How Does IQ Option Make Money?

How does IQ Option make money?
IQ Option makes money mainly through binary options and other financial instruments that allow you to invest in indices, commodities, currencies, and others. The software includes a robust online trading platform and analytics that enable you to take advantage of investment opportunities and calculated risks in real-time.

Millions of traders will not trust their investment using the IQ Option platform if they are not making money through it. But in this article, we want to turn the question on its head–how does the binary options broker actually make money?

One of the areas where IQ Option has become a popular choice is in binary options trading. As of the latest figures, over 17 million trader accounts have been processed and managed by IQ Option since its launch in 2013. Its rapid growth in just a few years has been attributed to the company’s transparent dealings. Knowing how it earns only adds more transparency to it.

While we’re at it, we will show how the chances of better returns are realized through IQ Option and why it has become one of the leading binary options brokers today. But first, we’ll take a look at what binary options trading is all about.

iq option make money

Binary option is a financial instrument that allows you to invest by predicting the price movement of various assets such as commodities (gold, silver, oil), indices (stocks), currencies, and others that are freely traded in the world market and national exchanges. They are also called all-or-nothing options or the more commonly used “high/low” because you only have two options to chose from – either the asset price goes up or down during a specified period.

If you make the wrong prediction, you lose all the money that you invested. If you make the right trade, you get your payout – investment, plus other bonuses and extras as offered by the brokerage company. The mechanism is not quite different from other forms of investment, like stock trading or forex. The distinction is that binary options trading is simpler (made possible by easy to use online trading platforms like IQ Option), can give larger payouts, and has basically black-and-white risks. Furthermore, its straightforward approach means you can confidently trade using online services through apps or websites.

Source: Statista

While many financial analysts and brokers themselves will advise you beforehand that trading in binary options may not be suitable for all investors, binary options is generally considered legal, albeit, subjected to regulations, as are other financial instruments.

All high-risk financial undertakings, such as binary options, carry the reminder that “You should never invest money that you cannot afford to lose.” The risk, however, is mitigated because you can have ample time to study price movements through historical charts and other features provided by binary options brokers such as IQ Option to help you analyze and predict movements, increasing your chances of making the right trade.

While luck will play out in almost anything you do in life, in binary options, you get a better chance of making money because you have precedents in how assets move in the markets which you can study. Nasdaq defines binary option as: “possessing all the characteristics of a financial instrument that can be used to realize investment goals.” While it may take time to learn its ins-and-outs, you need to learn the answer to the most important question first: how do binary options service providers make money?

1. How Does IQ Option Earn Through Binary Options?

Binary options are very much different from the stock or forex markets. Brokers are obviously making money on binary options, but how do they exactly do that?

Brokers such as IQ Option make money in several ways. Liquidity providers typically provide pricing structures that are slightly marked up compared to market prices. When you pay closer attention to asset prices on trading platforms, along with the potential payout, you will notice that these are not calculated according to the true percentage payout. Binary options brokers retain a portion of the latter, which serves as their commission and earnings.

Of course, the majority of broker earnings come from trading activities. Consider a simple scenario below:

Let’s suppose that IQ Option has 200 clients. Now, 100 of those clients bet 100 USD each that the GBP/USD will go up during the hour. On the other hand, the other 100 bets 100 USD each that GBP/USD will go down within the hour. Now, the total market pool of all clients is 20,000 USD. Let’s assume that the expected payout ratio is 80%, according to the trading platform.

After the hour, let’s say GBP/USD ended up. That means those who bet that GBP/USD will rise will receive 180 USD each while those who bet otherwise ended up with zero returns. Thus, the total payout is 18,000 USD. IQ Option now earns the 2,000 USD balance from the trade.

While the example above is simplistic and ideal, it shows how binary options brokers earn from trading. Imagine multiple trades during the day with many more clients. Brokers can easily end up with thousands of dollars in 24 hours!

2. IQ Option Corporate Profile

Industry experts are one in saying that IQ Option is one of the most transparent, reputable, and innovative binary options brokers around. They have a basis for saying that. Not counting the millions of traders that use IQ Option’s platform, let’s round-up some corporate facts and figures.

  1. Over a dozen awards and recognitions for its customer service and trading app/platform
  2. $11 billion average trading volume per month as of 2016
  3. $5.7 million average withdrawals by traders per month.
  4. 1 business day processing time for withdrawal requests
  5. 178 countries accepted and being serviced as of 2016
  6. More than 43,000 affiliates in 2016 from 4,000 plus in 2014
  7. Over $2 million in affiliates’ earnings per month

The company consists of two legal entities – IQ Option Europe Ltd. located in Cyprus and regulated by the Cyprus Securities and Exchange Commission (CySEC), and IQ Option Ltd., which is registered in Seychelles. The company is also listed in the registry of several European regulators such as the UK Financial Conduct Authority (FCA), the Italian Consob, the German Federal Financial Supervisory Authority (BaFin), and the Spanish CNMV, among others.

IQ Option

IQ Option

Try out IQ Option with their free trial

What does being registered with a number of regulators mean? For traders, the big advantage of this is that it’s easier to lodge any complaints if issues arise with the broker. For IQ Option, those are plus points for transparency, legitimacy, and reputation. Going back to the question – how does IQ option make money? User trust is key.

If ever there was a gold standard in binary options trading services, IQ Option easily has the attributes to be considered as such. It boasts of the following:

  1. Award-winning online trading platform/app
  2. Dependable customer support team
  3. Fast same day withdrawals
  4. Free demo trading account
  5. Small minimum investment and deposit
  6. Great payouts
  7. Top-notch trading conditions

Started only in 2013, IQ Option’s phenomenal growth and achievements in the industry despite being relatively young is a testament to its strict adherence to policies and regulations set down by government authorities, efficient company management, genuine dealings with customers and partners, and it’s leveraging of technologies to come up with innovative trading platform and features.

iq option

3. IQ Option Trading Features

Before you trade and earn with IQ Options, you must first know the tools, components, and features offered that you’ll be using. Here are the essentials:

  1. Online trading platform: IQ Option has its own in-house HTML5 trading platform developed by IT and financial specialists with advanced analytics tools to facilitate trading for both beginners and long-time traders. It allows for viewing of multiple charts, undertaking historical and technical analysis, and doing full-featured demo trading. The platform has won industry awards and accolades for its modern, intuitive, and responsive design and features. It supports various operating systems and can be run on Windows, Mac OS X, and even Ubuntu. Also available are native mobile trading apps for iPhone and Android for enabling trading on the go.   
  2. Types of binary options: IQ Option offers two ways to trade – regular options and turbo options. The first is binary options contracts with expiry times of 3 min, 5 min, 15 min, 30 min, hourly, and even up to the end of the month. The second one involves options with 30-sec and 120-sec periods.
  3. Available assets: IQ Option gives you more than 500 assets to trade in – currencies, stocks, and commodities. Currency pairs include EUR/USD, USD/JPY, GBP/JPY, EUR/GBP, AUD/CAD, EUR/JPY, USD/RUB, NZD/USD, AUD/USD, USD/CHF, USD/CAD, GBP/AUD, GBP/CAD, AUD/JPY, EUR/CAD, CHF/JPY, USD/NOK, EUR/NZD, and CAD/CHF. Among the stocks you can trade in are those of Facebook, Twitter, AIG, Baidu, Google, Ferrari, Gazprom, JP Morgan, Lufthansa, Intel, Goldman Sachs, Hang Seng, McDonalds, Nike, Apple, Amazon, Alibaba, CitiGroup, BMW, Cisco, DAX30, Dow Jones, Commerz Bank, CocaCola, Deutsche Bank, Daimler, General Motors, Vodafone, and others. You can also trade in a dozen cryptocurrencies. The only commodity available for trading is gold.
  4. Payouts: These would depend on the assets being traded and the expiry term you choose. But generally, medium and long-term options pay more than the short-term options. The big edge with IQ Option is that payout can reach up to 90% on successful trade with no commissions or fees charged by the broker when opening or closing trades.
  5. Investment amount: You just deposit $10 in your standard account (using leading credit cards, wire transfer, or online payment gateways) and start live trading at a minimum of $1 or a maximum investment of $1,000. There is the option for a VIP account, which requires an initial deposit of $3,000.
  6. Withdrawals: You can withdraw as soon as you make your first profit. The withdrawal process is quite easy and does not entail complicated steps with various methods available. They can be facilitated through credit cards, payment gateways, or e-wallet. Minimum withdrawal is $2, while the maximum is $1 million. Withdrawal requests are processed within 24 hours, but the length of time for you to get your payment varies (for e-wallet around one day and banks about 7-9 days). 

iq option dashboard

4. Investing and Earning Through IQ Option

Now comes the exciting part. One of the most common queries when it comes to binary options are variations of this – “do people really make money with binary options trading?” The answer is yes, and IQ Option is there to help you realize that with lesser risks and more chances of success.

Bear in mind, though, that how you earn through binary options trading rest entirely on your good judgment and preparation, things that IQ Option thought out to help you through its services, offerings, and features. We’ll go through some of them.

  1. Use the free demo account. You do not dive right into something without first knowing about it, especially if you are a first-timer. IQ Option’s free demo account lets you get the hang of things; hence, it would do you well to familiarize yourself with the trading platform, which is designed to be user-friendly. Through the online platform, you can set out trading strategies and plan your trade so that you’ll be ready come real trading time.
  2. Go through the historical quotes. IP Option provides historical currency trading and financial instruments’ quotes, which contain information on the exchange rates of currency pairs and other financial instruments over various periods. You view previous figures and rates and how they settled in the market and use them to test out strategies as well as do technical analysis.
  3. Scour their knowledge base. Still, to get you prepared, the IQ Option website provides pages for video tutorials detailing trading techniques and how to use the platform, comprehensive FAQs, and insights from financial analysts and trading experts. All are meant to equip you considerably even before you make your first trade.
  4. Be alert for market developments. Market volatility is a given, and any world-impacting events – conflicts, disasters, corporate takeovers, popular product launches, etc. – are sure to influence currency rates and share and stock prices. For example, the dates of product launches of Apple, Google, or Microsoft are known in advance, and their corporate stock prices usually pick up during or after the day of the product launch. You can take advantage of this window of opportunity to put in your trade – especially longer-term options, which pay more – knowing previous stock market patterns of such major events.
  5. Short term trades. While long-term trades pay more, shorter ones like IQ Option’s turbo options of 30- and 120-second expiry times can make you money much quicker. Having gained more experience with long-term trade, your next step is to trade for shorter terms. However, it’s riskier because, with short expiry periods, you won’t be able to depend on upcoming news events that can have an impact on asset prices. You can instead read the charts of various assets to again look for trends or use strategies such as the “Candlestick” or “Bollinger band” to help you find profitable trading opportunities for short term options.
  6. Trade prudently. In all your excitement, do not go for large investments hoping to strike it big on your first trade. Remember, this is not gambling, and having that bettor’s mindset will set you in for big losses and much bigger disappointment. It is wise to start with small, manageable amounts and, knowing price trends and trading patterns, go on sustained successful trades.
  7. Manage withdrawals. Just like in investing, also manage your withdrawals with smaller amounts. While with IQ Option, you can withdraw your winnings up to a million dollars, do not wait for it to reach staggering amounts before you decide to withdraw and have it transferred to your bank account. Experts suggest that you do frequent withdrawals/transfers of smaller amounts, which can easily be facilitated without raising red flags with your bank.
  8. Join their affiliate program. This is one way of earning without having to trade per se. All you have to do is invite potential traders and investors to use and join IQ Option and earn in the process. It is well-known in the industry that IQ Option has one of the most profitable affiliate programs.

iq option turbo option dashboard

Should You Go with IQ Option?

If you’re just about to try binary options trading as part of your investment portfolio, IQ Option is a highly recommended entry point. If you’re a seasoned trader, you know the many benefits that can be gained with IQ Option. Either way, making money with this broker gives you the means to manage risk, the knowledge to get you ready, and the opportunities to make the right trade, and eventually make money on your investment.

Every investment, especially ones like trading in an erratic market, brings with it certain risks. The levels of risk vary, and you’ll be advised in advance that the risk is high with binary options trading. Despite that, hordes of investors worldwide go for binary options because of the proven returns when trading is done properly with the right preparation, consistency, and mindset.

IQ Option will not promise you that you’ll win all the time in binary options using their platform, but you’ll soon realize that with IQ Option, the risk will be much more manageable and that profiting off your investment is very much a reality. The 17 million traders of IQ Option is proof of this. If you want to explore more investment platforms, you can check out the most popular binary options brokers in the market today, starting by comparing IQ Option with other top binary options brokers.

Daniel Epstein

By Daniel Epstein

Daniel Epstein is a senior financial research analyst at FinancesOnline and the architect behind our Fintech and ERP content division. His main areas of expertise are blockchain technologies, cryptocurrencies, and the use of biometrics in fintech solutions. His work has been frequently quoted by such publications as Forbes, USA Today, Entrepreneur, and LA Times. With more than 1,800 solutions scrutinized in the last 5 years spent on our team he always prioritized offering readers an unbiased perspective on modern financial technologies.

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