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Binary options simple investment or risky gambling?
Sometimes would heard an opinions that Binary Options is gambling. So stepping blindly into Binary Options, the poor management of capital is a gamble. Just like opening a large position in the Forex, futures contracts on equities or indices and play the stock market without any analysis of the company or the chart, not to mention such a popular playing the “bankrutach”. However, approaching the option seriously, they are an instrument like any other and not having anything to do with gambling.
So, is or not a Binary Options Gambling?
Binary options are not gambling simply because there are regularities one can exploit in order to make money. These are called chart patterns and are used all around the globe, not only by binary options traders and forex traders but also by investment banks’ employees who run the trading desks.
Chart analysis is a legitimate tool to analyse the market and predict future movements in prices. This does not mean that there is no risk and that any simple strategy will do. There is a lot of work each trader needs to do before she can become a true master of the market. On the other hand, gambling involves a lot of luck.
• In casino games, players are dependent on the system settings
• In sports betting, players depend on many variables that determine the outcome of the match. Also, not all matches bring best returns, while higher grossing matches also carry more uncertainty.
• Poker is a game of skill and players rely on a different set of individual and non-structured guidelines they themselves came up with.
Criteria are not clearly objective.
Casino games are nothing like trading binary options. Taking positions in the market vs betting on a roulette is not the same. In casino games, you get a return based on the probability of an event and it is always at a disadvantage to the player/trader.
Sports betting and especially with the introduction of live betting on games via The internet, one will find several similarities. In binary options trading, you can take a position (similar to placing a bet) that a stock will go up or down. This is similar to sports betting.
Let us take a soccer game as an example where you can place a bet saying: Team A will win with more than 1,5 goals over team B. If team A wins with 2 goals or more the bet is won. If they don’t, you lose. There are only two outcomes similar to a yes-or-no position in binary options.
In football, the experts will study both teams’ performance leading up to the match and also look at any historical data available which holds significance to the game. For example: if one team has won the last 10 matches out of ten it is believed that it has a superior team and strategy.
If the two teams have played a draw the past five times re there any players with injuries? And so on. In sports betting, if you know something that the majority of the market does not know (yet) you can leverage on that information.
Poker is by most poker players considered to be a skill game. On the contrary, most governments label it as gambling. Poker and binary options have several similarities. A skilled poker player has an edge vs. a newcomer to the game just like a skilled trader has an advantage over a random person on the street. Short term, the inexperienced can be just as profitable as the skilled trader/player and in some cases even more profitable. It is hard to argue that becoming an experienced trader and obtaining knowledge about different strategies while possessing a general understanding of the game/market will not have a positive impact on your ROI. Short term, luck does not make one resilient in the market long term.