There are more patterns applied by binary options brokers to make a profit, but the three most common are: per trade commission, income commission or taking your lost investment.
The first strategy that is not only applied by binary brokers, but the stock ones as well, is imposing a per trade commission. In this case either if the trader losses or wins a trade, the broker is guaranteed a sum of money. The fee depends on the number of trades during a quarter, but in most of the cases is anything between 2$ and 10$ or even more.
Income commission means that you are only cut a bit of your profit if you win the trade. The underlying principle is that for every trader that opted for A, there is one who chose option B. The broker takes the entire initial investment from the one who lost the trade and after getting his share gives the money to the winner. Under this circumstances, there is no chance for the broker to remain profitless. This pattern is mostly used in brokerage firms or agencies.
The most controversial way of paying for a broker’s services is by giving the lost capital. This is what entails the third model of making a profit for brokers. The idea is simple: every penny lost goes into your broker’s pocket. It is paramount to remark that this method is entirely legal and has nothing to do with scams. The reason why traders choose such brokers, despite being aware of their strategy, is that this way they don't have to share their profit.
In most of the cases brokers do inform their clients about the way they get rewarded. To emphasize the difference, scam brokers might not even ask for a share, but at a particular moment when the capital is significant, they don't allow the trader to withdraw his money.
To conclude, legit brokers have various imposing schemes and they only take an insignificant part of your budget, whereas scammers have an entirely different strategy.
I think most of the binary options brokers rely on their statistical advantage over their traders. They offer let say average 75% return and collect in most cases 100% return on the contracts. In such a case if the average win rate of their clients is about 50% they have good profit. Trading against the clients doesn't always mean the brokers want to take your money out... but unfortunately this is often the practice with shady and not so shady brokers around the globe. However good brokers will be happy with their statistical advantage and will allow you to win regularly when they know they have plenty of other traders who lose A new practice recently is to take into account the bid/ask spread and not the average price in between. This gives the brokers additional margin of safety for them especially in short term trading where only one tick may be the barrier to your profit.
"The goal of a successful trader is to make the best trades. Money is secondary." - Alexander Elder