Binary Options Regulated and Scam Brokers

[NanoAlpha]

Being a one post guy and coming here to criticize Dukascopy says it all! You are using a username, they'll not know who you are anyway, only if there was a real case with them firstly!!

Since I said that from the thousand of binary options brokers, I opened my first account with Dukascopy since they are the first ones I can minimally trust, I would consider that praise, not criticism.

I can't believe that a bank like Dukascopy will stop you from withdrawing money or cut your profits just because you are succeeding!!, that's if we believe your story!!

Forex is one thing, binary options is quite another. When trading binary options with Dukascopy they are the counterparty. How much "winning" will they tolerate? $1K per day? $50K per day? These are not hypothetical numbers. $50K per day is not unreasonable given their maximum bet size ($10K) and their pricing structure (fixed).

To make it clear - I have nothing negative to say about Dukascopy at the moment. They did nothing wrong to me. But allow me to be skeptical that they will tolerate losing hundreds of $K per month to advanced traders with quant strategies.

On the other hand, assuming that the terms posted are correct, I think a 100 CHF per day penalty for public complaints is a bit harsh. I'd also like to see clarification on whether something like "fix my problem or I'll share the facts publicly" counts as blackmail.

You can read the terms for yourself. Section 22.6 in this version: http://www.dukascopy.com/swiss/docs/bankForms/Marketplace-Trading-Agreement-in-use.pdf

 

[Roaming]

Even if Dukascopy clauses in their contract are the same as the one shown, I don't consider it something bad looking at how many clients share with the public wrong details, hurrying up to conclusions without contacting their broker seriously. Like the one post guy who started an accusation against Dukascopy, given it a bad public image with no proofs whatsoever of being scammed, and disappears
The within 30 days period is not a long time knowing how much services and clients base Dukascopy Bank has, and the payable amount if violated the contract in that period is nothing serious when the client must already know to sit on his/her hands until the time ends.

 

[NanoAlpha]

I did not disappear. My reply is awaiting moderation.

 

[NanoAlpha]

Since it seems that I can post again, I will say just this:

I clearly stated in my original post that Dukas is the first binary option broker that I trusted enough to open an account with, this is praise not criticism in my book.

And to make it clear: Dukas did nothing wrong to me yet.

The longer part of my reply I won't post again, but the idea is this: Dukas is conterparty to binary options, and it's not unplausible to build a quant strategy that nets $50K per day giving their binary option specifics and betting limits. We'll see how long till they stop paying.

 

[Roaming]

I couldn't get your point, maybe Pharaoh can! So, you were presuming all the time that if you were successful, Dukascopy will kick you out??
How will you succeed with any broker if you are worried if it will scam you or not instead of focusing on trading?
If with Dukascopy you're worried that much, how if it was a non reputable unregulated broker? How can you trade like that?
You want nets of $50K per day?? What's your account size?? A Million Dollar to risk 5% of it and win that amount with no loss every day?
Dukascopy has a limit of $1000 per trade, can open several trades.
Rest assured, Dukascopy is very big to fail. And, FINMA will not let it run away with clients money if it ever wished to!! It's a Swiss Bank

 

[Pharaoh]

I don't see a way even for Duka to hedge it's binary operations against it's internal or external forex operations.

How would you hedge "pay Roaming $85 if the price of the Euro in 1 minute (or 1 hour or 1 day) is anywhere from 1 to 1000 pips greater than it is now?

On the other hand, passing a forex order onto the market or hedging the net orders of all clients against the market is an easy task.

So, if Duka's binary options clients as a whole somehow were to start winning more than they lose, the only "hedge" will be Duka using profits from other operations to pay off the winners while rethinking the concept of having binary as a choice for clients.

 

[NanoAlpha]

So, you were presuming all the time that if you were successful, Dukascopy will kick you out??

Most people say that binary options odds are firmly stacked against the retail trader. And in some sense this is true. Just like in BlackJack, the stakes seem to be against the better.

But if you take a serious mathematical look, you'll see that in fact in BlackJack the odds are firmly against the casino in reality. Thus card-counting was born. And what did the casinos do? They started kicking out the card counters. Why didn't they stop playing blackjack instead? Because it was too profitable.

The same is with binary options. To a naive look, the stacks are firmly against you - 100% versus 75-90% payout, so on average you lose 15% per bet.

But this is just a naive look. Apply some serious mathematics and you'll see that in fact the odds are MASSIVELY in favour of the trader. This is why most of binary brokers have betting limits (why aren't there betting limits on spot forex?), to discourage professionals traders. And just like the casinos, they will kick out binary options card-counters. This is why there are countless complaints against binary brokers refusing to pay profits.

So you saying that Dukascopy will pay no matter what is like saying that there exists a casino in the whole world that would welcome card counters. That casino will inevitably go bankrupt, because it would attract all the card counters in the world, who would win massively more that the small no-advantage retail betters.

 

[Roaming]

I'll give you a piece of advice Pharaoh. Get rid of being very stuck into the idea of worrying much how brokers work instead of being sured that they will accept your withdrawal as deposit. This can be known only by opening an account with a regulated broker like Nadex and Dukascopy in Binary Options, deposit the minimum, make some profits and withdraw.
Honestly, who cares a nickel if they hedge orders or not when am getting my money profits and deposit at anytime I want plus fair service.
Supposedly, the broker hedges whatever you want from orders but when it comes to withdrawal it takes much time and start making excuses, what will the type of execution the broker is running help you with?!
You are worried of BO or any broker to run out of business because winners will exceed losers! Is this Serious!?
That will never happen at anytime at any broker, BO or Forex it be!

Am sure about Dukascopy as much sure about Nadex. Looking at the way Dukas BO service work, using same Dukas ECN spreads in BO and giving 90% payout for 13 Forex pairs(mainly majors and crosses), I know how they earn their profits from its BO service. Answer: Spread then comes the 10% payout amount and losers orders money. Spreads that most if not all BO brokers don't have(ask/bid same price, but different price for Dukas).

Dukas will not need to pay winners from other operations, they have much liquidity from its BO service. They run many other services and give out money with no problem. BO will not be an exception for it. Very big to fail and Swiss Bank.

 

[Pharaoh]

How a broker works is critical to its long term success and reliability.

I've seen plenty of well rated bucketshops that paid on time suddenly close down. Regulated brokers can go under, and being registered with the CFTC provides zero protection against either bankruptcy or changing the payout structure.

As for Duka, the plain and simple fact is that if net client winnings in their binary division ever exceed net client losses (plus ALL the expenses needed to run the binary division), they will have to reach into some other pool of money if they want to pay what's owed to clients. The fact that they are a Swiss bank and a large forex broker gives them alternative revenue to keep the binary division from ever placing the company at risk of bankrupcty. If it gets too unprofitable for too long and other adjustments can't fix it, I'm sure Duka will just phase binaries out.


NanoAlpha, I do know that analysus in blackjack can tilt the odds into the player's favor, but don't see this as automatically applying to binaries. For 1 minute trades, it's a virtual coin toss. For longer term trades, players still have to win much more than 50% of all trades to break even. If you really do have a system that can reliably work on a specific instrument and time frame, pick a regulated broker like Duka or Nadex and see how much you can make before something changes.

 

[NanoAlpha]

A lot of people put Nadex or Saxo and Duka in the same category - binary option brokers.

But Nadex/Saxo offer fundamentally different binary options than Duka/24-option/BancDeBin/...

Nadex/Saxo offer what I would call "classical binary options", or "old-skool binary options". These are classic financial derivatives, covered by financial theory, and with basic pricing theory presented in books like the one with the Amazon book number 1905641532 (search for that number on Amazon since I was told links increase the possibility of this post being moderated). These CAN BE HEDGED. The broker does not necessarily need to lose for you to win.

Duka/24-option/BancDeBin/... offer what I would call "new binary options", or "nu-skool binary options". From a financial theory perspective these don't make any sense. They are wrongly priced (fixed payout) and should never be sold by someone, since they are MASSIVELY MISPRICED. THEY CANNOT BE HEDGED. To put it another way, selling these is a sure way to bankruptcy. A smart player will buy them ONLY when they are mispriced, and win constantly, way over the 60% or so requirement to break even.

This is a crucial distinction. Nadex and Duka offer totally different products, they should never be recommended together. This only increases confusion. Nadex/Saxo has a survivable business model, Duka/24-opt/TopOpt/... does not