How do binary options brokers make money?

What are binary options?

The word binary itself means two ( 0’s & 1’s ) Where you have two options.

One is where you have the option to buy and the Second option is to sell.

Sometimes it will be by the name of buy or sell, up or down & call or put 

Now here you are given only two options. You are given a particular time frame. Within a particular stipulated time frame. 

Let’s say you’ve selected 5 minutes. Within 5 minutes, you have to tell whether the market will go up or down. 

And according to that, a return rate or percentage is mentioned that if the market goes in the direction of your trade then you will get a profit of 90%, 80%, or whatever was mentioned at the time of entering the trade

This means if you have invested $100, then you will have a profit of $80 or $90. 

There’s one more thing in binary options as to why it is called binary options. That is because you have two outcomes in this. There are two outcomes. You will either book a profit or a loss of capital.

How much will be the profit in Binary Trading?

The profit is mentioned at the time of entering the trade. Let’s say you are on an asset called USD/BRL OTC. This is a particular asset. You get many such assets. Commodities, currencies, crypto, stocks, there are many such options. 

You simply have to analyze and predict whether the market will be bullish or bearish ( meaning whether it will go up or down ) You have to analyze the online market, and you have to learn and examine the chart patterns after that, you get two such buttons ( up & down ) You have to select a time from the “Expiry time” section. 

Options like 1, 3, 5, 10, and 15 minutes are given to you Accordingly after selecting the time, all you have to do is to predict whether the market will rise or fall by pressing the up or down button At the same time, you can see a return rate of 92% on the asset ( USD/BRL OTC )

This means that if your trade turns out successful you will get a return of 92% on the amount that you have entered the trade with Suppose you traded on USD/BRL with the condition of going upward for 3 minutes 

So you select 3 minutes and press the up button. And if the market goes up, then you will get a profit of $92 on every $100 you invest. This is a Binary Options form of trading.

By selecting an expiry time, you have to analyze the market and tell whether the market will go up or down. But what you don’t know is how Binary brokers work and make money Many people ask me how Binary Options Brokers earn money 

How Binary Options Brokers Make Money?

Suppose there is a person named Ram and another person named Shyam. I am using fundamental names. Ram thinks that the EUR/USD chart will go up for the next 5 minutes. 

Whereas, Shyam thinks that the EUR/USD chart is going to Fall & go down in the next 5 minutes. 

Let us suppose there are 9 more people with Ram who think that the market will go upward and accordingly they enter an upward / call trade 

Similarly, Shyam and 9 more people think that the EUR/USD will fall and go down for the next 5 minutes So Shyam and the other 9 people enter a downward trade with 10 dollars each ( 10 trades of $10 ) 

Similarly, Ram and his friends put 10 trades of 10 dollars in the upward direction Now what is going to happen is one of the predictions will turn out correct and will get a profit whereas one of the predictions will turn out wrong resulting in a loss 

Let’s assume that Ram won and Shyam lost The market went up and resulted in a loss of Shyam and 9 more friends with him How much did they lose in total? 10 people entered trades with 10 dollars each meaning a total loss of $100 At the time of entering the trade, a return rate of 80% was shown on the asset they were trading on Ram and 9 more people collectively invested $100 and the return rate is 80% so how much will be their profit? 80% of $100 is 80 dollars. 

This means their profit is 80 dollars Now where does this 80 dollars come from? It comes from Shyam and his friends. 

The loss of Shyam’s team here was 100 dollars of which 80 dollars is given to Ram and other people And the remaining 20 dollars is the income/commission of the binary options broker

Now let’s say it is 90%, Then 10% will be given to Binary trading broker. Or whatever broker you use will get it. So this is how Binary Options Brokers work. And this is how Binary Options Brokers make money.

Conclusion

In every trade and chart, there are people with different opinions and analyses.

Some people think that the market will go up. Some people think that the market will go down. 

One of the two will turn out wrong and will have to bear a loss The loss of 1 person is transferred to the person with the profitable trade The percentage that is left in between, As you might have seen, Binary Options usually have a return rate of 80-90% It will be 80%, 82%, 84%, 90%. Usually around this number Sometimes it is even as low as 70 or 75%.