What does it mean if it says the broker sets their own prices???

[nitya]

I just posted this in another forum and didnt get a reply yet.
I wanted to post here to find out...
Okay...so, I am doing MASSIVE reseaerch on brokers before I deposit any money to trade. It seems these folks are all mostly high profile criminals.

I have seen regulated brokers as well as semi regulated brokers say that they set their own prices.

Can someone please help me wrap my head around this becuase it defies my logic.

If they are not pulling their pricing from somewhere trustworthy, what is to stop them from fudging the prices and make it whatever they want it to be? I am simply not a technical person to determine what this means...and if it means the sinister thing it seems, please confirm it now.

I asked someone I know who is in the industry and who works in a tech department and he said that it is okay for them to make their pricing, as long as they are regulated, they cannot mess with the prices too much...

IS THIS REALLY LEGAL????

Can someone please make me understand the following in plain english???

Here is an example of what I pulled from an ASIC regulated broker in Australia..

Our binary prices are calculated using the XXXXXXX Binary Pricing Algorithm which basically provides a quote based on the underlying spot price of the currency and adjusted according to the time until expiry.

Please keep in mind that other factors such as market volatility may also affect the price provided to you. In addition, the price in which you deal is not governed by an underlying exchange or market, but set by (name of broker).

Because XXXXXX sets the price, we cannot offset or ‘hedge’ your position in the same way we can across other trading instruments (FX, Commodities and Indices). (Name of broker) are therefore exposed to the outcome of your binary trade.

 

[Pharaoh]

If you are talking binaries, the price feed is mostly provided by the platform provider, but nearly all binary platforms allow the broker to alter the prices, be it for one client or for the whole client base.

The part about hedging is beyond stupid. Most binary brokers LOVE it when clients hedge. Why? Simple. Let's say you open a $100 up bet on something and simultaneously open a $100 down bet with the same expiry.

The broker collects $100 from the losing bet, and pays somewhere between $60 and $85 on the winning bet. If you hedged all day with a binary broker, you would steadily be wiping out your balance.

Binary Options is nothing more than an online casino with bad odds. Your wins are the broker's losses (assuming the broker actually processes withdrawals, which is far from a sure thing with BO brokers). Your losses are money in their pockets.

Learn forex trading and find yourself a good, well-regulated ECN broker.