Joa, if you really want to keep dragging your own thread off topic by trying to convince people that all forex brokers are B booking and your favorite binary brokers aren't, fine.
You weren't the only one condemning Crown Forex when it went bad. Just because one well respected forex broker ended up being a scam doesn't make all forex brokers scams. Just because one binary broker doesn't cheat doesn't absolve other binary brokers of their misdeeds.
If you had done some research of your own, you will
find a thread where Roaming and I covered much the the same ground - and where he finally had to admit that there was no such thing as a binary LP. In that thread, you will see that there are a tiny handful of well regulated binary brokers - which are still bucketshops, but are under close regulatory scrutiny, which greatly reduces the chances of them doing anything dishonest.
Then there's this very interesting post:
I can't tell you who I'm quoting. I can say that my source has been involved in upper management of both retail forex and binary options brokers. Confidential sources who are willing to divulge information about how brokers really work are hard to get.
According to my source...
"Regarding LP's for binary, there is NO such thing.
There was an attempt to do it in a company called NADEX. It didn't work at all.
No one bought it."
Unless my source is in error or something has changed, there are no liquidity providers for binary options.
I challenged OptionRally to explain how they made money. Their rep couldn't answer. I explained how his company operates like a bucketshop and he had no reply. If you or anyone else can show me how a binary broker can connect to an LP or otherwise hedge itself, I'll happily correct my statement about the impossibility of binary LPs.
Maybe you need to check what the UK FCA has to say about binary options to put this in perspective:
We don't regulate firms that offer binary bets. These involve you betting on the likelihood of, for example, an index reaching a certain level during a specified period. You pay an initial premium when entering into the binary bet and receive a return if, for example, the relevant index reaches the certain level during the specified period. If the relevant index does not reach the certain level during the specified period, then you don't get any return and lose the initial money paid.
The profit or loss relating to a binary bet is fixed when it is taken out rather than, for example, varying with movements in the chosen index (as is the case with a spread bet, being a contract for differences).
Firms based in the UK that offer binary options are regulated by the Gambling Commission,...
How can any LP offer a fixed amount of profit for a price movement as little as 1 pip in the money? How can it only collect a fixed amount of the price goes the other way by hundreds of pips? Simple answer - it can't.
Since you seem to love some these binary brokers so much, why don't you ask one to explain how anywhere from 1 pip to thousands of pips can result in the same payment to/from from their alleged LP? Ask them to name their LP. Personally, I don't trust any forex broker that doesn't proudly list their LP(s). I can't seem to recall any binary broker ever doing this.
Binary options are run like online casinos - all trades are in house. Like online casinos, a few are honest, but the vast majority aren't.
Yes, some forex brokers run A and B books. I believe I covered that in my last post (but didn't use the A vs B designation) where I pointed out that a clever forex broker would keep the losing clients in house and either hedge real client trades or pass them directly up to their LPs. And, there are plenty of forex market-makers, aka pure B book, aka pure bucketshop brokers. Only a scam broker would claim to be ECN because of the electronic connection to the client. Any broker with a shred of honesty claiming to be ECN is passing trades to its LP(s).
One true difference between forex brokers and binary brokers is that it's possible for a forex broker to be true ECN and not have a conflict of interest when traders win. Virtually all the money used by a binary broker to pay winnings, salaries, and to keep the lights on comes from losses of other traders - so, just like casinos and forex bucketshops, they need many more people to lose than to win or else they go out of business - unless they cheat the winners.