Trading Binary Options Can Be Addictive

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Trading Binary Options Can Be Addictive

People who have uncontrollable behaviors can be considered addicts. The word “addict” may seem dirty especially with society’s perceived ideology of people sharing needles and sleeping on park benches. Reality is that addiction can be in any form and it can happen to you and to anyone else who has an obsession towards something. According to research, an addict’s brain is quite different than a non-addict’s brain because it processed drugs in a different way. For some reason, a part of the brain is being activated and that is when the addiction stimulates these behaviors.

Addiction does not limit to drugs alone. Hobbies or jobs such as trading can also be addictive. The process of trading includes extreme brain exercise plus strong will. It comes with problem solving and invariable analysis as skills based on performance become very fine tuned. This growth can be similarly linked to poker and chess players, and athletes. Nonetheless, trading can be a way of destroying your life because it can be quite addictive because you can develop the urge to succeed in an uncontrollable manner. The hard part about this kind of addiction is that you become addicted to the process and not to a substance such as drug and alcohol addiction. There is still some tedious research done in trading addiction but to stop yourself from becoming a trading addict you need to understand a few things.

UNDERSTANDING ADDICTION

Drug and alcohol addiction are progressive neurological diseases that is greatly influenced by the vulnerability of genes. The brain chemistry’s acquired or inherited abnormalities develop a distorted response thus causing huge psychological, behavioral, and physical problems. Even though social and environmental factors can influence the expression and progression of disease, they do not actually cause the addiction. What transpires is the development of a new strain of chemicals known as TIQS or tetrahydroisoquinollines.

TIQS are very similar to opiates which are compounds that relieve pain. Just like these opiates, enkephalins and endorphins and synthetic heroin and morphine, TIQS can be very addictive substances. When these are developed in adequate amounts in the vital parts of the brain, TIQS can lead to brain chemistry changes that lead to pathological desires.

With this being said, it is in fact very possible that similar processes happen with regards to trading addiction. If one or more of your relatives have problems with addiction then you are more or less susceptible to being a trading addict. Just like drugs and alcohol. Trading can also numb you from pain. If you are at risk for addiction then you need to ask yourself first – do I have the enthusiasm for trading?

Most trading coaches and psychologists will advise you about losing patience, self control, and self discipline. However, the true dangers of addiction are rarely discussed. Frequently, losses if the above mentioned market characteristic are linked to addictive behavior patterns.

Addiction happens when there is great stimulation provided by a specific activity then when done over time, the person can be physically and/or psychologically dependent. It is typically labeled as addiction if people look for the activity despite of the fact that it is destroying everyone and everything around. It is considered as the incapacity to end the activity even when such activity disturbs life.

Research shows that over two million adults have already met the criteria for the diagnosis of pathologic gambling. Four to eight million adults can also be considered as problem gamblers who are direct problems due to gambling. Trading can be included in this category. It is already considered as gambling when you join the main purpose of earning money. There is no utmost plan and goal. The idea of unlimited wealth stand before you and what keeps you captivated is that great catch. This is called as Random Reinforcement. In definition it is having characteristics reinforced with negative or positive results on none consistent basis. For example, today you do something and then you get a reward for it. A similar thing happens the next day but on the day after you do something but then you are punished for doing it. This goes on randomly. This is can be impossible for effective learning.

This cannot be avoided in the training market. All you have to do is to be able to recognize it and stick with your rules at the same time detaching yourself from money. You need to have a good feeling about your trading not because you lost money but your capability to stick to your rules the only consistent things in this environment are discipline and rules.

ADDICTION TO TRADING

Even if you say that traders do not show addictive behaviors than the bigger population, statistics prove that most likely than not, at least a single trader in every 10 can be diagnosed with addiction. For traders with attention deficiency who cannot stand to be bored or who lacks stimulation, binary options trading can do the trick. For a depressed trader, trading can be an escape and be an immediate sense of gratification. Traders like this have to trade and then keep on trading even when they do not have an edge to do so. They eventually lose lots of money and lead to failure in like. This then creates hardships for themselves and their families.

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For those who are addicted to trading it is not about the discipline and going with the rules. It is actually about gaining more profit and following rules is useless. The biggest solution is regaining their lives and being in control again. If you already see yourself in this article then you have to understand self mastery and not become a destructive instrument. Feeding emotional problems is not the real reason for trading but making money.

One question that you have to ask yourself is “ what will you do if cannot trade and if you are in trouble? If is like asking a drug addict “what will you do if you do not do drugs? If the answer to these questions is “Life would not be worth living” then you are an addict. If you answer with “ I can do some other productive things” then you can have a better life.

A Guide to Trading Binary Options in the U.S.

Binary options are financial options that come with one of two payoff options: a fixed amount or nothing at all. That’s why they’re called binary options—because there is no other settlement possible. The premise behind a binary option is a simple yes or no proposition: Will an underlying asset be above a certain price at a certain time?

Traders place trades based on whether they believe the answer is yes or no, making it one of the simplest financial assets to trade. This simplicity has resulted in broad appeal among traders and newcomers to the financial markets. As simple as it may seem, traders should fully understand how binary options work, what markets and time frames they can trade with binary options, advantages, and disadvantages of these products, and which companies are legally authorized to provide binary options to U.S. residents.

Binary options traded outside the U.S. are typically structured differently than binaries available on U.S. exchanges. When considering speculating or hedging, binary options are an alternative—but only if the trader fully understands the two potential outcomes of these exotic options.

Now that you know some of the basics, read on to find out more about binary options, how they operate, and how you can trade them in the United States.

U.S. Binary Options Explained

Binary options provide a way to trade markets with capped risk and capped profit potential, based on a yes or no proposition.

Let’s take the following question as an example: Will the price of gold be above $1,250 at 1:30 p.m. today?

If you believe it will be, you buy the binary option. If you think gold will be below $1,250 at 1:30 p.m., then you sell this binary option. The price of a binary option is always between $0 and $100, and just like other financial markets, there is a bid and ask price.

The above binary may be trading at $42.50 (bid) and $44.50 (offer) at 1 p.m. If you buy the binary option right then, you will pay $44.50. If you decide to sell right then, you’ll sell at $42.50.

Let’s assume you decide to buy at $44.50. If at 1:30 p.m. the price of gold is above $1,250, your option expires and it becomes worth $100. You make a profit of $100—$44.50 = $55.50 (minus fees). This is called being in the money. But if the price of gold is below $1,250 at 1:30 p.m., the option expires at $0. Therefore you lose the $44.50 invested. This called out of the money.

The bid and offer fluctuate until the option expires. You can close your position at any time before expiry to lock in a profit or a reduce a loss, compared to letting it expire out of the money.

A Zero-Sum Game

Eventually, every option settles at $100 or $0—$100 if the binary option proposition is true and $0 if it turns out to be false. Thus, each binary option has a total value potential of $100, and it is a zero-sum game—what you make, someone else loses, and what you lose, someone else makes.

Each trader must put up the capital for their side of the trade. In the examples above, you purchased an option at $44.50, and someone sold you that option. Your maximum risk is $44.50 if the option settles at $0, and so the trade costs you $44.50. The person who sold to you has a maximum risk of $55.50 if the option settles at $100—$100 – $44.50 = $55.50.

A trader may purchase multiple contracts if desired. Here’s another example:

  • NASDAQ US Tech 100 index > $3,784 (11 a.m.).

The current bid and offer are $74.00 and $80.00, respectively. If you think the index will be above $3,784 at 11 a.m., you buy the binary option at $80, or place a bid at a lower price and hope someone sells to you at that price. If you think the index will be below $3,784 at that time, you sell at $74.00, or place an offer above that price and hope someone buys it from you.

You decide to sell at $74.00, believing the index is going to fall below $3,784 (called the strike price) by 11 a.m. And if you really like the trade, you can sell (or buy) multiple contracts.

Figure 1 shows a trade to sell five contracts (size) at $74.00. The Nadex platform automatically calculates your maximum loss and gain when you create an order, called a ticket.

Nadex Trade Ticket with Max Profit and Max Loss (Figure 1)

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Binary Options

Options that offer a fixed payout based on a simple yes/no proposition.

What are binary options

Understand the simple idea behind binary options and their advantages over other financial instruments.

How to trade binary options

Learn how to trade with our award-winning binary options platform in this simple step-by-step guide.

Types of trades

Learn about the types of trades that can help you execute your trading strategy on rising, falling, and even sideways markets.

Range of markets

Trade binary options on a wide range of underlying markets with limited risk.

Glossary

Check out some technical terms before you start.

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Forex

The Foreign Exchange Market (Forex) is the world’s largest and most liquid market – where anyone can buy, sell, and exchange currencies.

What is Forex trading

New to Forex? We explain the basics of the world’s largest and most liquid market.

How to trade Forex

Learn how to read currency pairs, when to go long or short, and how to buy your first currency pair.

Forex margin policy

Not sure how margin works? Read our margin policy and learn how to calculate the margin for our currency pairs.

Forex contract specifications

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Cryptocurrencies

Cryptocurrencies such as Bitcoin and Ethereum are decentralised digital assets that enable instant payments to anywhere in the world.

What is cryptocurrency trading

Speculate on the price movement of cryptocurrencies such as Bitcoin, Ethereum, and Litecoin without owning them.

How to trade cryptocurrencies

Trade popular cryptocurrencies on our MT5 platform with leverage and variable spreads. No wallets are required to start trading.

Cryptocurrency margin policy

Not sure how margin works? Read our margin policy and learn how to calculate the margin for our cryptocurrency pairs.

Cryptocurrency contract specifications and commission scheme

Find out more about the costs and details of every cryptocurrency pair we offer.

Contracts for Difference (CFDs) are financial derivatives that allow you to trade on the movement of underlying assets without owning them.

What is CFD trading

Read our simple introduction to this popular derivative instrument to find out what you can trade with CFDs and their advantages.

How to trade CFDs

Plan to start trading CFDs? Learn when to buy and sell, how to calculate your profits and losses, and how to close a position.

CFD margin policy

Not sure how margin works? Read our margin policy and learn how to calculate the margin for our CFDs.

CFD contract specifications

Find out more about the costs and details of each CFD asset we offer.

Metals

Diversify your portfolio with all four types of precious metals that are widely known as “safe haven” investments: gold, silver, platinum, and palladium.

What is metals trading

Learn the basics of metals trading and the categories of metals available.

How to trade metals

Buy or sell all four available precious metals – depending on your market view. Also, learn what factors affect prices.

Metals margin policy

Not sure how margin works? Read our margin policy and learn how to calculate the margin for our metal pairs.

Metals contract specifications

Find out more about the costs and details of every metal pair we offer.

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Lookbacks

What are lookbacks

A lookback contract has a payout that depends on the optimum high or low achieved by the market. The option allows the holder to “look back” over time to determine the payout.

Types of lookbacks

We offer three types of lookbacks:

Win the multiplier times the high minus close.

Win the multiplier times the close minus low.

Win the multiplier times the high minus low.

For example, let’s say the market has a low of 5,200 and a close of 6,000 over the contract duration, then a “Close-Low” lookback with a multiplier of $2 would have a payout of:

Lookbacks options are currently only available for Synthetic Indices.

Return to player (RTP) % for lookbacks for a multiplier of 1 and 1m duration is around 87% on average.

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In the EU, financial products are offered by Binary Investments (Europe) Ltd., W Business Centre, Level 3, Triq Dun Karm, Birkirkara, BKR 9033, Malta, regulated as a Category 3 Investment Services provider by the Malta Financial Services Authority (licence no. IS/70156).

Outside the EU, financial products are offered by Binary (SVG) LLC, Hinds Building, Kingstown, St. Vincent and the Grenadines; Binary (V) Ltd, Govant Building, Port Vila, PO Box 1276, Vanuatu, regulated by the Vanuatu Financial Services Commission (view licence); Binary (BVI) Ltd, Kingston Chambers, P.O. Box 173, Road Town, Tortola, British Virgin Islands, regulated by the British Virgin Islands Financial Services Commission (licence no. SIBA/L/18/1114); and Binary (FX) Ltd., Lot No. F16, First Floor, Paragon Labuan, Jalan Tun Mustapha, 87000 Labuan, Malaysia, regulated by the Labuan Financial Services Authority to carry on a money-broking business (licence no. MB/18/0024).

This website’s services are not made available in certain countries such as the USA, Canada, Hong Kong, Japan, or to persons under age 18.

The products offered via this website include binary options, contracts for difference (“CFDs”) and other complex derivatives. Trading binary options may not be suitable for everyone. Trading CFDs carries a high level of risk since leverage can work both to your advantage and disadvantage. As a result, the products offered on this website may not be suitable for all investors because of the risk of losing all of your invested capital. You should never invest money that you cannot afford to lose, and never trade with borrowed money. Before trading in the complex products offered, please be sure to understand the risks involved and learn about Responsible Trading.

In the EU, financial products are offered by Binary Investments (Europe) Ltd., W Business Centre, Level 3, Triq Dun Karm, Birkirkara, BKR 9033, Malta, licensed and regulated as a Category 3 Investment Services provider by the Malta Financial Services Authority (licence no. IS/70156).

In the Isle of Man and the UK, Synthetic Indices are offered by Binary (IOM) Ltd., First Floor, Millennium House, Victoria Road, Douglas, IM2 4RW, Isle of Man, British Isles; licensed and regulated respectively by (1) the Gambling Supervision Commission in the Isle of Man (current licence issued on 31 August 2020) and by (2) the Gambling Commission in the UK (licence reference no: 39172).

In the rest of the EU, Synthetic Indices are offered by Binary (Europe) Ltd., W Business Centre, Level 3, Triq Dun Karm, Birkirkara, BKR 9033, Malta; licensed and regulated by (1) the Malta Gaming Authority in Malta (licence no. MGA/B2C/102/2000 issued on 01 August 2020), for UK clients by (2) the UK Gambling Commission (licence reference no: 39495), and for Irish clients by (3) the Revenue Commissioners in Ireland (Remote Bookmaker’s Licence no. 1010285 issued on 1 July 2020). View complete Regulatory Information.

Binary.com is an award-winning online trading provider that helps its clients to trade on financial markets through binary options and CFDs. Trading binary options and CFDs on Synthetic Indices is classified as a gambling activity. Remember that gambling can be addictive – please play responsibly. Learn more about Responsible Trading. Some products are not available in all countries. This website’s services are not made available in certain countries such as the USA, Canada, Hong Kong, or to persons under age 18.

Trading binary options may not be suitable for everyone, so please ensure that you fully understand the risks involved. Your losses can exceed your initial deposit and you do not own or have any interest in the underlying asset.

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 78.6% of retail investor accounts lose money when trading CFDs. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.

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