Binary Options Brokers often advertise the fact that they have no fees or commissions. Most brokers in financial markets charge different fees and commissions per order. This is how they make money. How can it be that Binary Options Brokers don’t have any fees. Are they being deceptive in some way. If they don’t charge commission, how do Binary Options brokers make money? They make money because they collect 85-100% when you lose and pay out 65-85% when you win. Assuming you win 50% of your trades the broker will have made more money. In essence in order for brokers to make money they need you to lose.
This is in contrast to other types of financial brokers. For example when trading equities the broker takes a commission on all trades whether you win money or lose money. Since trading firms make money on each trade. they want you to make money in order to continue to make as many trades as possible.
Do Binary Options Brokers Want You to Lose Money?
Binary Options Brokers don’t WANT you to lose money, but they understand by the nature of the business that most will lose money. It is for this reason that they want as many people to open accounts and make deposits as possible. The reality of trading is that most people will not have the proper discipline and patience to be effective traders. This is the case with all types of trading. It’s a very difficult profession to learn, albeit extremely rewarding if it can be mastered. In fact many binary options brokers offer all types of training and strategies to help their customers to try and make money. In a previous article I explained why they would offer all this help if they need the traders to lose money in order to be profitable. Binary Options is an extremely competitive business with brokers fighting for depositors. They need to have successful traders in the industry in order to attract even more traders, so they do what they can to help their traders make money, understanding that in the end most people will not have the requisite skill sets to be profitable traders thus ultimately resulting in profitability for the broker.