Option trading tips: about brokers and their money
To many of you for sure a logical question has come to mind – how binary option brokers earn their money? As we know, in this kind of trading there is no spreads or commissions, but still there is something these companies have to earn on.
For a start I will say that I, too, like all suspicious traders, was leery of the issue, was looking for the catch, and believed that the binary option brokers just have to cheat you to have a profit.
However, as it turned out, it’s much easier. If you think about it, if our forecast is correct, we earn only about 80% of our investments, but if we are wrong, our investment is 100% goes to the broker.
Thus, the binary option brokers have a good difference of 20% of our winning and losing bids. But that is not all. Things would have looked this way if all traders from around the world made 50% winning trades and 50% losing trades. But this is not the case. A lot of people contacted us asking to teach them to make money on binary options, we saw that they had the desire and were willing to learn, but nevertheless, not all of these people eventually were able to make a profit. I would say that among the people I know (my friends and the people who contacted me) not more than 35-40% make money on this form of trading, so the binary option brokers not only have benefits from the difference between profitable and unprofitable deals, but also get the additional revenue for the reason that I described above.
But then a new question arises – why do brokers open learning centers, conduct training webinars and strongly promote to the fact that traders earn? All the matter is in the law of balance conservation – they just need to keep a large percentage of successful traders, as they are a walking advertisement – their friends see how successful they are, there are more reviews on how people have earned on binary options. All of this serves as a good incentive for more and more people who want to try their hand at binary options.
Thus, binary option brokers, not only are not interested in the loss of the traders’ majority (as it is suspected at first by most of traders), but also do everything possible to maintain a healthy balance and to help a large number of traders to make money on the binary options.
As an indication of a real broker their permanent offers to make big bets can serve. The higher the value of the option, the more assets may be acquired or disposed by the broker. Also, the actual brokers are constantly updating the list of options, and by filling such a list a trader can judge on the work plans of the broker.
What kind of brokers to work with – it is up to you to decide. The main thing for the trader is the presence of acceptable conditions of work: fair terms of the transaction, the timely payment of profits and the absence of unexplained charge and unmarked commissions. Successful transactions to all of you!
That’s all for now. Got any questions? Just ask the expert!