more o a final push this year, its not really that popular and have seen many close.. unlike forex in my opinion more stable, yeah many would look at binary as gambling..

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Watching binary option industry for almost one year i have concluded that this industry still require a lot of time to mature and in the meantime it will either subject banning due to a lot of traders complaints regarding binary options brokers.

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