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How Do Binary Brokers Make Money?
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Binary options are one of the trending and risky investment option. But it is trending because of the general human tendency. It is believed that more the risk, more the money. Therefore, it is one of the trending financial investment options. But there is a question that arises in the mind of all those who are aware of the binary options that if the Binary Options Brokers don’t charge fee or brokerage for trade, how do they make money? Well, It is no big secret, the simplest answer to the question is, when some trader loses money, the broker keeps it. And that is the sole reason why binary options brokers don’t need to charge brokerage or fee per trade.
Before we actually understand the procedure first let’s clear out that there are two kinds of brokers, Regulated/Honest and Unregulated/Dishonest Brokers.
First, let’s understand how Regulated/Honest Brokers make money:
An honest broker i.e. a licensed as well as regulated by the CySEC makes money based on the trading volume. The more the trader's trade, more they lose and more money is been kept by the broker. There is a reason the Binary Option is called risky, people either get more money on the invested money or no money at all. Another way through which brokers earns money is by giving their traders a bonus. The “bonus money” is just another sales trick which many regular traders no longer falls for. When a trader opens an account with a regulated broker, the broker’s salesman will offer him a certain amount of money as a bonus to “aid them to start trading”. But the problem is that the trader sometimes isn't aware that the bonus money will come with some terms and conditions. It is advisable that traders must read each and every term as well as conditions page for getting exact details. The biggest drawback of the bonus money is that there is will be trading volume requirement that will be anywhere from 15 – 50 times of the amount the trader has received as the bonus money.
Now let’s understand how Unregulated/Scam Brokers make money
Just as the contrary, the unregulated/scam binary options brokers are not registered with the CySEC can make money in a few ways. In order to create an impression that their proceedings are legitimate, they offer to help you make money. Then they will ask the trader to permit them to trade on their behalf and initially, will manipulate the software so that the trades they make will result as winnings. After that, the broker will automatically give a bonus to the trader which will result in locking up their deposited funds so that they can’t withdraw the deposited money. They will also place unauthorized charges on the trader’s credit card. Lastly, the broker will try to become your well-wisher or friend to build up their trust and get them to deposit $10,000. Everything seems okay with the broker until the trader asks to withdraw their money from their account, withdrawing money from an unlicensed or unregulated binary options broker is next to impossible. As they are not a scheduled bank or registered financial organization, the trader cannot just withdraw the money. All the withdrawals are processed manually by some broker employed clerk.
In the other scenario where the trader did not fall for their scheme to receive a bonus and the trader is eligible to withdraw the cash, the broker will make the withdrawal process difficult. Their employees will ask time for unnecessary verification paperwork and the salesman gets on the phone with the trader to convince the trader to deposit more money for some unbelievably awesome trading opportunity.
Thus, above were the ways how Binary options broker makes money. The best way to avoid all this and stay aware from the fraudulent brokers is by getting a good review of the broker from some genuine Binary Broker Reviews website and be safe in choosing the best broker.
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