How brokers make money with binary options?

No trader can say for sure if he has entered into a wrong trade. As the markets can take a turn at any point of time. But then a good trader is one who will learn from his bad trades as well as from his past mistakes :slight_smile:

I think it depends on the binary option broker, the good ones earn when clients earn (just like good forex brokers), the bad ones want clients to lose in order to earn.

You are mistaking my friend - all binary options brokers are earning when the trader loose and loosing money when the trader wins. It doesn’t mean that they are “bad brokers”, you can make profits with them anyway. Bad brokers (I like to call them scams) are the brokers that will not pay you when you want to withdrawal your profits!

Well you do not know the inside things. These binary option brokers have a team that is trading against the traders so that the broker always remain in more than 50% wining.

The better binary option brokers employ traders who also trade the markets and generate revenues for them.

I don’t think it’s true - where did you get this information from?
How can the broker have a team of pros that trades against me if I’m the one who makes my trades???
I think that it is much more simple - the basic odds are more than 50% to the broker anyway. The max payout you get per trade is always less than what you risk - since most people have no idea not they are doing the odds are higher than 50% for the broker.

Very interesting discussion about binary option brokers.

Binary options trading is fixed odds betting. Literally, by randomly clicking on the call and put buttons, you have a 50-50% chance of wining. However, if you put some thought into it, in my experience, these odds simply have to change to your favour. Especially if you combine binary options trading with some of the known and proven strategies. In any case, it’s always up to you. My experiences have been great. About the percent of the trades that you need to win, it’s easy to calculate. And, honestly, not that hard to achieve. Just speaking my mind, do not mean to offend.

Options only look easy to make money but we do not have control over the market so it is much riskier than the forex market. Moreover these brokers are manipulating a lot and causing loss to many traders.

The risk is the same, those who know what they are doing will succeed others will fail. It depends on the individual and not the asset.

Couldn’t say it better my friend :60:

Exactly right, and the more you practice the easier it gets to achieve positive overall balance. And if there is something that internet is full of, it’s the different ways to learn how to trade binary options, such as tutorials, guides, FAQ’s, tips. Even the brokers get involved with binary options signals and demo accounts. Every trading success requires commitment.

They makes profit when you lose your money and they are unprofitable if you are making profit.

[QUOTE=“TanGIRL;489349”]They makes profit when you lose your money and they are unprofitable if you are making profit.[/QUOTE]

Not necessarily… Many brokers don’t actually trade against you, they either offset your position with another if their clients positions or they use liquidity providers.

They profit off the spread… And it’s to their advantage that their clients profit as that will increase the number of trades the clients make and the position volume, both increase the brokers profit from spread.

Seems interesting, can you explain a bit more ?

You are mistaking my friend. Binary options brokers don’t have spreads! so your theory have a big hole…
The only time the broker will not trade against you is when your trade (or a total of all current trades with same asset & direction) are to big for them to afford losing.

Yes, I agree with you. There is no success without commitment.

Before I got to know about MT4 I traded binary option and lost a lot of money. Will not recommend this type of trading and believe me I had a lot of training.

I enjoy MT4, SL, TP, BL,SL, more control over entries and exits. This type of trading is more structured, binary options are more related to a lotto ticket with numbers being drawn in the next 15min.

Remember trading is a business!

People, I think some of you are overthinking this. Binary options IS fixed odds betting. Nothing more nothing less. FOREX is variable odds betting nothing more nothing less. Now this statement could raise alot of eyebrows but its the simple truth.

Every gone into a casino and played roulette? You sit at the table, place a few bets, win a couple, lose a couple but hey you’re up so I’ll place a couple more bets and whammo, you lost your purse! Thats how casinos win. They get you to stay n play. Ever been pissed off at the punter who comes along, watches the table, makes his move, wins and leaves. Thats cause he knows that the only way to bet the casino is to get in and out. No different to binary options. The broker knows that the longer you stay n play the greater the chance of you losing your kitty. So if you want to trade binaries then learn a lession from the pro gamblers. Watch the markets, wait for the trade, make your profit and run. Run for the hills cause if you stay n play you’ll loss it all.

Now with that said, what do the binary option brokers do with all that money sitting in their clients account. Well they dont let it sit there and do nothing. They invest and make alot more money. And they are collecting a hell of alot of market sentiment data from each n every trade so they are better placed to make informed trade desicions. So they can double dip their profits making a nice fortune.

So if you decide to go binaries my advice to you is to hit n run cause the bank wins in the end. And for those of you interested I have been a binary convert for the past couple of months

I have been trading binaries since last year and while I do not agree with your gambling reference I do agree with your hit and run statement. I only place two or three trades per day and (especially) if I get two trades right for the day I am done. It’s a nice way to earn some extra cash. Those who keep trading will end up the day with losses in most cases.