I have been trading for some time and I am curious about one thing. How do brokers actually make money from our trades?
I realize they are in it for profit, but I don’t understand their business model. Do they take a portion of every trade?
I am starting to wonder if this impacts my trading outcomes.
Most brokers actually bet against you. They don’t hedge your trades.
When I lost $800 on EURUSD last month, my broker made that exact amount. This hit me hard when I realized we’re essentially playing against the house.
Some use A-book model where they hedge, but many smaller ones just take the other side of your position.
Binary options brokers make money through:
• House edge - payout rates below 100%
• Volume bonuses from liquidity providers
• Spreads on underlying assets
Pocket Option uses standard 80-85% payout structure. This creates built-in profit margin.
There’s also something called slippage that adds to their revenue. When markets move fast, your execution price might be slightly different from what you clicked.
Plus they earn interest on all the deposited funds sitting in client accounts. That money doesn’t just sit there doing nothing.
Some brokers also have withdrawal fees or inactivity charges if you don’t trade for months.
Brokers profit from the spread. Typically around 2-3 pips for major pairs.