Binary Options Regulated and Scam Brokers

[Pharaoh]

The concept - 60 seconds is pretty much roulette with a terrible rate of return.

For news trading, I can use straddle orders in forex. These can be pending orders (not available in BO) or a pair of hedge market orders with a very good risk/reward ratio. Hedged orders in BO mean I'd win $60-85 on one order and lose $100 on the other - i.e. a guaranteed loss.

If I use something like the FPA's Forex News Gun, I don't have to initiate the order until the news comes out. Sometimes news releases can be delayed at the source by several minutes. Revisions and other details can make price that started hard in one direction reverse itself 5-30 second later. In binaries, the close time is fixed, so what could be a big win in forex may not work. Overall, trading news releases on binaries are like betting on what horse will be in the lead at a fixed time in the future - except that the race may start a little late and someone may throw rocks at some of the horses.

In all time frames of forex, the ability to hold a trade for as long as the trade plan calls for, the ability to set pre-determined SL and TP to achieve a good risk/reward ratio, the ability to trail SL, etc., makes forex have much greater profit potential. Then there's the whole concept of carry trades.

Consider carefully - what is the background of many binary companies. Some were created by forex brokers. Many were created by exactly the same groups that run online casinos. If you enjoy playing with binaries, have fun. Just realize that your trades are never going anywhere near the real market and that you are playing a video game for money. But hey, a few people can be successful playing in online casinos too


And as to where the money comes from.

A proper ECN/STP forex broker passes all trades off to their LPs. It doesn't matter if the client makes or loses a penny or a million dollars. The broker collects the spread markup and/or commission and is done making profit on the deal.

In forex, I take spread into account. Unless I'm scalping for a tiny handful of pips, spread and commission (if applicable) is a small percent - much smaller than what binary brokers take.

Kindly explain to me how any binary option broker would deal with a group of successful traders who regularly win far more than they lose. An ECN/STP forex broker would throw a party and celebrate all the money they are collecting. A binary broker would quickly find itself in deep financial trouble.


Is it possible to be profitable in binaries. Presumably so. Unless you chose the one (possibly 2) well regulated ones, good luck on getting those profits back. BTW - Cysec regulation of binaries is a sad and pathetic joke. If you don't believe me, "invest" your funds with Banc de Binary, try to make some money, and then come back and tell everyone how the withdrawal process went.

So far, in terms of binary brokers that are well regulated, we've got Nadex, and the possibility of a broker that's fully regulated by the FPA (not just passported). That's out of how many binary brokers?

 

[Bullbutcher]

It really nice dispute here. But as person who looking for trusted BO broker I don't see any broker name with whom I can open account and not worry about withdraw or chart manipulation.

Do you have any thread here on FPA with trusted BO brokers? All what I found here is just SCAM, FRAUD and etc. How exactly FPA helps? Should I make my own broker list and make dipper research on FAP reading ton of negative and if one from my broker list not mentioned here I can try them

 

[Roaming]

It really nice dispute here. But as person who looking for trusted BO broker I don't see any broker name with whom I can open account and not worry about withdraw or chart manipulation.

Do you have any thread here on FPA with trusted BO brokers? All what I found here is just SCAM, FRAUD and etc. How exactly FPA helps? Should I make my own broker list and make dipper research on FAP reading ton of negative and if one from my broker list not mentioned here I can try them

Read my posts on this thread to know the trusted brokers in the US and Europe I found reliable to deposit with.
If you have another names, go on and post

 

[Roaming]

Ok Pharaoh. Am totally aware that the risk to reward ratio in binaries is not great. But come on, lets look at it from a different angle and always when dealing with a regulated respectful broker providing fair service, the 60 second method has a low return % like 70% at best, but you are winning 70% of your investment amount in just 60 seconds!!! What business can earn you that high%??? Better for the 15 or 30 minute that in both you can execute an order before 5 minutes of its expiry time for a return% as high as 85%.
5-15-30 minutes getting 80-85% in average on investment, again what business earns you that and in that short time?!
Lets be fair here, no doubt the risk is very high but also the reward is neither great nor low but high too.
The broker giving you good service, real prices, no manipulation, even if the reward is not great, you are playing the game yourself, you can win over both the broker and the market firstly.
Success is within your hands. There are advantages and disadvantages in any business, you can't expect a BO broker to give you 100% return, how will it make money anyway!!

Most importantly is getting fair business, then comes your trading skills and experience, putting you against the market to reach success.

 

[Pharaoh]

Bullbutcher - if you really want to trade binaries, check Nadex. To the best of my knowledge, that's the ONLY regulated binary broker in the USA. If you want to look at FCA regulated brokers, make certain that the regulation is directly with the FCA and not "passported" from Cyprus or somewhere else. If it's directly with the FCA, you'll at least have the option of filing a complaint with the UK FOS if something goes wrong.

But come on, lets look at it from a different angle and always when dealing with a regulated respectful broker providing fair service, the 60 second method has a low return % like 70% at best, but you are winning 70% of your investment amount in just 60 seconds!!! What business can earn you that high%???

Roulette. Put your money on red or black. The payout is 100% and the chances of losing are slightly above 50%. With any licensed casino, there will be zero issues cashing you your chips and walking out the door when you are done.

Better for the 15 or 30 minute that in both you can execute an order before 5 minutes of its expiry time for a return% as high as 85%.
5-15-30 minutes getting 80-85% in average on investment, again what business earns you that and in that short time?!

Somewhat better chances that the coin toss on 60 second options, but you are making exactly the same fallacy of focusing on how high leverage can make vast profits. The ability to lose money using leverage is equal to the ability to make money. In binaries, for ever 85% you can make, you are risking 100%.

Most importantly is getting fair business, then comes your trading skills and experience, putting you against the market to reach success.

Forex is you against the market itself. Binaries just borrow prices from the real market. No real currency contracts are created. If a casino had too many winners in roulette, more green spaces would have to be added to the wheel to keep the casino profitable. What steps would a binary broker (even an honest one) be forced to take if total client winnings started to surpass total client losses?

 

[Roaming]

No Pharaoh. It is unfair continuing picturing Binary Options to Casino Roulette. Stop doing that!
In BO, there's the technical and fundamental side just as in Forex, actually you are trading what you see in your mt4 and applying it too to BO but in a different trading style. While there's no technical stuff in Casino games, this is why it's pure gambling.
If you are trading BO by just looking at its brokers web charts provided that are plain, then it's surely gambling but when you are trading it according to your mt4 entries then it is just like forex.
BO brokers are not giving you delusional prices that don't exist, telling you choose one direction.
These same prices are running in your mt4 charts.

Before judging BO, open a demo account at least and start trading it with the Nadex, you can even deposit a minimum later on if you don't trust the Nadex despite its US Regulation..etc
In a Casino, you'll easily throw a $100 on a pure gambling, not bad to try it in BO.

Don't jump into conclusion giving all FPA readers your opinion as if it's a fact, when you hadn't even test it in reality.

 

[Pharaoh]

At the 60 second level, I see very little difference. You are betting on Up (Red) or Down (Black) at a specific point 1 minute or less in the future. FACT: One big difference is that roulette has better payouts.

Using 1 minute for news trading is more like betting on horse races - except that you are betting on which horse will be in the lead at a specific moment which may happen before the race ends (or before it begins if the news is late). FACT: News releases can come a few moments early or late. FACT: Price action around a news release can be very complex, requiring the ability to close at a predetermined TP or manually closing in a time frame of only a few seconds to snatch profit before price reverses. FACT: Forex allows hedged trades around news. So does BO - if you don't mind a guaranteed negative return.

At higher levels, there is the possibility of applying technical analysis - assuming that the broker doesn't cheat on the data feed. Now it's getting more like blackjack - there are strategies to try to tilt the odds. FACT: You are still facing payout solely based on price at a specific moment in the future. A short term correction in what is otherwise a profitable trend in either forex or BO can make a BO trade lose.

If you've got a big enough bankroll and take enough time, there may be ways to make profits in BO or blackjack in the long run - and that's when the casino will typically invite you to leave and never return. FACT: A forex broker can pass risk on to the real market via liquidity providers (some do it for ever trade, some aggregate trades and do it every so often, and unfortunately some are total bucketshops). I have yet to see a binary broker explain how they can pass risk anywhere outside of their own company. End result - binary options brokers are all 100% market makers with no way to hedge themselves, aka bucketshops. So, if too many traders get too profitable, the broker won't be able to keep paying out.

I doubt Nadex would steal money, so their choices would be to reduce the percent on payouts to winners or to go out of business.


First, show me a factual method of how a binary broker could stay in business if the average result of all trades placed was profitable. Then, I'll consider investing some of my time playing on a Nadex demo account. Otherwise, I'll wait for my next trip to Vegas or Macau if I develop the urge to place a wager.

 

[Roaming]

The 60 second option does not apply just for news trading, it can be a successful countertrend trading plan if can know what prices to sell or buy at.
If you are a real news trader, the 60 sec. can be very profitable just as the 15 minute because you must have the data received to you at the same moment of the news data released, so you know if it's positive or negative. Some get it 2 minutes before most people know it, this is why you find some 10-20 pip drop or spike before the actual time of news release.
If short term correction happen and you are trading for 4 hours expiry, you have all the time on earth to postpone your position or sell it if needed, these are the stop losses or maybe trailing stops(in another way) in BO.
You don't need a big bankroll, if you are successful in forex then you're in BO, little testing on demo will make you cover all errors and time will teach too
Start with a minimum as suggested before, it hurts in nothing.
BO brokers are 100% market makers just as FXCM was and maybe still! Fully Regulated in the US too.

I would always have the curiosity of knowing the truth about how BO brokers make their money, but as long as they are providing fair service, not a big concern anyway.

BO brokers pass the positions to LP's or not, not a disaster when I read from good sources that most forex brokers including ECN and STP don't pass below 10 lots orders to LP's, am safe anyway as long as the 10 lots does not become 100 lot size orders each!

I still can't understand why a BO broker can get bankrupted if there are many winning by some traders, when we all know that in forex brokers who have the best traders, they will not exceed 50% of all clients. How when it's in BO, a new trading option for traders, 30% of clients successful would be the utmost I believe So, more loosing clients more money for brokers as in your opinion if the client loose the broker win and the opposite, add to it the broker winning on the difference between investment and return %. Can you explain how will BO brokers get bankrupted then?!
This is simple calculation, not just words, "they will go out of business"
This is the factual method
If you are gonna look at only the negative side of things then you'll be very busy doing so, not able to see the positive side

Consider going to the Seychelles too, you need some relaxation far way from here

 

[Pharaoh]

Although some STP and ECN brokers don't directly pass small orders to the market, they do what the better market making brokers do - frequent hedging of net positions.

A super simple example: Imagine 100 people having small positions open on the EUR/USD and LPs with a minimum pass through of 1 lot. If the total for long positions is 10 lots and the total for short positions is 5.1 lots, the broker can pass along a 5 lot long position to it's LPs. This leaves the broker with only 0.1 lots of exposure where it has to cover losses or gains instead of the net total of 4.9 lots of exposure. So, if price moves 100 pips and everyone closes their trades, the broker collects all the spreads (and commissions, if applicable) on 15.1 lots and also makes/loses $100 on that 1/10 lot that it had to cover. An extremely clever broker could even have an account with a competitor and use that to hedge the 1/10th lot if there was any anticipation of major market moves.

But forex brokers are smarter than that. They don't have to pass on each pair directly. The net positions can be condensed across pairs - For example, if there are net open positions on EURUSD, EURGBP, and GBPUSD, it can be possible to hedge these with one or two trades instead of 3 separate trades.

You still don't understand how a binary options broker can go bankrupt? It's so easy. At the risk of annoying you, I'm going to use the casino analogy again.

To simplify, imagine the casino only had one game. Let's say Blackjack, since it's known that proper strategy and the ability to count cards can really shift the odds, just as strategy in market analysis can shift the odds in forex and binary wagers on forex. Further, assume that there only 100 bets daily at the table and the minimum bets are $100 and payout on a $100 is $80 (to make it closer to binary ratios - casinos have better payouts).

If all players are clueless, the win ratio on 100 bets would be in the neighborhood of 40% and losses would be 60%. 40 winners x $80 per win = $3200 paid to players. 60 losers x 100 = $6000 paid to the casino, leaving $2800 as profits for the casino. Statistically, there's a small chance of a bad day ending in loss for the casino, but this will be rare.

Now, some of the players start studying strategy. The players start winning 50% of the time. Out of 100 bets, the casino now pays out $4000 and takes in $5000 (net profit $1000). Days ending in loss increase, but chances of bankruptcy are still remote.

Then the players go off to card counting college. Not only does the overall winning percentage increase, but they know when the deck is hot and when it's not. The total number of bets remains at 100, but during hot times (say 10% of the time) the bets jump to $1000.

If "normal" odds remain at 50%, the the 90 bets of $100 ($9000 total) result in payout of 45 x 80 = $3600 and takes in $4500 (profit of $900). The remaining 10 bets of 1000 ($10,000 total) have the players winning 60% of the time - $4800 wins. The casino collects 500 each on the 4 losing trades - $4000. The casino made $900 on 90 trades and ended losing $800 on the remaining 10 trades.

What happens now if the players either get a little better or increase their trade size more when the deck is hot?

Similarly, binary options collects $100 on losses and pays $60-85 on wins. There is no way to pass this risk on to the real market. As long as the amount lost by traders is greater than the amount won, it's a giant cash generating machine. Since most traders are not very skillful, this cash cow can keep delivering for a long time. Some retail forex brokers use this same bucketshop model, since it's MUCH more profitable than just living off the spreads and commissions.

The problem is that when the smarter traders who have a good win/loss ratio start increasing the size of their trades and learn to increase further when they see high probability trades, the amount the broker keeps declines and the amount paid out increases. If those traders keep increasing their trade sizes as their balance increases, eventually, they will be collecting more cash than the broker gets from all the small losing traders.

Unless they can quickly lure in more traders willing to lose money faster, brokers and casinos have a limited array of choices under these circumstances:
1. Accusing the players/traders of cheating and refuse to pay profits.
2. Rig the games/price feeds to reduce the number of wins.
3. Increase spreads, decrease payouts.
4. File for bankruptcy.

An honest company that wants to stay in business could only do #3.

 

[Roaming]

I thought Pharaoh is smarter than giving an opinion in absolute

You want to convince FPA readers that 99% of BO brokers are Scam AND the whole BO Concept is Scam too

You want to convince them that all BO brokers will sooner or later cheat on its clients OR go bankrupted.

Is that what you mean really!!

So, the Nadex will put its reputation in question by all US clients when it's the only well regulated BO broker, just to make some more profits per year?!!

Or Swiss Banks like Dukascopy and Saxo in Europe will do the same, risking its huge base of clients in its several services provided just to make some more money from binaries??

Not gonna say that I trust European regulated BO brokers, but when you talk in absolute way AND doubting BO Concept, then you are saying in other words that all BO brokers are scam, they manipulate their BO service. This can't be an acceptable or logical opinion at all!!
If there's no real good concept in binaries, big banks would not enter such a business at first.

So, if the Nadex opens branches in Europe and Australia, getting FCA, CySec, FINMA and ASIC registration, just as Oanda had done in Forex, then the Nadex US would be much safer place while the Nadex UK, Nadex AU will be scams!! Anyway in your opinion all will cheat its clients at some time!!

To not make your post above look very hilarious about BO model compared to Casino model, I'll briefly say that most of that post can be summarized by: it will never be a fact or reality because it can "never" happen.
There will never be more than 50%(if very optimistic) always winning clients and I can't understand how you got the 60% or more number when we all know that 90% of forex traders loose and blow their accounts, at least this is what we all know, can adjust it to 70% if you want, so how when it comes to a new trading style like BO, want to convince anyone that there will ever be 60% of winning clients in any BO broker AND trading in consistency for long time!!! And, this is if we agree with you that 60% of winning clients will make any BO broker get out of business or cheat!!!

Conclusion: You are still moving around the subject from a point of view, "lets find the weak points or create ones just to attack the concept"

Anyone can do the same and be more rightful than what you show in your opinions about BO.
Can start saying forex is just gambling ruled by central banks and hedge funds, price been manipulated(like sudden spikes for one or few seconds, we saw that hugely throughout the years!!!) at sometimes to favor them over regular account traders.
Or from what I read about 100s(if not more) of forex brokers scamming clients etc

But, would that make me stop trading the forex market or say the Forex concept is absolutely scam? NEVER