Binary options trading attracts a lot of people. Almost all traders are retail ones.
It means that you won’t find institutional investors, macro-managers, hedge funds, and so on, investing or trading a binary option. Simply put, binary options trading is for the average Joe.
Average Joe is a regular human being. He/she has a job (not related to trading) and heard/read about a possibility to make tons of money. Easy. With no hard work involved.
And, the average Joe fell for it.
Don’t get me wrong: money can be made trading binary options. Only that the chances are so slim for the regular retail trader, that they won’t stand the test of time.
Having said that, why makes money in the binary options business? Why is it accepted if almost all retail traders lose money?
Who Profits from Binary Trading
Despite the tough introduction, this is valid not only for binary options. But for trading in general.
Trading financial markets is not for everyone. It is an ongoing job, not a hobby.
It comes with a high level of stress and virtually it is an emotional rollercoaster. Add to this the ever-changing environment.
Imagine an active trader from the 80’s. The trading industry changed so much that is unrecognizable anymore.
High-frequency trading with its robots and super fast computers, online trading, etc… they all brought something new to the trading table. If the trader didn’t adapt, he/she won’t survive the test of time.
Brokers
If there’s one entity that makes money in the binary industry, these are the brokers. Here there are two categories:
– Regulated brokers. They earn from commissions and other fees. They don’t make much and their earnings strongly depend on how active their clients are. They try to stimulate clients to trade as much as possible. So that the commissions and fees to keep pouring.
– Unregulated brokers. They earn from every part of the trading process: commissions, fees, scamming traders, delaying withdrawals, and even trading against their client’s positions.
Software Developers
Unfortunately, most binary options brokers scam people. This means their business is not regulated by a financial authority.
As such, what they do is they mirror the market. They offer their clients quotation of the actual market.
But, this is only a software that copies the rates. And, sometimes, they’re copied in such a way to be in the broker’s interest.
Software developers make money from binary trading. Where else would buy the brokers the much-needed software?
Some Retail Traders
Statistically, almost ninety percent of Forex retail traders lose their first deposit. Moreover, the ones that fund their trading account again, more than eighty percent lose again.
In binary trading, percentages are believed to be even higher. There’s no accurate statistic because the industry is plagued with scammers.
People that make it, find it is impossible to withdraw their funds. In any case, those retail traders that make it have experience, know other markets and use binary trading only as a hedge on other positions.
Conclusion
Anyone but the retail trader, or the average Joe, make money in the binary industry. While this is a percentage valid for the Forex industry too, there’s little or no comparison between the two. Mostly because regulated brokers are difficult to find in the binary industry.
