How Do Binary Options Brokers Make Money?
I’m sure you’ve wondered how do brokers make money before. Do they want you to lose and take all the money? With traditional trading it was clearer to me at first where the broker’s money came from – spread. That’s what I thought at least. When actually different providers take their cut differently. Some take a trading fee, some have a spread – the difference between buying and selling price. But when it came to binary options brokers it was a bit difficult for me to understand this at first.
This is where market makers come to play. Essentially binary options brokers doesn’t really care whether a trader wins or loses (that is if they are using a market maker). Watch out though – some brokers actually don’t use market prices and do just manipulate with the results. Always read the terms and conditions. For me knowing this about IQ Option took away some of the fear. If they don’t care whether I win or lose, they will not start doing dodgy business with the trades. And to be honest their market prices and movements correlate pretty closely to a different price provider’s. I use Metatrader 5 with Admiral Markets’ demo account for my tech analysis.
Your question now probably is – but what’s in it for the market maker? What is everyone suddenly starts winning. Unfortunately statistically that is highly unlikely. Most traders don’t have the knowledge or emotional skills to excel at trading. Too many people get into it for a quick cash but then don’t stick to money management rules. Some don’t even have a strategy. Trading is hard and requires a lot of learning and a strong mind. This is why 95% of traders fail.
If you want to start your trading success story, have a go at IQ Option’s free demo account.
Here are some tips that helped me perfect my trading game.
Affiliate Disclosure: I enjoy being able to bring you content free of charge. In order to keep doing this, please note that, if you decide to start trading with this broker after registering through one of my links, I will receive referral commission. I have not been paid to write this review and I only ever recommend products that I use and love myself. Thank you 🙂