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How do Binary Option Brokers Make Money?

How do Binary Option Brokers Make Money? Is perhaps one of the most mysterious and interesting questions, when it comes to online investments. Many binary options traders are trading binary options online on a daily basis, without having any clue regarding how do the broker they put their trust and money with is making his money.

Binary trading is one of the most lucrative businesses online and a large number of people are getting more and more inclined towards investing money with binary options. The Binary industry have come a long way since it’s early days way back in 2007. Nowadays, more and more brokers are regulated, unlike in the past, when regulation was not yet mandatory for binary brokers.

Apart from Regulation, there are way more trading knowledge among binary traders, in the sense that, there are more traders who know more about binary trading, which decreases significantly the number of traders who lose their whole investment in a very short period of time.

But still most binary options traders do not know How do Binary Option Brokers Make Money? How exactly do the brokers fill up their pockets? This question still bothers many investors who are concerned about the safety of their investment.

how do binary option brokers make money

The Big Secret

After a profound research we have been doing for quite some times now, we are 100% fully confident that the only way for Binary Options Brokers to earn money, is via YOUR LOSSES!

Yes, as much as it is hard to believe, binary brokers need you to LOSE, in order for them to PROFIT.

Binary Cash Flow System

It all starts from the Binary brokers, which are functioning as “Market Makers”, meaning they control everything, quite similar to casino houses in the sense that everything stays under the same rooftop. The traders investments are all being kept and held in the same bank account that the brokers are using for their own expenses. The brokers are using the money to keep the machine going, by paying salaries to their sales people as well as promoting the binary brand in order to attract more and more innocent traders.

Money

As I started to explain, due to the fact that all binary brokers are acting as market makers, money does never go out to the real market, it all stays in the same place, the broker’s bank accounts, and I can assure you that they have all the interest in the world to keep it there. That is mainly why it is very hard to withdrawal money out from the brokers, yet tremendously easy to make a deposit.

More loosing traders, means more money in brokers bank accounts.

Expiries

The different expiries that are being offered to the traders  are all artificially created by the brokers, 60 seconds, 1 hour, 1 day or any other expiry they come up with. So in other words, they decide when will the trade be over, what allows them to control their risk management perfectly as they know constantly how many traders are trading on each asset and for what direction. So as part of their risk management, in case there are too many people trading on EUR/USD down, on a certain expiry, they can simply block that option for a certain period of time or to allow only to trade it up.

Rates

The Brokers are the ones who control the assets rates, they might still get them get the rates from Reuters, Bloomberg or any other 3rd party who provides real time rates, but it does not change the fact they have full control on the displayed rates and that they can change them as much as they want and to who ever they want.

how do binary option brokers make money 2

Conclusion 

After all being said, It is true that binary trading offers a huge potential of earning a high level of profit within a very little time but traders should be careful about who they trade with and how much they are willing to risk. We highly recommend you to trade only with regulated binary brokers as than your funds are a bit more protected. 

–> For part 1 of this article Click here