How brokers make money with binary options ? - Page 2
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  1. #11
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    this is very simple
    the brokers make money when you lose money this is the naked true!!!

  2. #12
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    Quote Originally Posted by joe davis View Post
    this is very simple
    the brokers make money when you lose money this is the naked true!!!
    Sounds like the best approach would be not to lose money. Most people will fail at that, but it is NOT the brokers fault!

  3. #13
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    Quote Originally Posted by TheLastBear View Post
    Sounds like the best approach would be not to lose money. Most people will fail at that, but it is NOT the brokers fault!
    Then it simply means that its the gamblers fault...isn't it?

  4. #14
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    Quote Originally Posted by TheLastBear View Post
    Sounds like the best approach would be not to lose money. Most people will fail at that, but it is NOT the brokers fault!
    I agree with that. So many blame their brokers for losses.

  5. #15
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    Feb 2013
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    The truth is that most people loses their money because they gamble and not trading. You can make money with binary options if you wait for the right timing and never risk more than you can lose.
    You do trade against your broker - only one will win, but it's not a casino - if you are doing your homework and you do wait for the right moment you can earn a lot.
    The problem is that some brokers will not pay you back even if earned - that's why you must do a good research before you deposit and always start with a small deposit and try to withdrawal some funds before deposit a large amounts.
    From my experience the biggest (most famous) binary options brokers are the biggest scams!!!
    Last edited by mikeman; 05-01-2013 at 10:35 AM.

  6. #16
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    Apr 2013
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    On the broker side it's pretty much like forex.
    Some brokers are more reliable than others and you have to do your research.
    As for your concern that a successful customer can send them into bankruptcy don't worry as there are lots of things they will do to avoid that. From legitimate (hedging the positions) to pure scam (false quotes, requotes, cancelled orders,...). They may even terminate your account without a valid reason.

  7. #17
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    Oct 2010
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    Jacksonville, FL USA
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    Quote Originally Posted by Red Uku View Post
    I agree with your example. Based on this, how can even an honest broker make money if his clients are good traders ? Is binary options based on the same concept as casino ?
    Simple it is based like a casino. The difference here is in a casino the slot machines are set to pay out after so much is paid in. So you can make money if your timing is right on each machine. Card tables on the other hands are different but most of a casino is slots. So it is all betting.

    In binary options you are correct if you make money your broker looses money so it is not in there best interest for you to win. But you must always remember there is a reason there are so many advertisements out there. For every good trader there are 100 suckers that will more then fill what you make. Therefore regardless of what you make there are 100 suckers paying your tab. Once you start crunching there profits you will be booted. If you got a good broker they will give you your money and kindly ask you to leave. That is the same as a casino. If you make enough for them to notice you get free everything not to leave so you spend your profits there. Trust me they will serve you everything you want to get that money back. If you dont start spending that money and put it in your bags to take home guess what they will see that you go home.

    In the end it is the same concept but a big difference in the 2. In binary options you see the cards on the table and know your odds. Where in a casino you are playing a slot where it pays in more than it pays out (although you could win big but I doubt it) or your at a table where you dont know what the others are holding. If you get caught counting cards you will be booted.

    So some will call it a form of gambling but I dont. I dont trade binaries but you use technical analysis and your good at it. Hey 1 pip or 100 pips your paid. Not a bad deal. I will stick to my spot forex as I am used to it. Its the beast I chose to tackle and I have gotten pretty good at it (not a millionaire or anything). I am good with it

  8. #18
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    Quote Originally Posted by ronerown View Post
    On the broker side it's pretty much like forex.
    Some brokers are more reliable than others and you have to do your research.
    As for your concern that a successful customer can send them into bankruptcy don't worry as there are lots of things they will do to avoid that. From legitimate (hedging the positions) to pure scam (false quotes, requotes, cancelled orders,...). They may even terminate your account without a valid reason.
    I very much agree with what you said. I do think that if you trade with a good binary option broker, just like trading with a good forex broker, you should have no problems.

  9. #19
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    Mar 2013
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    Name:  image-788487004.jpg
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    talking with tradologic
    i will post more, when they answer me with more details

  10. #20
    Join Date
    Apr 2013
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    thanks you all for sharing your opinions.

    Quote Originally Posted by rawand View Post
    Name:  image-788487004.jpg
Views: 1459
Size:  71.9 KB

    talking with tradologic
    i will post more, when they answer me with more details
    This is very interesting rawand, yes please post more when they answer !

    I actually was wrong when at first considered return rates were fixed. The guy from tradologic said they manage the risk by managing the price of their options. Translated to binaries, the parameter they can adjust is the return rate. I looked at it as fixed per broker/per asset/expiration time, but they can (and probably do) change it whenever they want.

    If we bring the first example back and genelarize it from the broker perspective, we get something like this :

    raw profit = Sum,i,k(
    amount bet (i)
    * (1 - asset return rate (k) when out of the money) * is bet (i) out the money
    * (0 - asset return rate (k) when in the money ) * is bet (i) in the money
    )

    He just observes amount_bet(i), is_bet_in_the_money_(i) / (out) (=rate at which customers win or lose) and controls the two return rates. If he has enough client, those distributions will likely be gaussian (if not that doesn't change the problem). He can make the assumption that, let's say next week bets, will be disttributed the same as what observed until now. If distributions are gaussian (or any symmetrical) he simply use means to calculate what return rate will assure him positive profit.
    So yes, he not only makes money as long as return rates respect the expected ratio of amounts bet by options winners and losers, but also knows how much he'll make.


    Now the other aspect many of us are interested in : what if the rare case of a more-enough-than-average-trader occurs ? The broker will want to know the probability of a one his client winning millions (especially without having the symetric client who lost same millions).
    That's just the study of marginal cases.
    If the distributions are known, you can easily calculate the probality. He may also choose to insure himself against those cases. He may just choose not to be honest and not to pay this lucky client.


    In conclusion : the broker controls easily how much money he makes out of binaries. Clients making money is then not a problem. BUT the rare client making too much money is a problem for him. The threshold of what if marginal depends on brokers, and it'd be very interesting to learn more about those considered by brokers.
    Last edited by Red Uku; 05-03-2013 at 02:35 AM.

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