Understanding How Binary Options Brokers Make Money

Many people do not really understand how binary options brokers make money since they do not charge for commissions. These brokers have numerous ways to make money although payout percentages account for a majority of their earnings.

Profits with Minimal Risk

When you work as a binary options broker, you can make almost risk less profits. This is possible thanks to percentage payouts that they receive from trades and also from trading with clients. Renowned binary options brokers have very many clients. Despite the number, about half of the traders believe an asset’s value will go up while another half thinks it will go down. If the trend is strong enough, the numbers may vary in both directions. In most cases, the number of put and call buyers ranges between 40% and 60% with a 50-50 average over time.

As the trades take either side, the brokers then make their money. To make this even easier to understand, consider a broker who has 100 clients with 50 buy calls and another 50 buy puts. When the option’s time runs out, the winning 50 get their 80% payout together with what they had invested. The other 50 lose their money. Assuming that each trader had invested $100, the broker gets $5000 from the losers. From the $5000, he or she pays out $4000 to the winning traders and keeps a cool $1000. That is why this is an almost risk free venture.

This above is just an example of how trades may look like. However, the real world is more complex although the scenario is more or less the same. You will definitely not get a 50/50 division between call buyers and put buyers. To maximize their profits, binary options brokers want to have very many clients trading with lots of assets. Furthermore, having more clients means that they will have many options being traded. This takes them close to the 50/50 scenario that maximizes their profits.

If multiple assets are actively traded and the broker has to pay out more than he or she received from the losers on one option, other options will compensate for this. This iterates the importance of having many clients who are trading in many different options. With a large number of trades, the broker will always have a mathematical advantage and with time, the brokers can take home a payout of between 60% and 80%.

Who Do Brokers Trade Against?

It is common to think that binary options brokers trade against their traders. Although they have their other trades, they work best when they play the role of middlemen. As middlemen, they can make money without really taking opposing positions with their clients. Furthermore, this takes away risks associated with being on the losing side and thus saves them money while minimizing their risk factor. Being on one side could also tempt them to undertake unscrupulous tactics to win, something that is not good for business.

Looking at this, the best brokers are those that rely on the difference between payouts to make money instead of taking opposite sides. Furthermore, there are clients on both the winning and losing end and the broker can only be engage them well if he or she is neutral.

Others Ways Brokers make Money

Apart from options, brokers also make money through miscellaneous fees paid by their clients. Many of them have withdrawal or account management fees.

They also get interest from deposits made by their clients. When you give the broker money for deposit in your account, you will not get any interest but the broker can make money from your money and pocket the interest. This is in fact a good way to make money if the clients make huge deposits although having more clients also helps collect a sizeable sum.

Final Remarks

In most cases, binary options traders make most of their money from the difference between the put and call buyers. They also make some money from service charges and interest earned on deposits. Although it is possible for them to take sides, it is always prudent that they remain neutral which is the norm. By bringing call and put buyers together, they can collect near riskless profits. There, understand that your broker will do simply sit back and watch the different assets and trades fluctuate knowing that at the end of the day, he as a percentage to take home.

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Finding the Best Binary Options Brokers

Binary options is the most popular way of trading currency pairs and other precious commodities in the financial market. This explains why the internet is full of binary options broker sites that purport to give you the best tools and resources to get started. But at the end of the day, it all narrows down to reliability and how equipped they are with all the resources you need to enhance your trading experience.

Binary-Options-TradingThis is not to say that there aren’t any honest binary options brokers on the web. In fact, there are quite a dozen of those. It only takes a little investigation to know whether or not they are honest. For instance, you need to know where they’re situated, their customer support and also how people are talking about them.

If people seem to raise a genuine concern about a particular binary broker, perhaps it should be true to assume that no smoke is emitted without fire.

With respect to this, we’ve cut the long chase for you by hand-picking only the best and reliable binary options brokers on the internet, like 24option. Every broker has undergone thorough scrutiny, and this is a guarantee that you will get what they promise. So whether you want to get started now or some time in the future, rest assured that these brokers are among the most reliable you will ever find.

Also, all the sites here have obtained the required license to trade binary options. This is one way of knowing upfront that a broker is reliable and is conforming to the regulations which guide binary options trading.

Trusted Binary options brokers

Picking a random binary options site is like gambling with your money. You risk learning the hard way when it’s too late to get your money out of their reserves once you’ve made that initial deposit.

By trusting sites that are listed here, you’ll be safe from falling in the hands of poorly-run sites that don’t tick all the boxes highlighting customer ideals. It’s in your best interest to only do business with a trusted binary options broker.

Once again, you should never fall for a binary options site simply because they are offering a huge bonus. This is a trick that many sites are now using to lure unsuspecting customers. They know that if they give a huge percentage, you will overlook all the other things they are not offering. Again, this is too dangerous where your money is concerned.

Reliable sites offer asset trading, currency pair trading as well as precious metal trading. Variety is what most customers want.

Simply put, our site has the finest and most trusted binary options broker sites in Australia. In light with this, looking elsewhere would put you at risk of coming across a site that is not very reliable.

Legitimate brokers

You should prepare a list of the best features you want to see in a good broker. The following hints should give you a clue as to what you should look for:

(a) Range of purchase limits

Again, consumers want variety because with variety, they can find something they will afford. In binary options trading, the same thing applies. You want to work with a broker that will offer you different volumes of binary options trading. This will allow you to trade as little or as many binary options as you want — of course breaking them down into affordable volumes suitable for every trader’s pocket.

(b) Multiple payment platforms

They must be able to support a payment option that you’re most comfortable with. Sometimes it’s frustrating when don’t know how to make deposits simply because the broker is not supporting your most-preferred platform.

This also amounts to convenience anyway. So if they can’t give you the convenience you need, know that there are other disappointments lurking in the horizon.

(c) Limits

You should not trade with brokers who insist on putting limits to profits you can make from a trade or the amount of money you can withdraw at any given time. It’s your money and sweat, so no one should impose restriction on what you’ve worked for.


Be sure to keep those points in mind when seeking a reliable binary options broker. As long as they can tick most items in your check-list, there is no cause of alarm to worry about. However, if they fail in most parts, perhaps you should drop them.

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