Binary Options Regulated and Scam Brokers

[Roaming]

A few facts guys:

1. 99% of the non paid withdrawals here at FPA are from a BO broker

2. Only a handful of these broker's are regulated

3. 99% of BO 'traders- (read gamblers) will overlook the regulated brokers and choose one of the bucket shops

4. Forex Broker's make their money from spread's and commissions- how do BO brokers make their money? Good luck!

1- That's totally false, forex brokers here have much more open cases and court ones too.

2- You must only choose these

3- This is why am trying to help with this thread. Not my problem if they are ignorant, not willing to use that small part in head named brain.

4- Regulated ones make money from traders investments, example a payout of 70-85%, investing $100, if trader wins or looses broker takes $15-30 of the investment.

 

[Roaming]

What I see the majority of binary brokers doing is taking a "trading" model that's more gambling than trading, stacking the returns so high in the house's favor that any self-respecting casino owner would blush at the thought, and then stealing scam methods from the worst forex brokers out there.

Those scam methods include:

Get the credit card number from a small deposit and then make unauthorized charges.

Find any and every excuse to not process withdrawals - including ignoring Cysec's clear reminder than a traders capital cannot be legally locked up by bonus terms for any Cysec regulated broker (binary or forex).

Offering to have an "expert" trade the account. Funny how the expert always ends up needing the client to deposit more money. Of course, this isn't so strange considering that 100% of that so-called expert's salary (as well as ALL other expenses of a binary broker) is paid for solely by client deposits.


Binary options IS gambling. With a vanishingly small number of exceptions, it's gambling in a casino that follows no regulations and faces no consequences for cheating or even directly stealing money from clients.

If and when more honest and well regulated binary brokers appear, I may revise my opinion. Until then, playing roulette in Las Vegas is more fun, has much better odds, and the house always pays winnings.

Plus, just for me, Las Vegas has a casino inside a giant pyramid.

For the first few sentences, those are the scam BO brokers, we have no business with firstly, so why worry about scam companies methods when we'll not deal with.
Few forex brokers regulated too by the CySec do that, not our concern.
The expert thing is the traders problem not the scam broker, "why blame the thief when you're very ignorant"(not personal, general)

BO is gambling as much as forex, it can be much less when you are trading with a regulated broker like the Nadex or the others in Europe I mentioned before, and when you have a predetermined fixed investment, no spikes will hunt your stop loss or maybe not fill it!!!

Nadex is great for US investors, the others wrote about in Europe seem Good, i don;t care if 1000 others are scam.

Las Vegas is for fun, for hotties more than for the money, pure gambling, I prefer forex and BO for investing.

 

[Pharaoh]

I still prefer a broker with a real LP. That way, if I win or lose, the broker makes money only on the spread (and commission, if applicable).

Even a totally honest and regulated binary broker only makes money from trades that are lost. This means that if the win percentage of all trades increases past a certain point, an honest binary broker will run out of money and close. This creates a huge conflict of interest.

This is not the case with an honest forex broker using an STP or ECN model. Even a MM forex broker that hedges itself regularly and has TOS prohibiting trading styles incompatible with that model of broker (scalping, news trading) can easily remain in business even if client profits exceed client losses.

 

[Roaming]

That's not true. In General, BO Regulated Brokers make money in another way than Forex Brokers.
They make money from the difference between the client investment and the return(70-85% return gives them 15-30% of the money invested)
Nadex make money similar to most forex brokers, from commissions on trades.
There's no near time it will go to bankruptcy because of many winning traders.
I think the same can be applied to European BO Brokers, we all know loosing traders are more than winning ones. They work very similar to market makers of Forex. The big ones would not fail easily.
Just make the calculation of difference in investment that is similar to spread and commission in forex plus the reality that must investors loose money, if we are very innocent to say only 50% loose, that's enough for any regulated BO broker to continue making money and paying out normally with no problem.

Don't trust the STP and ECN forex broker model, I had tried all types, have account running in different ones, came to the conclusion that in terms of trading costs all types match to a good degree sooner or later. There are advantages and disadvantages for each type and for your info all or to be optimistic 95% of all brokers have cheating tricks.

Not sure if am very optimistic with the Binary Options Trading just because I doubled my account in 2 weeks and withdrew my deposit, trading with my profits right now, nothing to loose and still growing my account profits.
CFTC would have a minus case to deal with anytime soon
Nadex call be twice a week to make sure everything is alright, happy with their service..etc
Not sure if they are loving my contract sizes or they are dying from my winnings, trying to confuse me maybe I loose some money, because I came to a conclusion long time ago that very rare to find a broker that loves gooooood traders. this is why spreading your money with different regulated brokers and types is the best option

 

[Pharaoh]

You need to rethink how you follow the money. 100% of paid winnings and 100% of all operation costs come out of client deposits. There is no other source where the money can come from at a binary broker.

An honest binary broker (one that doesn't cheat on prices and really allows withdrawals) still makes 100% of it's money out of client losses. Your winnings cost the binary broker money. Your losses pay money to the binary broker. As long as net losses are sufficient, an honest binary broker can remain profitable.

For example, you and I decide to open accounts at an honest, regulated binary broker. We pick an instrument and time frame that has an 80% payout. I go short, you go long. We each wager $100.

One of us loses $100. One of us wins $80. The broker just made $20 (10% profits). The winner's profits AND the broker's profits ALL came out of the loser's wager, which came from his deposit.

If you and I had unlimited funds and played this game forever, the broker would be very happy and profitable.

On the other hand, what if the two of us sit down together and study this instrument very carefully? What if we find patterns of predictability and start betting together instead of against each other? What if it works so well that we win 30-60% of all wagers? What if we start telling friends and they join in? What if everyone keeps racking up profits and increasing their trade volume? After all, binaries may get prices from the real market, but the trades aren't passed on. Unlike forex, one could bet billions or trillions and not have the slightest effect on prices.

So, one day instead of averaging 10% (net loss from client deposits) on a typical pair of client wagers, the broker finds itself owing an average of 20% or more. Where will that money come from, especially as we reinvest our profits and keep increasing our wagers?

One of several things will happen:
1. We'll be accused of cheating and get tossed out. Maybe we get paid. Maybe not.
2. We'll be welcome to continue trading, until we try to withdraw. Then things will get . . . interesting.
3. The broker will be 100% honest - and go out of business when we try to withdraw too much money.


Casinos work on the same principal. You "deposit" for chips or a card that can be used in machines. Your losses are the source to pay anyone else's winnings. Your winnings come from the losses of others. A casino can't have clients who are too successful playing against the house, or it will go out of business. This is the reason why card counting is banned in blackjack. Calculation devices and working in teams can be made illegal in some jurisdictions. The ability to track how "hot" the deck is in one's own head is not illegal, but if you are too good at it for too long, you'll find yourself being politely escorted to the door and invited to never ever return.

 

[Roaming]

First of all, would like to know if you are against the options trading idea as whole or just the binary options one? Because for options trading there are many regulated brokers, will list them in a next post if you wish.
About from where money comes at binary options brokers, I liked to get an answer from a European Regulated BO Broker. Here what happened(gave nickname as BO for them and Me for myself):

BO: Welcome to live chat
BO: How can I help?
Me: Hello
Me: can you explain how your broker makes money in binary options?
BO: Hello, sir
BO: Why you ask, sir
Me: like to know
Me: is it a secret!
BO: No, sir
Me: so!?
BO: Sir, I am not obliged to disclose those infomations
Me: lol
Me: We all know in forex, regulated brokers make money from the spread, commission, or both
BO: Here it is the same
Me: a nicer question, regulated brokers in binary options make money from what?!
Me: no darling, it's never the same, unless you are the Nadex and I don't know!!
BO: Sir
BO: I do not think it is very important for you
Me: lol you want to think for me!!
Me: I know what's important, answer...
BO: Sir, I am not obliged to do that
Me: You have to answer my questions, unless you and your broker would not seem innocent in your business
BO: Sir
Me: Am not asking you from where you bring money to open your broker
BO: as I said above
BO: we are making profit on the spreads
Me: Am asking you how you make money from clients trading..?
BO: Only on the spreads
BO: Besides, we are market markets
BO: market maker
BO: so we buy and sell positions
Me: are you kidding me!!
Me: you have no spreads
BO: Yes, sir
BO: we have difference
BO: between buying and selling price
BO: Sir
me: how can it be found!?
me: when there's only one price available for both?!
BO: Yes, sir
BO: As I said, we are a Market Maker
BO: For every selling position, we open a buying position
BO: and the opposite
BO: way
BO: so we are making profit on the price difference
BO: the spread
Me: meaning if i win you loose and the opposite
BO: No, sir
Me: meaning there's a conflict on interest like market makers not ECN and STP
BO: No, sir
BO: no conflict on interest, because as a Market Maker we do not depend on the other pice providers
BO: price provider
Me: if you open an opposite order that simply means if i win you loose and the opposite, no other way
Me: example if i buy euro and my friend sells it, if euro goes up i win if it goes down my friend wins
BO: yes, sir
BO: and out profit is in spread
BO: in the difference between buy and sell
Me: flaw words that cant be understood nor applied
Me: you could had been smarter and said you gain from the difference between clients investment and the payout %
BO: No, we win from the spreads
Me: darling, what nonexistent spread are you talking about
Me: forex brokers have eurousd 1.3540 1.3542 for example
Me: you just have one price
BO: Sir
BO: Against every buy price (put), we open a sell price - call
BO: and one client chose put
BO: the other one call
BO: so we win from the difference
BO: as one of the clients win and the other one loses

-------------------------------

Did this Regulated BO Broker convince you, any explanation Pharaoh?, honestly am not convinced!

Found new European Regulated brokers(based banks) that offer Binary Options Trading, Saxo Bank and Dukascopy.

 

[Pharaoh]

I'm against the concept of binary brokers trying to sell themselves as a safe, simple alternative method of forex trading. In the end, what binary options brokers really offer is a casino type game no different from wagering on the outcome of anything else. If you want to gamble online and think that your analysis gives you an edge, you'd better pray the broker is honest and stays honest.

That chat conversation is hilarious. A market maker broker that doesn't hedge itself to the real market (possible in forex, impossible in binaries) can indeed pad it's income by collecting spreads and/or commissions, but makes the bulk of its money from client losses - since those losses are not ever passed on to the real market. The drawback for a successful trader is that all profits come out of the losses of other clients, and too much success harms the broker's bottom line.

Another name for this sort of broker is a bucket shop. This dates back to many early stock brokerages. They realized that most clients lost, so instead of submitting trades to the real markets, they "put them in the bucket". As long as client losses were significantly more than client gains, it was a very profitable way to do business. The flaw is that one client managing to pick the right stock at the right time could leave the bucketshop owing money that it doesn't have. This sort of thing for exchange traded stocks was outlawed a long time back.

There are still too many bucketshop forex brokers. Other forex brokers are market makers that hedge against their liquidity providers frequently. The binary brokers make make up excuses about charging some sort of fees, but make no mistake about it - your losses are the binary broker's profits and your profits are the binary broker's losses.

 

[Roaming]

I'm against the concept of binary brokers trying to sell themselves as a safe, simple alternative method of forex trading. In the end, what binary options brokers really offer is a casino type game no different from wagering on the outcome of anything else. If you want to gamble online and think that your analysis gives you an edge, you'd better pray the broker is honest and stays honest.

LOL Forex Trading is as much Gambling as Binary Options. After trying the later with the Nadex and withdrew my deposit, now trading with my profits growing..I discovered that options have big influence on market, if you like to believe that or not! Monitoring how prices move at most expiry dates led to this conclusion.

In Forex, any rumor may result in your stop loss filled quickly from a spike by a big bank or hedge fund that needed some quick money to cover expenses.
In BO, you have a kind of stop loss that is the initial investment contract amount that you can't loose more than it.
I see Binary Options or Option Trading as a Sub Branch for Forex and other markets trading.
The BO broker doesn't make prices, its 95% similar to your forex broker prices that are market prices, some 1-3 pip difference at worst, sure talking about regulated BO broker here.

Don't forget that there's a difference between binary options and options brokers.
The first brokers mentioned above in past posts, the latter are like tradeking.com, scottrade.com, schwab.com regulated at the NFA and CFTC.

Lets not laugh at people reading FPA, market trading might not be Gambling but it is GAMBLING
May not be gambling for JP Morgan, Morgan Stanley, BNP and others because they can rule the market movements with the central banks coordination but it is Gambling for any investor with some millions of dollars and below.

If you are a good trader, you'll be successful in BO or options trading as much as in Forex, if not more.

 

[Pharaoh]

If you treat it as such, forex can be gambling, as can any other type of trading. The difference between stocks, bonds, forex, etc. and binary options is that binaries are built around the gambling concept instead of being "abused" that way by new traders who haven't learned the difference.

If you are worried about forex being gambling, show me what percent of forex brokers advertise about winning easy money in 60 seconds or less. Only the best forex scalpers have any chance of steady profits trading on super-short time frames, and they've got the option to close their trades early or late. 60 second binary options is only different from betting on black or red on a roulette table in one significant way - the house edge is MUCH higher.

I am glad to hear that Nadex is paying. Considering the amount of scrutiny they must be under, I thought they would, but confirmation from someone who really got money out is nice. Still, all binary brokers are bucketshops. If you and other successful Nadex start winning money faster than other depositors at Nadex are losing, the company will have to reduce payouts on winning bets, start cheating, or will go bankrupt.

I don't see how a successful forex trader could make more with binaries. If a forex trader catches a good long term trend, that person can install trailing SLs and steadily increase the total position size by scaling in. If a scalper finds a trade down only 1 pip against what appears to be a good very short term trend, deciding to wait a few more seconds or minutes is a reasonable choice. In binaries, when the clock runs out, you either lose the whole bet or walk away with only 60-85% of your wager as winnings. Plus, if binaries are truly getting their prices from the real forex market, then everything you said about how forex is controlled by the big fish applies equally to binaries as well as all the other inherent disadvantages I've pointed out.

 

[Roaming]

We are not meeting at 2 things. The first is Binary Options or Options Trading Concept.
The second is how BO brokers make its money?

Lets only discuss the fully regulated BO and option brokers in the US that are regulated by the NFA and CFTC, besides the ones regulated by the FCA, CySec, Finma in Europe. Scam BO brokers are not our concern just like the same in Forex.

Firstly, why are you against the BO Concept? Am gonna go to the worst trading option they provide and you pointed at which is the 60 second(provided by European brokers).
Even if any trading style is provided, if you find it risky, don't use it, you are not obliged at any time!
As much as you say its bad, some can find it great especially news traders.
For example: if you're a news trader, the 60 second method can benefit you greatly or even if a news gambler in forex, betting on a bad or good news before seeing the outcome data, placing a trade before seconds of the news release, this method can win you money quickly.
I don't Forex scalpers can use it for any real benefit, other than news trading its surely very risky to use.
Any company will advertise something seductive to promote its goods. At end, the client is not a kid opening his mouth if they advertise a hottie will buy the product blindly!!!
Not concerned of newbies who are in the wrong place, wanting to earn money in no time.
We are talking to grown up serious traders who have the least experience in this business.

You are looking at the BO Concept from its negative risky side, why not look at it from the positive side and try to beat the broker and market with your trading experience.
When any broker if Forex or BO or option is giving me fair service, no manipulation or whatever, if I like the concept, applied it to my forex experience and it had been working gooood, deposited money and was able to withdraw the initial deposit and willing to draw some of the profits gradually, why not continue.
If Pharaoh didn't like the concept because its not his trading style, that's another matter, but it doesn't have to do with all BO brokers are scam!!

The second point of how BO brokers make its money?

Well, am not convinced of the Nadex commission earnings nor European brokers difference in investment 15-30% or what they name in other way "Spreads"!!
But, who cares how they make their money if from the other investors loosing or spreads or whatever when that is not affecting my trading, getting right prices, execution etc
Despite I really like to know the truth.
Not convinced too of your thoughts that more winnings investors will make the best regulated big broker go bankrupted!!
We all know that there's no one broker if forex, stock, BO, option that have more than 50%(at best) of its investors who make stable income without blowing their accounts.
If we apply the same to BO, if we say 50% too, and the broker have an already step forward in the difference of investors investment and the payout %.
That will keep any broker live long growing its business. Then why some brokers are Scam?
Simply, because when they are not regulated, have a small base of clients, even with a bigger loosing clients % they are not profiting much, no big volume, so they insist on clients to deposit more, they make tricks to increase the loosing %, they bet on stealing people money in short time and escape!!at end no regulator will ask it what are you doing!?

Not necessary that BO traders can make more money than forex traders, it might be a close call at end when we talk about scalpers(15 to 1 hour max. expiry date) at both sides, but surely BO has same or maybe less profitability for long term traders of 4 and more hours time frames.
If most of your trades are based on higher time frames then forget about BO and options trading.

Again, the concept of BO is good. Not because we are used to mt4, mt5 and trading station platforms, must say that the BO platform with its expiry time principle is bad.
It's just a different way of trading and making money, if suitable to your trading style, that's okay, you don't, forget about it.
Will continue fighting its scam brokers instead of BO trading concept.

Ending with an example from basketball, when the NBA rules are different to a good extent than the Fiba rules governing many countries around the world. We would not go saying the latter concept of basketball is garbage, we are the best. Okay, best in players, arenas, big sponsors, high salaries etc But we still apply many Fiba rules when playing abroad in international tournaments.
This comparison is surely a good example since playing under different rules from the 3 point distance to under the board to timeouts and half times etc(similar to trading difference bt. forex and BO, just playing in another way like trading in another way) it makes a real difference for NBA players despite we still win at end mostly