Is trading Binary Options a form of gambling

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  • Binomo
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Binary Options Trading: An All or Nothing Gamble?

Binary options trading sounds too legit to be anything but above board. After all, this involves publicly traded stocks and commodities. Lately, however, it has been criticized as nothing more than gambling, pure and simple, yet the buzz around it is getting louder and the promise of easy money is attracting the attention of people from all walks of life. What is it, really, and is it something the ordinary weekend investor like you and me should even care about?

What are binary options?

Binary is an apt adjective for this type of option. In programming parlance binary used to describe either of two states. 1 or 0. In the sports betting industry binary options are also popular – win or lose. In other words, there are only two possible outcomes. There is some basis to this all or nothing description of binary options trading. Here’s a short explanation of how it goes.

Take the price of any asset at any point in time. You make an intelligent guess on whether this price will increase or decrease over a specific period of time and bet $100 that you guessed right. If you are you win back your bet and plus a pre-agreed amount. If you’re wrong you lose almost all of your $100.

Of course it’s not as simple as that. In fact, there’s serious math behind binary options and people who engage in binary options trading, like all others involved in financial markets, are pretty confident that their numbers are better. Because in a single binary option trade, the outcome for the participants is also binary. One loses, one wins.

Let’s get a bit more technical than the simple explanation above. As currently practiced, binary options trading involves three main components.

First, there is an underlying asset, the future value of which becomes the basis for the trade. This asset can be the price of a specific company’s stock. It can be a traded commodity such as gold. Recently, there was an industry filing at the Commodities and Futures Trading Commission to allow exchanges to offer binary options for future box office receipts of certain films.

Second is the direction of trade. This is your guess of what the price of the asset will be at a specific point of time in the future and you make your trade based on whether this price will be above or below the current price at the time that the binary options contract was made. Third is, of course, the amount you wish to trade.

A binary options glossary

Like most specialized fields, binary options trading has its own jargon. These words are borrowed from the more established practice of commodities and futures trading, and gives binary options an aura similar to that of derivatives.

Current price. The price of the underlying asset.

Strike price. The price of the underlying asset when the binary option is purchased.

Expiry price. The price of the underlying asset at the time of expiry of the binary option.

Call option. The right to buy. In binary options trading, the purchase of an offer is an exercise of the option. In American exchanges this is termed as “Finish High” because the motivation behind a call is the probability that the price of the asset when the contract expires will be higher.

Put option. The right to sell. This is also exercised when the offer to sell an option is taken. This is called “Finish Low” in American exchanges because a put is based on projections that the price of an asset will be lower when the contract expires.

In-the money. A successful trade wherein a call option expires above the strike price or a put option expires below the strike price.

At-the-money. A trade in which the price during expiration is identical to the level during purchase. In some binary options contracts, such a scenario requires the initial investment amount to be fully returned to the customer.

Out-of-the-money. A failed trade wherein a call option expires below the strike price or a put option expires above the strike price.

Essentially, “options” is a misnomer for these types of transactions. “Lock” (another type of derivative) would have been the more appropriate term because once the deal is sealed, both buyer and seller are obliged to comply with whatever conditions were agreed upon to take effect at the contract’s expiry.

One other thing to remember is that trading in binary options only involves the price of underlying asset, but not the asset itself. You might be trading binary options for the price of Google or Apple stocks or gold, but there is no assumption that the seller owns any of these assets or that that you will when the contract expires.

What makes binary options attractive?

Fixed risk and reward. Most binary options are Fixed Return Options (FROs) in which the gains and losses (the risk-reward ratio) are predetermined. You know exactly what you’ll earn should you be in-the-money, or what you would otherwise lose if you happened to be out-of-the-money. In a $100 trade, for example, many options offer a return of 81% for a successful trade. Many also offer to return 10% of the purchase amount should your trade be out-of-the-money.

Capped risk. You will never lose more than what you’ve invested, which is all too possible in other investments like foreign exchange or real estate.

Assured reward. By the same token, gains are not dependent on the price of the asset during expiry. Regardless of whether the increase in price is a fraction of a point or double the strike price, the winner gets the entire payoff amount.

Simpler to understand. In binary options trading you only need to sense the direction of the price of the asset you’re trading. With regular options, you need to know both the direction and the magnitude of the price.

High level of sophistication. While easier to understand than most options, binary options still offer enough freedom for the application of sophisticated investment strategies. Investors in the forex market use binary options to hedge against their currency investments by investing in an opposite direction to their traditional forex position. Regardless of whether prices rise or fall, they’ll have their losses covered or might even profit from their binary options position.

Shorter durations. In some exchanges, many contracts close within the day. Some durations last for only an hour so the gratification (or mortification) is instant. It is possible to participate in many options within a single trading day.

Potential to profit from both falling and rising markets. In regular stock and commodity markets, money is made only when the price of the asset is rising. Binary trading allows an investor to absorb some of the market’s risk and make money regardless of whether prices are falling or rising.

Access to multiple markets. From a single account, you can have access to a wide range of markets and asset classes including forex, shares, commodities like oil futures and stock indices.

Other types of binary options

Binary options can either be cash-or-nothing, where a fixed amount of cash is paid out. It can also be an asset-or-nothing option where instead of cash the value of the underlying asset is paid out. Aside from these basic types, there are other more exotic binary options that are a bit more complex but follow the same general concept.

Barrier options are options that depend on a specific price level for their existence within the duration of the options contract. They can disappear (knocked out) or appear (knocked in) when a specified price level is breached. In partial barrier options, the price is monitored only for a specific window within the duration.

In a double barrier option, there is both an upper and lower price barrier and the double knock ins are activated or a double knockout terminates the option if any of those barriers are hit. The more complex double barrier binary option, of which there are 28 types, combines the characteristics of both barrier and binary types.

Are binary options a safe investment?

As with any other form of investment, risk is inherent in binary options. In fact, websites that guarantee returns are the ones you should stay away from. There have been complaints of payoffs not being remitted to bank accounts, so you’ll need to do due diligence before committing. The best idea is to always go with one of the best binary options brokers that you know are legitimate and reliable.

If you’re serious about trying binary options trading out, selecting a reputable trader is the first critical step. There has been a proliferation of trading websites online and it can be quite confusing to know which is legit and which is not. Start with traders registered with the Chicago Board Options Exchange (CBOE) or the American Exchange (Amex) to be sure that the firm you’re dealing with is subject to regulation. Fixed return options are more common in Europe and are traded in European exchanges heavily, thus the nickname European options. There have been reports of Europe-based sites engaging in unauthorized binary options trading.

The financial crisis of 2008 has awakened every American to the very real threat Wall Street presents to their personal financial health. The clamor for financial reform has resulted in the Dodd-Frank Act being passing into law in 2020. However, regulation for binary options trading is not explicit in the implementing rules and guidelines although proposals for rule changes have been discussed in the Securities and Exchange Commission (SEC) and predate the creation of the Dodd-Frank Act. For now and until the rules are in place, prudence in this investment area will always be your biggest safety net.

Are binary options a good investment?

Yes, if you have the stamina to monitor prices closely, the diligence to study the history and performance of the underlying asset you’re trading, and no past history of compulsive gambling.

Forbes columnist Gordon Pape issued a strong warning against binary options. He claims that this form of trading appeals to the online poker crowd and market junkies who tend to be more exuberant in taking chances than the ordinary investor. In fact, he refuses to acknowledge binary options trading as legitimate investment. He insists that it is a pure gambling activity where the odds are stacked against the investor.

Gordon Pape claims, as do others, that you need to win 54.5% of the time to just break even. For some, these odds are good enough, even if the house gets the better deal. For the house, it’s like having hundreds of slot machines that won’t ever pay out a jackpot. For the investor, on the other hand, binary options multiplies his chances of winning each time he cranks the machine. Not the jackpot, maybe, but big enough if one keeps at it and does the homework.

Thread: Is Binary trading is like gambling?

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Is Binary trading is like gambling?

Some people think Forex is like gambling, some of them make sure that binary trading is exactly gambling, what is your thinking friends?

Binary option is a different form of gambling. In a way, binary options are legal and more acceptable to many traders or countries even though the way to make money this way is not very profitable. However, if the method the trader does has good reason and analysis, then the mind-set of binaries and their relationship to gambling can be eliminated. However, if the method is done wrong and the way to trade with binary options based on guesses, the results obtained are also not good and can be categorized as gambling.

That’s why binary options are not recommended for people who are very new in the trading business because this can have a very bad impact, where people will be more interested in seeing the market in a short and fast time without ever doing in-depth technical analysis to find out market movements in a trend that can last for several days or weeks. In addition, binary options can destroy people’s patience and usually people who are stuck with the platform, they will continue to feel addicted to open more and more positions, no matter how much money they have and how much money is left in their account.

I admit I have also done transactions in binary options at a broker using a demo account. That happened in 2020 to 2020 and I also felt some bad experiences when making transactions in binary options. At that time, I felt “momentary blindness” because I used vulnerable time for 30 seconds to 1 minute to trade in binary options. I did not realize, if the initial capital of $ 10,000 could be used up and vanished in the next few minutes and I did not realize because I had spent an insignificant amount. Luckily it was a demo account, I can’t imagine what would happen if it were my own money.

The point is, how do we handle a market with the analysis we have without ever thinking of doing a quick and short way to get profit. Keep in mind that every satisfying result always requires a certain process and time period to be achieved. There is no good result that can be obtained in a short time. It might happen, but the risk that we must use certainly is not small and can make our psychology disturbed.

Most of us always use the terms “play”, “win” or “lose” in the trading business. This shows the paradigm of society tends to regard trading as a game, a gambling game. Instead of seeing trading as a business, it’s something less serious.
In fact, in the trading business we do what is called stock trading. Just like we sell clothes, there is such a thing as buying and selling clothes. Now, in running a business, of course we also have to learn the strategy and business planning. Well, if you really want to learn trading, you must be disciplined to pursue it as a business, not a game. And replace the terms “playing stock” with trading, “winning” and “losing” with profit and loss.

Some reasons why binary options include gambling.
1. The regulation is in the gambling category.
2. Every trade we have a 50:50 chance of winning or losing.
3. The losers pay who win.
4. The more we trade, the more we lose.
5. There is no backup if you lose.

Of course my dear in my point of view I want to say that binary trading is all about doing gambling.
In real means traders are not aware about the real definition of investment in financial markets they are just play and loose or win a trade to make double dare accounts and this is all about losing their initial deposit and they are crying after their loss.
There are a lot of binary options brokers who do a lot of advertisement for their companies because they are aware that when someone will comes on their platform they will easily make money from them to show them wrong prices at manything are also included in one of them but, traders are really unaware when they are choose this type of brokers.
Because due to the advertisement videos and showing their profits they are thinking that we can also become millionaire in just one month but comma in real means they are going in Wrong side and we should have need to stop people who are 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.

———- Post added at 08:09 AM ———- Previous post was at 07:43 AM ———-

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
Binary Options Investing Not Trading
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.

“IQ Option is gambling, lost it all”

Binary options are a hot topic at the moment, people search information online, read non-factual feedback and get scared away, we have therefore decided to come up with an article to clarify the difference between trading and gambling, as there is one.

In different countries regulators do not know whether to classify binary options as a financial instrument or gambling. This statement shows a shallow understanding of binary options as well as financial instruments and due to this fact we had to leave a number of countries lately, among them are Canada, Australia and Belgium as the latest. From today, that is August 18th, we have stopped providing services to both old and new customers from this country.

Gambling or financial instrument?

According to the Merriam-Webster dictionary, gambling is defined as “to bet on an uncertain outcome”. Isn’t trading any financial instrument according to this definition gambling? Well, it is if you are just looking at the outcome of one individual trade in isolation. If on the other hand, you are trading a system that has a positive expectancy then the outcome may not be so uncertain.

The risk will always be there and the higher the payouts the riskier the investment is. With binary options, the risk are always known in advance. You will never lose more than what you’ve invested in one position and with IQ Option the payout is always known in advance.

This is actually similar to bank deposits, you invest a certain amount of money, you may be protected up to a certain sum depending on your government, and the bank offers you a fixed annual percentage. However, with banks since the risk is relatively low so is the payout on those savings accounts. In most cases the payout doesn’t even cover inflation.

When you trade binary options, it is important to ask yourself:

  1. What am I trading? If there is no system that can be developed that has a positive expectancy, then you are gambling and what you are “trading” is not a viable financial instrument.
  2. How am I trading? If you trade any financial instrument without a strategy that has a positive expectancy, then you are gambling.

Let us take a look at a few examples to see whether you are gambling or trading.

  1. Playing the slot machines in a casino. This is clearly gambling as the odds are in the favor of the slot machines over time. If you play long enough you will always lose. The casino always wins.
  2. Trading options with a system that has a positive expectancy. This is clearly trading and not gambling as you can make money over time even though the outcome of any one trade is unknown.
  3. Trading assets without a system that has a positive expectancy. This is clearly gambling, as it is uncertain whether you will make money over time. So in this example, you can see that even though you are “trading” a financial instrument, what you are doing is still considered gambling.

Some analysis can make a difference

To sum up, if there does not exist a system of trading that has a positive expectancy, then you are gambling and what you are trading is not a financial instrument. Why? Because trading binary options includes risk management and both technical (indicators) and historical (news) analysis. Trading requires a lot of concentration and feeling of responsibility for the actions you take as there will be positive or negative consequences and you are solely responsible for them.

Develop your trading system, build a strategy by training and learning, enhance your approach with analysis and don’t forget to address our support in case you need information on how to access tools and educational material.

NOTE: This article is not an investment advice. Any references to historical price movements or levels is informational and based on external analysis and we do not warranty that any such movements or levels are likely to reoccur in the future.
In accordance with European Securities and Markets Authority’s (ESMA) requirements, binary and digital options trading is only available to clients categorized as professional clients.

GENERAL RISK WARNING

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage.
87% of retail investor accounts lose money when trading CFDs with this provider.
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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What is binary option trading?

What is binary option trading?

Binary option trading is a type of business that offers two options – either the price of a particular asset goes up or down, and you have to estimate which direction the price runs in a given time period.

It is a relatively simple method of betting on whether binary options trading will be a definitive result or not. The name ‘binary’ (meaning ‘two’) indicates the fact that you have to choose from just two scenarios – yes or no

Binary Option Broker

.

In financial business, it usually happens whether the price of an asset will be more or less than a certain level at a given time.

The most common type of binary option is a digital option, sometimes breaks into ‘up / down’ or ‘call / put’ options.
With a simple call / put option, if you think the price of the underlying asset will be more or less than the strike price, then you buy a ‘call’ option. If you think that at the time of expiration the price will be less than the strike price, then you buy a ‘put’ option.
If you are right, the option is ‘in money’ and pays a certain amount of compensation.

This compensation is usually money, but some contracts may have the amount of the underlying asset.
If you are wrong, then this is ‘out of money’ and you do not get anything.
Because of this, binary options are sometimes called ‘all-end-nothing options’.

Attractions of Binary Options Trading

Because you have only two possible results to consider, binary options trading is considered to be simpler than many other types of financial trading.

Generally, you need to decide which direction in which direction you think that the value of the underlying asset will increase.

Unlike other forms of financial trading, where your potential profit or loss is also determined by the size of a price movement, it does not matter to the binary options trader, above or above the strike price agreed upon when the option ends. How far have gone . Along with binary options, a winning business always produces a single payment.

Because of this, you have a clear picture of your risk-reward ratio before entering the business.

This is in contrast to traditional options where profits and disadvantages can be infinite.

With binary options, therefore, you do not have to sit on your trading terminal, are looking eagerly – once you do your business, you do not need to check until the contract is terminated. You do not even have to worry about applying a complex risk management tool like stop loss.

Binary options are flexible, brokers are usually offered contracts for various types of underlying assets – from foreign currency or commodities to company shares or index like FTSE or S & P 500.

Contracts can last from 30 seconds to several months, depending on your broker’s offer. This means that you can tailor your business to areas of your expertise or trading style.

If you are an experienced trader in other markets, such as foreign currency or shares, then you can apply some of the skills you have already developed.

For example, both fundamental and technical analysis can be used to help you create a view on future value movements.

Binary Option Broker

Risks of binary options trading

Is Binary Trading Gambling?

There has been a vibrant debate over whether a binary option constitutes trading gambling for a long time or not. Binary options brokers argue that this is not a gamble, it suggests that the payment includes third parties (meaning that this is not the only customer against the home), as well as brokers do not take a commission for a business Which ends “attract.”

But these are Fringe arguments. Many still argue that the basic format of making a prediction and losing or making money on it is worthy of the game of chance. The interesting question becomes whether this interpretation extends into all stock and asset trading.

Best Binary Options Brokers 2020:
  • Binarium
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  • Binomo
    Binomo

    Good Broker For Experienced Traders!

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