How brokers make money with binary options?

I agree with that. So many blame their brokers for losses.

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!!!

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. :31:

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

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.


talking with tradologic
i will post more, when they answer me with more details

thanks you all for sharing your opinions.

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.

When it comes to trading it means that it is the trader’s fault. The trader analyzed the trade and place the order, identified levels so the trader is to blame and not the broker for allowing the trader to place a trade.

I agree with TheLastBear - when a trader loose a trade he should only blame himself. I also think that some brokers are scams , but it doesn’t mean that we can blame them for the mistakes we make.

[QUOTE=“Red Uku;484995”]thanks you all for sharing your opinions.

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.[/QUOTE]

i talked also with spotoptions to become a partner
he said that when clients lose you make money
i said what if clients make more than i have
he said thats why you should have at least 150 customers a month, to make balance between losers and winners
if you talk with bancdebinary which are spotoptions partner
they will say that we make money when clients make!!!
i don’t trust any broker for binaries
if you want to open account
there is a large broker who provide binaries
IG MARKETS
they have custom options>fast options
i couldn’t talk to them because they don’t accept clients from my area
i like to trade very fast
they offer 2 min trading options same as binaries
but my question is
does that mean we can trade every 2 min
or it depends on their expiry time?
the didn’t answer me because of the same reason
are you interested in trading binaries or you are just looking for researches ?

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.