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  1. #1
    Rookie Member

    Real noob question !!!

    Hi guys

    Quick question that I have not been able to find out the answer to yet.

    Who exactly am I trading against when I am trading binaries? Initially I thought it is me against the binary option company (BOC) holding my account - but after chatting to a company they said I am trading against other traders.

    This however does not really make sense to me as it just seems like a trade is executed by myself - the BOC is stumping up the money if I win or taking the profit when I lose - Different to forex/shares or commodities.

    So, am I competing against other traders or is it 'me against the house' (BOC)

    Thanks - and apologies for asking what must be such a basic question!

  2. #2
    Master Member SeasaltMcFish's Avatar
    No stupid question and I'm also thinking about that.

    As far as I understand (read my post about this: http://forums.binaryoptionsthatsuck....ke-their-money ), both is correct. You are trading against the broker, but in fact against other traders, since the broker uses their money to pay your winnings and your money of lost trades for paying others, who took the opposite trades.

    They collect a part of every trade (paying less for a winning trade than taking for a losing trade) too.

  3. #3
    Rookie Member
    See this is what I think as well. Their profit is the 'spread' between the win and loss - but all come from the same pot of money.

    So what would happen if all their customers started winning more than they lost - It would become like a ponzi where they would get into a position where they cant facilitate the payments back for the winnings

    This is what concerns me though. All these binary companies offer account managers that will 'help you' but if it is essentially you against the house it is not in their best interest for you to win in the first place.

    This then raises concerns if it is you against the house - how accurate is their software and can it be manipulated artificially to make you lose.

    I have seen some info mentioning this.

  4. #4
    Master Member SeasaltMcFish's Avatar
    I always capture my trades with Camtasia at the moment, to be able to see what happened if something looks strange.
    This way you can at least add some control about your broker in your trading and will notice if something is wrong earlier.

    They need losers, but since about 19-20 of traders are losers, it will not be a problem too much.

    However, I don't trust their trading advices for the same reason you don't trust it.

    It's better to develop your own trading 'system' by getting to know the asset you're trading and getting familiar with the markets and economic events.

    Wishing you good trading!

  5. #5
    Administrator Martin Kay's Avatar
    I agree with just about anything seasaltmcfish said. Do NOT trust the house advice, not because it's the broker (well, is it even possible for the broker to know how to trade a certain position for 100% assurance??) but because you should only trust yourself.

    afraid of scams?? Read about the broker first. Make your own research. Video record your trades. In the long run, reputable brokers want you to win. Unfortunately, there are bad broker out there, we do our best as a community to help you avoid them and learn to trade from scratch.

    Any advice you seek, we hope to provide. Cheers mate

  6. #6
    Specialist Member LesterK's Avatar
    Your question is not noob at all.

    It is very important question, but don’t have exact and straight answer. There are some brokers which are marketplaces and there the volume of the put and call options is so big that most of the orders from one side mach orders from the other side. It is not that simple because they are different expiry, different volumes and so on, but there are algorithms to calculate these things and to combine orders that way every trader trade against the mass of all other traders. In more simple case brokers are the house and you trade against them.

    Actually most of the traders are inexperienced and lose money, so the brokers don’t have to worry for the small percentage of the wining traders. If they are honest and reputable entities they want steal your money when you win. The biggest and well known brokers in the binary industry like the names presented on the recommended BOTS list are hedging their net positions against other liquidity providers, that way they are insured against big loses when a trader or group of traders win big stakes.

    So Martin is right, good brokers want you to win, to be their client for long and to give them the spread commission every time you trade. Absolutely the same with the stocks and forex brokers – they win more when you have bigger trading volumes and you have big volumes when you are really very successful trader! If you lose your money quickly you will trade less frequently or even you will stop trading at all and the broker won’t earn commission too. The situation with the best brokers is Win-Win. With the scam brokers it is totally opposite – they win when you lose, they don’t mind that you won’t trade big volumes, they want only your deposit and nothing more!

    That’s why it is VERY IMPORTANT to select the right broker. I made my choice a year ago and I am absolutely satisfied with that choice.

  7. #7
    Rookie Member opdax's Avatar
    Not exactly sure where you are getting your information from Lester, but brokers definitely DO NOT want you to win. With BO you are supposed to be trading open market assets, but you are doing so against the house. So seasaltmcfish is right when he says that brokers take the losses of others to pay out the winnings.

    Brokers have absolutely NO benefit in you winning except for the fact that you may deposit more and lose it all. The sole purpose / goal of the broker is to get you to deposit as much as possible - just like ANY business out there's goal is to get you to purchase/buy as much product of theirs as possible. PUNTO!


    Quote Originally Posted by LesterK View Post
    Your question is not noob at all.

    It is very important question, but don’t have exact and straight answer. There are some brokers which are marketplaces and there the volume of the put and call options is so big that most of the orders from one side mach orders from the other side. It is not that simple because they are different expiry, different volumes and so on, but there are algorithms to calculate these things and to combine orders that way every trader trade against the mass of all other traders. In more simple case brokers are the house and you trade against them.

    Actually most of the traders are inexperienced and lose money, so the brokers don’t have to worry for the small percentage of the wining traders. If they are honest and reputable entities they want steal your money when you win. The biggest and well known brokers in the binary industry like the names presented on the recommended BOTS list are hedging their net positions against other liquidity providers, that way they are insured against big loses when a trader or group of traders win big stakes.

    So Martin is right, good brokers want you to win, to be their client for long and to give them the spread commission every time you trade. Absolutely the same with the stocks and forex brokers – they win more when you have bigger trading volumes and you have big volumes when you are really very successful trader! If you lose your money quickly you will trade less frequently or even you will stop trading at all and the broker won’t earn commission too. The situation with the best brokers is Win-Win. With the scam brokers it is totally opposite – they win when you lose, they don’t mind that you won’t trade big volumes, they want only your deposit and nothing more!

    That’s why it is VERY IMPORTANT to select the right broker. I made my choice a year ago and I am absolutely satisfied with that choice.

  8. #8
    Administrator Martin Kay's Avatar
    Quote Originally Posted by opdax View Post
    Not exactly sure where you are getting your information from Lester, but brokers definitely DO NOT want you to win. With BO you are supposed to be trading open market assets, but you are doing so against the house. So seasaltmcfish is right when he says that brokers take the losses of others to pay out the winnings.

    Brokers have absolutely NO benefit in you winning except for the fact that you may deposit more and lose it all. The sole purpose / goal of the broker is to get you to deposit as much as possible - just like ANY business out there's goal is to get you to purchase/buy as much product of theirs as possible. PUNTO!
    You're contradicting yourself. First you say Brokers do NOT want you to win, then you say they want you to win so you might deposit more. Your second claims nulls the first, therefore brokers do want you to win. It's a simple assumption - eventually, the experienced, the ones who deposit only the minimum yet have dreams of getting rich fast, the ones who think signals providers will make them rich, and more of the same - they will lose. the few qualified traders would profit.

    Brokers do not want you to lose. neither to win. Scammers, on the other way - only want you to lose. Idiots- only want you to win. The few brokers who understand that traders must win and lose sometimes, will profit in the long run. I just hope for more like these, unfortunately too many scammers are taking advantage of naive traders. I think our part is to help traders and brokers understand this business could grow legit. And if it doesn't - I will be the first to put a big welcomes sign to BOTS - BROKERS DO NOT WANT YOU TO WIN. Until than, we're optimistic.

  9. #9
    Rookie Member opdax's Avatar
    Lol, uhhh I'm not sure if your kidding or serious.

    There is absolutely no way that it would be profitable for a broker to have its players winning and withdrawing because it's a closed market. I said the only long term benefit to have players winning short term, is that you'll deposit big and lose. The long term strategy is that you will lose all of your money because you are "playing" against the house.

    There is something called "player value" and someone who is "high player value" deposits a lot, and loses a lot. That's GOOD for the broker.

    I'm not really sure what you are defending as "optimistic." The brokers are in it for the money and so are you. This isn't some charitable organization here. Having said that, it doesn't mean that individuals can't best the broker. You can, and I do.

    It's a fact that on average individuals who invest lose in comparison to the house, whether that be binary option brokers, or huge hedge funds - whether it be binary options or the open stock market.

    As far as the brokers are concerned, even though they are pulling in a lot for the winnings, there's a huge ton of overhead, plus 30% payout.

    Quote Originally Posted by Martin Kay View Post
    You're contradicting yourself. First you say Brokers do NOT want you to win, then you say they want you to win so you might deposit more. Your second claims nulls the first, therefore brokers do want you to win. It's a simple assumption - eventually, the experienced, the ones who deposit only the minimum yet have dreams of getting rich fast, the ones who think signals providers will make them rich, and more of the same - they will lose. the few qualified traders would profit.

    Brokers do not want you to lose. neither to win. Scammers, on the other way - only want you to lose. Idiots- only want you to win. The few brokers who understand that traders must win and lose sometimes, will profit in the long run. I just hope for more like these, unfortunately too many scammers are taking advantage of naive traders. I think our part is to help traders and brokers understand this business could grow legit. And if it doesn't - I will be the first to put a big welcomes sign to BOTS - BROKERS DO NOT WANT YOU TO WIN. Until than, we're optimistic.

  10. #10
    Administrator Martin Kay's Avatar
    Ofcourse they want you to lose eventually! Question is - How?? Is it by price manipulation? or simply by understanding that eventually, the house has the upper hand?
    We are against those who try to manipulate. As I was saying earlier, crooks get you to deposit then tries manipulate you in so many ways. They want you to lose, literally. they will get you to lose. but let's not be mistaken here- just because some (or many... unfortunately) shady brokers will do anything in their power to get you lose, that doesn't mean all brokers want you to lose! No, they don't want you to win. No, that's not what im saying here. They want you to eventually lose, they understand that the house has the upper hand, and they won't manipulate you (hopefully). I think there's a big differences between these two approaches of "brokers want you to lose". That's why I saying - "If they all want you to lose your money, I'll be the first to shout it". I think (or wish) all traders here understand that it's them against the house, that's the reason scam is so popular in this business. But if we point traders at the right direction, then who knows, they might make money of it!

    And it's thanks for members like you, opdax, that reviles the crawl truth. Learn your business or else be burnt. good to have you around

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