Binary Options has become such a popular choice for investors that many of its trades hover on the edge of legality. And what may bring in a quick buck, may not be worthwhile in the long run, if you're one to care about the law (or even just financial penalties) coming back to bite you. What binary options, as well as Forex brokers, are now seeing are harmful or "?toxic" order flows. This occurs when traders try to influence prices by taking advantage of arbitrage opportunities or by using methods other than the normal trading protocols, such as placing an order beyond existing market quotes.
Some binary options providers are approaching their trades as "?dealers" or counter-parties rather than agents representing their clients and this become a risky venture when and if their clients win too much money. Brokers are being asked to execute trades at "?off market" prices and despite their warnings to clients that such orders are subject to cancelation account suspension, traders continue to use a variety of automatic trading strategies to place their orders.
Brokers have been handling toxic order flow in different manners. Some see it as a sign that the binary options market has finally reached maturity but they will cancel trades that have been executed at off market prices. Other brokers continue to take responsibility to honor and execute their clients' trades but move ahead with caution. All brokers have the legal right to reject an order and will do so when deemed necessary.
It is just as important to note that traders can earn money by trading binary options in the proper way – all it takes is a bit of patience, education and practice. And making money legally is entirely achievable.