How Do Binary Option Brokers Make Their Money?

There are currently two business models for binary options that power the industry. The Single Market Maker (European) business model, which is mostly regulated by CySEC, as well as the US exchange model.

You probably know all about what we will call “CySEC” model if you’re in Europe, and you’ve got a bit of binary option experience under your girdle. The broker acts as the sole price manufacturer and trade against its own customers in this business model. The setup remembers a casino where the bosses play the house. The same goes for traders in every single trade they take up against the house. This setup clearly reveals the conflict of interest and the potential for fraud. The broker mainly opposes the trader, on a separate turf, under a set of rules laid down and implemented by him. This is precisely the reason why the US authorities have not allowed such trade in the country to take root, and why the EU authorities are increasingly frowning on this establishment as well.  The model “CySEC” is dangerous for brokers to have a vast range of fraud opportunities, and certain of them are actually taking advantage. They manipulate prices, cause a loss of businesses and offer bonus traders never hope to make a profit. Some of these practices are performed by brokers who are also authorized and otherwise regulated.

Inherently fairer is the exchange business model employed by all US licensed agents and also by some of their European counterparts. Traders act as market manufacturers in this kind of arrangement, which means that price prices are based on dynamics of supply and demand. The downside is, of course, that there is no pricing for the underlying assets that do not attract enough interest. Traders trade against their peers and not the “house” via exchanges such as NADEX and DAWEDA. This means that there are no reasons for the exchange operator to take unfair action, thereby skewing the trade equation one way or other. Whenever a trader wins a trade, he takes money lost by another trader home. When a trade enters, as well asupon trade expiry, the exchange cuts a commission from the winner. This means that the exchange is in constant turnover while traders are on an equal footing.

The most creative and at the same time the most disgusting practices of brokers are those in the “Wild West” binary option trading industry which can easily be called. These brokers are not licensed and regulated and do not respond in any form or form to any authority. As such, the unfortunate traders who fall for their charades, whenever they feel fit, have the freedom to blow their hands. Indeed, such scammers can become very creative and stop at nothing. One of their favorite tricks is to give traders an account manager who will then deal “in the best way” with the money of the victim. In this case, the optimal reference to traders ‘ scamming is sadly so that those who fall for such “offers” inevitably see their accounts always loosened. These fake account managers ‘ standard MO is quite unhealthy. Firstly, they “win” a couple of trades for their customers, persuade them of their potential and seeds of greed. They then directly contact them and try to persuade them to deposit, promising great profits. The clearing of accounts by traders begins seriously if they draw the line and refuse to comply. When you try to make a deposit, you will be asked to receive several documents and, as the money disappears from your accounts, all communication will be cut back with you.

These brokers will also persuade traders to apply for’ generous’ bonuses, which will be used later to justify their refusal. Cases occurred in which gullible victims of such textbook extorting schemes borrowed from home to secure. In this regard things can degenerate very fast, so it is always advisable to wish-based traders to avoid unlicensed brokers.

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