A binary options broker is a financial agent that provides retail traders with investment opportunities through binary options. Such replication of the position of the client is called hedging. First of all, you should see brokers as order aggregators.

This ratio may get skewed one way or another under certain market conditions: At maturity of the option, one trader will be right and the other will be wrong whatever the evolution of oil prices. The trader that was wrong will lose its USD excludind the refund or return on loss and the trader that was right will receive 80 US. The broker thus kept 20 USD of profit with almost no risk. Of course it is not that simple and most of the time, the broker will need to replicate some positions on the market and offload some risk in order to balance some positions between traders that may have different binary option maturities , strike prices and a greater amount of buyers than sellers.

Moreover, you should never think that the percentage of the transaction the broker pocket on each trade is a pure profit. This is the money the broker will use to invest on trading platform improvements, trading signals proposed to retail traders, mobile applications …. It requires a lot of experience and advanced risk management tools to perform in the binary options broker industry.

All our recommended brokers are known for their risk aversion and for their high standard risk control processes that keep your deposited funds safe.

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How do binary option brokers make money?

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Charles Beaujoire A binary options broker is a financial agent that provides retail traders with investment opportunities through binary options. Broker is not an easy job Of course it is not that simple and most of the time, the broker will need to replicate some positions on the market and offload some risk in order to balance some positions between traders that may have different binary option maturities , strike prices and a greater amount of buyers than sellers.

Learn to make money with binary options in volatile market Do Binary Brokers Trade Against Their Clients?

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