Why trading binary options and gambling are quite different things

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Why trading binary options and gambling are quite different things

Binary options attract more and more attention, because it is a great way of earning considering the simplicity of their usage in the buying process. Only imagine next situation: deal with expire time from 30 seconds and up to several months, approximately may make a profit of about 80% of the total cost of the option. This was the real reason for the rapid growth of interest in this type of trading in the financial market.

Is trading binary options gambling or it is completely different things? In order to really answer this question intelligently, at first, remind yourself what is gambling.

The goal of each and every gambling is targeted at inciting excitement in player. For example, the well-known card game “Poker”, which is all considered gambling. But does it really evoke strong emotions in people? In fact, an ardent gambler, she’s probably really excited, but, for example, for the dealer is nothing more than a job. Hardly professional croupiers will argue that he is actually a gambler. In any case it is a link that is definitely allotted role in this game and not much more. In other words, the perception of the game. It’s like in a hockey game that for fans this is a real game, and for players work.

Therefore, given the above induced opinion and taking into account he binary options market, where people perceive the Forex trading, as a game, therefore, likely to experience the passion. Therefore, it is logical to assume that his position will be similar to any gambling. At the same time, the person who objectively looks at things, has a real understanding of what is happening and to adequately assess their capabilities, never will be related to binary options trading as gambling. The essence of the perception, not in the lesson, and what people will do in a given situation.

Brewing logical question: why the gambler is not a bit of work on binary options? And it’s all quite simple:

• the player originally will be allocated to the trading process as a game — hence the action often will be ill-considered and frivolous;

• more than likely, these people will not learn anything, relying on fart and perceiving the learning process is a waste of time;

• high embernet the occurrence of excessive expectations, often will be associated with a profit in the first seconds.

BINARY OPTIONS AND GAMBLING

Very often you can hear that the options trading looks like the well known game “Roulette”, wherefore winning is impossible. First and foremost, to win here, obviously, the truth will fail, however, to start earning in a very real way. additives important here is the approach to this activity and its human perception. These two things resemble one another due to the fact that roulette as well as in options trading, you can make bets at random, or to calculate all possible combinations to remember past results and calculate the probability of an event.

A similar result in trading binary options — someone will come for the freebies, the result is playing will deposit lose, and someone will start to earn real money by earnestly studying, examining the experience of other successful traders, analyzing the trends and the situation of market, knowingly invented and use technical and fundamental analysis. Trader also needs to be armed for victory.

Anyone who seriously trades binary options never call it a game, because he would not a priori to experience the excitement. In fact, top traders, to achieve real success in this field, will always look at binary options trading soberly. After all, they really understand that the thrill of destruction. Hence, the person who wants does not want to play, but seriously to make money trading in the financial market, he must learn to take seriously, not to be confused with the conventional gambling. After all, the one who wants to, he will always find a 100% similarity in all this, mixing the result of trade and game, when in fact it is quite the different classes.

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Little advice for everyone: if you have a feeling of unhealthy excitement during the trading process (similar to gamblers), then right immediately quit with it, because it is well known that emotions still haven’t helped to reach the desired results nobody.

Sadly, but truly – it is not suitable for everyone to trade on the financial market. But anyone with a desire can test himself and check luck, while not risking his own money.

All of this is real by opening IQ option demo account. This broker, as a trusted choice top traders, holds a leading position in the ranking binary broker and offers impeccable service with really great trading conditions. Check it by clicking the button below.

“General Risk Warning: Binary options trading carry a high level of risk and can result in the loss of all your funds.”

Binary options – trading, NOT gambling

This question has been repeated so many times that we thought it deserved a special section. A lot of people like to think that Binary Options is like gambling because you are basically investing your money on something that you simply cannot tell with a respectable degree of confidence. Since you are trying to predict whether the cost of an asset will appreciate or depreciate within a specific time period, you can either be right or wrong, regardless of what you may have learnt. Let’s take a look at whether this assumption is true or not.

What is Gambling

Gambling is essentially an investment into an activity in the “hopes” of winning something of a higher value. Gambling is extremely popular the world over; places like Las Vegas are frequented by millions every year who try to find that lucky break which will turn their thousands into hundreds or thousands or even millions. Of course such an outcome is tempting!

All you do is show up, place a bet and chances are you will walk away with enough money to make the rest of your life hassle free and comfortable. Popular forms of gambling include lottery, horse race, casino games like blackjack, roulette, bingo. There are even wagers which are placed on the outcomes of certain sports such as cricket and football, these bets include predictions such as who will win the toss, how much will the team score after a particular time period and whether a particular team will win or not.

The keyword in all the activities above is “hope”. The decision to place a wager is purely an emotional one and there is virtually no way that the gambler can even hope to get a clue regarding whether the eventual outcome will be in his or her favor. Gamblers often place large sums of money saying things like – “I just know it!” or “this is my lucky day”, hardly a well thought out decision. Gambling by its very nature is extremely risky and the odds from the get go are always stacked against you. Simply put, you are gambling if…

  • You have absolutely no way of knowing how the activity will turn out.
  • You are making financial decisions purely on an emotional level.
  • You did not bother to study the game you are investing in.
  • You believe that chance, luck or fate favors you.

Gambling vs. Investing in Binary Options

So does Binary Options fit the above description? Well for starters there is no way you can state with a hundred percent confidence that the outcome of the trade will go as you saw it, but the same could be said about anything else in life, ALL activities have some degree of risk attached with them and there is no way you can ever predict with total certainty that your plans will work out your way.

So there is no doubt an element risk that you might lose the amount you invested to purchase the trade. However, most people do not realize that part of Binary Options trading involves rigorous study of market trends, chart analysis and how assets tend to move from time to time. It also requires an understanding of binary options pricing. This is why those who bother to understand the market in general are the most successful at it.

Therein lies the difference between gambling and investing, while gamblers are emotional people, willing to lose money against a hopeful outcome, traders are intelligent analytical people who have rigid money management strategies and place trades in carefully selected scenarios which offer the highest chance of a positive return. If Binary Options could indeed be classed as gambling then all traders in stock markets are gamblers and surprisingly, many of them are some of the richest people on the planet.

Unlike gambling, in Binary Options you CAN predict with a high degree of confidence how an asset will move! While this does not mean that all the trades you place will win, there are ways you can turn most of your investments into winning ones.

Gambling Trading
Money is wagered emotionally. Money is invested intelligently.
Risk is maxed out. Risk is understood and accounted for.
Gamblers like to rely on luck. Traders like to rely on careful analysis and planning.
Predicting outcome is often impossible. Outcome is treated as a statistical probability.
Gamblers are easily tempted. Traders are inherently suspicious of too good to be true scenarios.

Mitigating Risk in Binary Options

Risk in Binary Options can be brought down systematically by a careful use of charts, market analysis and strategies. With the aid of charts you can understand how the price of an underlying asset is moving so that you can make an informed decision. When you have the history of how the asset has been behaving through a set period of time, you can at least gain an idea as to how it may behave in the next few minutes or hours.

Next, you can use strategies to reduce the risk as well. For instance, you could use a strategy called “Spreading” where you can duplicate a trade across a number of different binary option platforms. Since each of the five trades will be placed a few seconds to a few minutes apart from each other, it instantly increases your chances of scoring a winning trade on at least a couple of them. On an average you can hope to win 70% to 80% of all the trades that you will place when you make a use of the signals which you will receive from Option Bot 2 if you use spreading.

Avoid the Winning Streak Pitfall

One of the biggest errors which both seasoned traders and gamblers commit is getting carried away by winning streaks. A smart investor knows when to call it quits and move away, under no circumstance should you invest more money than you can afford to lose and the best way you can hope to win at Binary Options is by trading slowly and steadily rather than hunting for those special days.

7 Binary Options

Are you also still doubting whether binary options trading is gambling or not? Let us answer all your questions in this article.

Binary options trading is a hot discussion topic anywhere in the world. There is a lot of information out there and it is difficult to make sense of it all. And the truth is that there is really false information out there and, as a result, a lot of false conclusions are drawn from it.

This article will attempt to cover all the major questions around whether or not binary options trading should be classified as gambling or trading and whether it is a legitimate financial instrument.

If you have read our recent update on binary options regulations around the world, you have probably noticed that many countries are not sure how to classify binary options. Some choose to consider it a financial instrument while others still treat it as gambling. This shows a very weak understanding of the industry by even most qualified institutions. Some seem to imply that there is only one type of binary options when in fact there are many. For instance, there are those binary options that are fully regulated, trading on the NYSE and NADEX. There is also Binary Options Exchange. where one is able to be a writer and a seller of binary options.

Gambling or financial instrument?

Let’s set one thing straight and define once and for all what is gambling. If we look up this word in Merriam-Webster dictionary which is one of the most widely used English dictionaries out there, we’ll find out that gambling is defined as “to bet on an uncertain outcome”. Isn’t trading of any kind corresponds to this definition? Well, it really depends on what you looking at. If it’s an individual trade we are looking at, then it might be. But if you are trading a system that has a positive expectancy, then there is nothing unpredictable about it – you are making money!

So maybe it’s better to take a different approach to defining what is gambling and what is a financial instrument? For that, let’s try to answer two questions:

  1. What are we trading? If it’s not a system that overall has a positive expectancy, then the outcome it truly unknown and we are gambling, not trading.
  2. How are we trading? If we are following a trading strategy that has a positive expectancy, then everything is fine. If not, then we are gambling.

Let’s now look at some examples to illustrate this:

  1. Slot machines in a casino. Without any doubt, this is gambling. The outcome is unknown and if you play long enough, you will surely lose. Everyone knows that the house always wins.
  2. Trading with a system that has a positive expectancy. This is clearly what we define “trading”, as over a period of time you are sure to make money.
  3. Trading stocks without a system that has a positive expectancy. Now, this is gambling. If there is no sure positive expectancy, then we are still likely to lose money over a long period of time.

Expectancy type settles the dilemma

So, coming back to the question of whether or not binary options should be considered as gambling, we have to carefully look at each category of binary options and decide whether it is possible to develop a system with an overall positive expectancy. If such a system cannot be developed, then this following up on it is gambling. However, if there is a possibility of developing a system with a positive expectancy, then this is called trading a viable financial instrument.

If you on the surface of trading using OTC (over-the-counter) binary options broker, this might be considered as gambling. On the other side is always a broker and the odds always in broker’s favor. This is because in this situation you can only a buyer here, buying a put or call option. And even if you are right, you are still to make less than what you are risking. For instance, if your broker offers 80%, you are to make only $80 on the trade where you are risking $100.

So the only way you can be sure you are trading and not gambling is to develop a system that has a positive expectancy. For this, please follow our Education series to find out more about various strategies and options types. Educating yourself and practicing is the only way you can be sure that you are trading using reliable financial instruments.

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    Binarium

    1st Place! Best Binary Broker 2020!
    Best Choice for Beginners — Free Education + Free Demo Acc!
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  • Binomo
    Binomo

    2nd place! Good choice!

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