The IQ Option business model and many other binary option platforms are based on pure exchange. When there are traders who are willing to buy then there are other traders who are willing to sell. In normal market conditions buyer and seller positions are the same.
The normal situation is seen when the market moves quietly, no sudden spikes.
Where does the binary option broker earnings come from?
Binary option brokers earn commissions from trading volume of their customers, the more trading volume the more profit the broker. So can be spelled more profitable trader the profits also company.
Brokers take commissions on every transaction, commissions are usually up to 7.5% depending on market conditions, this commission is not displayed in our account. Because actually the commission is taken directly from the market rather than from our account.
Where do the traders get paid?
Profit trader obtained from the market directly, so the function of the broker is to bring together buyers and sellers and brokers will take a commission from every transaction that occurs
A simple example:
I bought the option EUR / USD Rp 100.000 then IQ Option system will automatically enter my order into the market and bring it together with the seller of EUR / USD who was in the market. That way there is a deal deal.
Getting around here does not mean that the seller must also sell exactly EUR / USD for Rp 100,000, he could be selling EUR / USD for 100 million while I only buy 100,000. Well this is where IQ Option system will process everything automatically, they will combine all buyer transactions at that time. So my order will be combined with other trader's order for processing. The picture is like that, but all the process was done very quickly by computer 0.01 seconds.
In a binary option there is a liquidity provider so if an excess order broker (a condition where the buyer is much more than the seller or otherwise) then the order will be thrown to a larger liquidity provider to process the order.
Conclusion
The workings of a binary option company are similar to those of most banks. They will process our transactions and take commissions for each successful transaction.
So if you lose your loss will go into the bag of IQ Option? The answer is no
If you profit from profit taken from IQ Option? The answer is no
IQ Option function here is to provide a platform so that we can trade mutual trading with other traders. When we buy an option then there are other traders who are selling it.