Binary Options Exchange – Peer to Peer Binary Options Trading

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Binary Options Exchange. Most people familiar with binary options only know about trading with a regular binary options broker. This means the broker offers a wide range of options that traders can buy. It doesn’t matter if it is a call or a put option, the process is the same: the trader buys the option from the broker. Whenever the trader wins, the broker loses, and whenever the trader loses, the broker wins. This binary options trading model has two problems: 1) There is a conflict of interest between the trader and the broker since the broker makes money only when the trader loses, and the broker loses money when the trader is .

2) Since the broker wants to make money, the options will have low payouts in order to give the broker an edge over the trader. This is why payouts are never more than 85% when it comes to simple Up/Down options that have a 50% win rate for the majority of traders. Considering the two issues described above, it is no wonder that most people trading binary options end up losing money on the long run. Of course, there are successful traders as well that make money trading binary options, but the losing traders far outnumber the winning ones, as the low payouts offered by the brokers require a very high winning rate to be profitable.

If the option payout is 85%, a trader needs to have a winning rate of approximately 54% to break even, and most brokers have payouts lower than 85%. Figure 1: Binary options brokers make money when traders lose. However, there is another model of binary options trading that very few people know about which offers better odds (higher payouts) and does not create a conflict of interest between the trader and the broker.

It is called trading on a binary options exchange . What is a binary options exchange? A binary options exchange is a trading environment where traders can buy options from other traders, or write their own options and wait for other traders to buy them. It is a peer-to-peer type of trading where you don’t trade against a broker, but against other traders like you. This is very similar to trading options or futures in a stock exchange where you buy contracts from other market participants, not from your broker.

When trading on a binary options exchange, your broker is not your counterparty as it only acts as a trading environment and not as a market maker. So how exactly does a binary options exchange work? Who creates the options and why is it better than trading with a regular broker? What if there is no liquidity on the exchange? Figure 2: Binary options exchanges make money from commissions. In order to have enough liquidity at any time, the binary options exchange will allow some partner brokers to write their own options and list them on the exchange.

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