Binary options trading or gambling. Do you Trade or Gamble

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Binary Options Trading or Gambling

Nowadays, binary options brokers are popular due to their short investment offers and promises of high profit margin. These marketing tools attract types of people that are playing poker online, gambling at casinos or betting on sports. But binary options leave an impression of offering more than just a bet in hope for profit, they are perceived as real investing tools.

So What are Binary Options?

These options can be bought on different assets and more or less look like the real investment. People are severely generating from these “all or nothing options” with opportunities to earn between 60% and 450% per one trade with binary options. Most of the time, betting has two options it is either win or lose. Binary option market’s gain or lose depend on asset lasting in one of two possible situations. Also, in case ending price is the same as starting price investor is going to get his money back. Some traders are encouraged due to this all or none results and take risk by predicting trade scenarios. That is why in some ways, binary options and gambling are always associated in the minds of potential customers.The distinguishing factor between gambling and investing in case of binary options is the bet size. As gambling entirely depends on the luck or chance, while binary options involve analysis and market predictions in betting.

The value of these depends upon the financial assets for which is dispensed, there are many ways through which you can invest in binary option based on market analysis and complete research on the concerned assets. In this way, one can have substantial data to decide whether the particular binary option provide revenue or not thus making it different from betting or gambling. Betting deal the capability to enter into a bet without predicting the outcome of the event whereas binary option allow the investor to conduct proper research and analysis about the strength and weakness of the underlying asset and then allow to authorise control over its future outcome.

On the other hand the trouble with this digital option is that they turn their percentage rate so quickly that even the expert traders become unpredictable about the mechanism of its market. So you just have to mount an instant guess and a prolong research for this kind of prompt trading. Another shortcoming provides longer term contract with broker certainly of one year which means that you will not be able to buy or sell your shares as the market fluctuates.

Is Trading Binary Options Gambling?

It must be an agreed fact that binary options involves high risk and high return on financial instruments. But it is similar to other trading options such as future trading or vanilla option trading and thus should consider as a part trading investment. So, short answer to are binary options like gambling – yes, but they are not gambling!

Although these websites are making huge businesses, and by searching through Google you would get around 900k hits with promotions that procure maximum profit in an hour, binary options are still more gambling than trading. However, even gambling can be done professionally. Go only for trusted binary options brokers!

Is binary options trading gambling?

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It is more about whether you are gambling with binary options.

If your decisions are educated and your strategy has a positive expectancy then you are not gambling.

If you make bets for the thrive of the game or the hope of getting rich quick then you are gambling.

Seasoned poker players are not gambling. Card-counters are not gambling. On the other hand, many “investors” are gambling with “safe” stocks.

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Is This Simply Gambling?

By Toby Robinson

A common question we hear is “Are binary options just gambling?“. The answer is not clear cut. As with many forms of investment, binary options can be used as purely ‘punts’, but astute traders will be using strategies and techniques to ensure the last thing they are doing is gambling. So the answer is not black and white.

Is All Investing Gambling?

Without getting into a semantic debate about the definition of gambling, it could be argued that any form of investment is a ‘gamble’. A hedge fund manager buying a large chunk of shares in a multinational corporation has an element of risk to it. Any form of financial disaster could impact that company. The manager is (hopefully) aware of this, but is satisfied that the potential gains are worth the risk. On the flip side, a private investor might hear about a tiny internet start up trading for pennies and buy shares without any form of research into the company or it’s business model. That would strike me as a gamble.

So if we have established that it is possible to gamble in traditional share trading, it is certainly possible in binary options. But just like the hedge fund manager above, it is also possible to trade based on expected value. In my opinion, once a positive expected value has been established, the line has been crossed from gambling to investing.

Are binary options gambling?

How To Avoid Using Binary Options To Gamble

Firstly, there is nothing wrong with using binary options for a flutter, as long as you know that is why you are using them and are not gambling with money you cannot afford to lose. That applies equally if you are using them to trade really! Binary options offer a quick, exciting way to speculate on the markets and are probably more entertaining than some other forms of betting, so why not? Some of the platforms are designed with gambling absolutely at the forefront of the design – flashing lights, pulsing price graphs and competitions. People who use binaries for a bit of fun are well catered for.

If however, you want to avoid using them to gamble, there are a couple of checks you can make, based on your own trading:

  • Use genuine underlying assets. Some brokers, particularly at weekends, will provide ‘assets’ based on random number generators. It is not always clear that traders are not actually using ‘real world’ underlying prices though. Some are labelled ‘volatility indices’ but they are not based on any official index, purely a number generated by a computer. No amount of technical analysis or research is going to help you here. These are a good old fashioned gamble. You will never be able to establish positive expected value on a random number – if you do, the broker is effectively giving away money. How likely is that?
  • Use a strategy. It is a broad statement, but needs to be – there are many strategies that work for people, and I am not going to question any of them. The point is, if you do not have a strategy for identifying the trades that might be profitable, and a money management plan to ensure risk is managed, then it is unlikely there is a positive value in the trade. The strategy might only apply to a single trade, a particular news event perhaps, but it should fit into a wider risk management plan somehow.
  • Understand positive expectation. Make sure you are aware of whether the trade will be profitable or not over the long term. Any single trade can win or lose, but over the long term, would this trade prove profitable? It boils down to the payout and the number of times this trade would finish in the money out of 100. If you need to win 57% of trades to make money based on the payout you are getting, and expect the trade to win 65% of the time – you have positive expected value – go for it!

So whether binary options are gambling or not depends on the trader. They can be used to gamble, but they can also be used to invest. It all comes down to what is going on between the ears of the person placing the trade.

…and the next time you hear a binary options snob writing them off as a gambling, ask them if they have life insurance (Read this to find out why)

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  • Binarium
    Binarium

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  • Binomo
    Binomo

    Good Choice For Experienced Traders!!!

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