How binary options brokers earn their living 06/12/15


The recent form of investment known as binary options trading has become widely accepted in the world of finance. There is a lot of concern at present surrounding the way in which brokers actually operate due to the fact that the matter of trading assets relies more on intuition than on science and that binary option brokers do not work in the same way as traditional brokers that invest in the stock market. If you are not sure whether a broker like 24option is legit, you can always view a 24option signals review and be ensured. It is not really a mystery how binary options brokers work.

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Binary options price

Binary options brokers have knowledge of prices and price structured from liquidity providers. As a general rule, the price of the binary options differs from the price with which the binary options are traded in the market. The process of trading binary options involves making a research into the price of the assets that are being displayed on the trading platform. The expected payout in dollars and cents is retained by the broker and this is considered his commission. Correctly predicting the movement of an underlying asset is the only way that the investment will pay off. If the initial investment is lost, the sum will go straightly into the broker’s pockets. The broker actually makes money due to the fact that many people lose trades and this happens due to the lack of patience. Traders are even allowed to trade against each other.

Trading assets

Brokers do not have the power of manipulating the market, they simply do some calculations. In addition to this, they are helped by technology such as trading software and online trading platforms. The active investment activities of their clients are what mostly help them make money. Another way in which brokers make money is by actually designing trading platforms themselves. Generally speaking, the returns that a broker gets depend on his skills and the fact that many will also lose in the process means that the odds are in his favor from the beginning. However, in order to handle an investment brokers charge fees to handle the investment account.  Traders do not have to pay high commissions, but brokers are entitled to a certain percentage of the win.

In conclusion, it can be mentioned that many binary options brokers engage in scamming clients as a means to get money. Although not many, those who actually do this are not caught due to the fact that they do it in a legit way, knowing how to manipulate the system. Brokers do not have the easiest job in the world, they risk very much when they speculate on prices. Although they can mathematically calculate the prices of assets, the calculation is only an approximation. Basically, the job requires a lot of experience in the field and the ability to replicate certain positions on the market. Many brokers have high standards binary trading is rather a profession than an occupation.