What is general view of Binary Options Trading?

[RobieNL]

I keep seeing scam reports/complaints of binary options platforms. I never tried binary because it seems like a pure gamble? Somewhere in the market between proper trading and book makers.

Is that a good judegment of binary options for anyone that has tried? Is it even popular?

 

[larz]

I keep seeing scam reports/complaints of binary options platforms. I never tried binary because it seems like a pure gamble? Somewhere in the market between proper trading and book makers.

Is that a good judegment of binary options for anyone that has tried? Is it even popular?

Sorry I couldn't help. Is there anyone who could share their experience with Binary Options please? It seems Binary options is a quick money but it posses a very high degree of risk.

 

[Wahlberg]

Hi, I'm new here.

Binary options is the epitome of all that is not financial sound.
To make a long answer short, any investment has to have a horizon, it would be based on 2 dimensions mainly which is Risk and Time. Anything lesser than that wouldn't be "Evil", but only called a gamble, rather than an investment.

Binary Options is an encapsulation of a Casino under the auspices of a financial transaction. Please believe me that there isn't one iota of finance in the binary options that are sold to retail. If you go to Goldman Sache's Structured Product department and see what they are doing, since it's Goldman Saches it's pure evil, but THAT is finance.

The scam is not that complicated, they will call you wanting you to "invest" money for trading.
You put down $500
You go into a touch 15 sec. oil call
NOW - since the statistics of win/loss with most traders is around 7/93%, that means, that out of 100 people putting in trades, 93 would lose the amount invested.
Yes - the Binary house invests exactly the reverse position (15 sec oil put)
You lose $500
They gain $500
end of story.

 

[larz]

So, it is always at a disadvantage to the trader. If 93% traders gonna lose money, the binary house has the edge and always wins in the end, just like casinos.

It's very sad that many of the online advertisements tout proven systems for guaranteed profits, making this arena ripe for scam artists who are more interested in profiting from traders rather than helping site users reap the rewards of honest investing.

 

[Wahlberg]

making this arena ripe for scam artists who are more interested in profiting from traders rather than helping site users reap the rewards of honest investing.

Exactly, that's why I affiliate myself only with strong labels across different verticals...
Any affiliates in this forum btw?

 

[Pharaoh]

I keep seeing scam reports/complaints of binary options platforms. I never tried binary because it seems like a pure gamble? Somewhere in the market between proper trading and book makers.

Is that a good judegment of binary options for anyone that has tried? Is it even popular?

There is no way for a liquidity provider to pay a fixed return based on a price change ranging from 1 pip to thousands of pips. All binary options brokers are bucket shops - they keep all trades in-house. Your gains are their losses. Your losses are their gains. A few people have hotly disputed this, but not one of them has ever been able to provide a rational explanation of how a hypothetical binary LP would work.

This means that any profits paid (assuming the broker isn't deposit-only), all the operating expenses, and all the salaries (including the salary of the "account manager" who promises big profits with "no risk") are coming from client deposits.

Check the Scam Alerts folder and the reviews. Binary brokers have an incredibly high number of complaints.

 

[Wahlberg]

but not one of them has ever been able to provide a rational explanation of how a hypothetical binary LP would work

Hey Pharaoh, as far as my knowledge goes, a Forex LP is the same as a binary LP, actually, I never heard of a "binary Liquidity provider".
To be honest, I think that alot of Forex Brokers were very "envious" from the Binary brokers revenue and they just decided to either open their own binary brand or switch from the Jedi Side (A-Book) to the Dark Ways of the force (B-Book).

As discussed privately, there is an upcoming, CLEAN STRICT A-Book Broker coming to town, a group of affiliates and I will be promoting him via diff. venues (social, PPC, websites, funnels)
If anyone is interested to know more, PM me.

I also know that we will be creating some trading contests spanned over a few months with some serious top high end prizes.

Thanks
AW

 

[Pharaoh]

A forex LP accepts trades from the broker (either singly - as in ECN/STP) or as a hedge against overall client positions.

As a simple example, imagine a broker with 1 client who opens a $10,000,000 account and places 1 trade. The client goes long on 1000 lots of the EUR/USD. If the broker has no LP, any gains or losses come out of the broker's pockets, so the broker is effectively taking the opposite side of the trade (short 1000 lots of EURUSD). If the EUR/USD goes up, the broker is losing $10,000 per pip. If the EURUSD skyrockets to new highs, a broker with no LP will have a problem.

On the other hand, if this broker passes the trade up to a big bank (which is accepting trades from many sources), the broker gives up some of the spread (banks charge spread for providing liquidity), and the bank (not the broker) will keep any losses or pay any profits. So, if our 1000 lot trade closes +10 pips, the LP pays the broker $100,000 which goes into the client's account. If the trade closes the trade at +100 pips, the bank pays out $1,000,000. If the client loses 100 pips, $1,000,000 from the client account goes to the broker. The gains and losses are directly proportional to the amount the currency pair moved.

A bank may make or lose money, but a bank will take measures to limit its risk. Banks trade forex with other banks. If a bank that serves as a forex LP finds itself getting too big of a net long or net short position, it can hedge itself with another bank experiencing the opposite condition.

For a binary broker, a "bet" of $10,000 gains somewhere in the range of $6000-$8500 if the client "wins" and loses the whole $10k if there is a loss. The amount of pip movement can be from 1/10 of a pip up to a multi-thousand pip movement. What bank or other large financial institution can say "If you make from 1/10 of a pip up to 10,000 pips, I will pay you $7000 and if you lose anywhere from 1/10 of a pip up to 10,000 pips I will collect $10,000? The bank's gains or losses from the real market movement of the currency pair will almost always be very disproportionate to the amount paid in or out.

Show me ANY well-known major bank that says it acts as an LP for binary trades. I've been waiting for this, but haven't ever seen it. I think I'll be waiting a very very long time - like forever.

 

[Wahlberg]

On the other hand, if this broker passes the trade up to a big bank (which is accepting trades from many sources), the broker gives up some of the spread (banks charge spread for providing liquidity), and the bank (not the broker) will keep any losses or pay any profits. So, if our 1000 lot trade closes +10 pips, the LP pays the broker $100,000 which goes into the client's account. If the trade closes the trade at +100 pips, the bank pays out $1,000,000. If the client loses 100 pips, $1,000,000 from the client account goes to the broker. The gains and losses are directly proportional to the amount the currency pair moved.

A bank may make or lose money, but a bank will take measures to limit its risk. Banks trade forex with other banks. If a bank that serves as a forex LP finds itself getting too big of a net long or net short position, it can hedge itself with another bank experiencing the opposite condition.

For a binary broker, a "bet" of $10,000 gains somewhere in the range of $6000-$8500 if the client "wins" and loses the whole $10k if there is a loss. The amount of pip movement can be from 1/10 of a pip up to a multi-thousand pip movement. What bank or other large financial institution can say "If you make from 1/10 of a pip up to 10,000 pips, I will pay you $7000 and if you lose anywhere from 1/10 of a pip up to 10,000 pips I will collect $10,000? The bank's gains or losses from the real market movement of the currency pair will almost always be very disproportionate to the amount paid in or out.

Show me ANY well-known major bank that says it acts as an LP for binary trades. I've been waiting for this, but haven't ever seen it. I think I'll be waiting a very very long time - like forever.

As a previous Trader working for the 2nd largest inter-bank broker in Europe I can tell you, you are partially wrong my friend.
You got all the basics right but...

a.) Banks are not the only LPs out there, to be more exact there are LPs that have larger positions and can easily shadow some large banks.
b.) A "Binary Broker" is not considered a "Binary Broker" no one will care if his name is slap-me-around-suzy, as long as they maintain the amount of risk, provide liquidity and lucrative margin spreads on their contracts, no one cares. So to partially answer your questions, banks don't care what happens on "the retail side" of that entity's business, it's not their business.
c.) Banks are the biggest Scam artists trading ahead of their clients, and i'm not talking about Joe the plumber but large institutionals who are trading for their constituents and they have all the regulations from all the authoritative figures known to man.

Mind you, this is not only FX, this is Gold spot warping, OPEC crude price warping, any physical commodity you can think of, is warped by prop traders in the banks, chinese walls are more like berlin walls, you pass notes in the cracks

I still trade futures from time to time in big economic events and I always find it funny when I see the /ES and /SP contracts move when the US closes until open, it's the biggest joke out there and it's played on every poor soul, unless you live on an island and grow your own tomatoes.

AW

 

[Pharaoh]

I was over-simplifying a bit - yes, banks aren't the only LPs, but the larger banks usually are among the largest LPs. I'm quite certain that banks (and, most likely, other LPs) can and do cheat in any number of ways - check out all the big (and escalating ) fines that have been handed out to some of the largest banks for various types of manipulations. Still, banks can and do serve as legitimate (more or less ) LPs in forex trading.

A bank (or other LP) can't offer fixed fees/returns for something based on a price movement from 0.1 pip-unlimited pips. If too many clients piled up on the correct side of a trade where the price moved too far, the LP would suffer considerable losses. Overall, an LP would be better off serving as an LP to casinos that only permitted betting on red or black at a roulette table. The payouts are fixed, like binaries, but the underlying instrument can't gain or lose value far above and beyond the amount of any winning payments.

The braver (and hopefully more honest) retail Fx brokers list their LPs. I haven't ever seen any binary broker do this.