Is trading Binary Options a form of gambling

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Binary Options: Trading or Gambling?

To answer this common question, let’s take a closer look at the definition of gambling.

“Gambling is the wagering of money or something of value (referred to as “the stakes”) on an event with an uncertain outcome with the primary intent of winning money and/or material goods. Gambling thus requires three elements be present: consideration, chance and prize.”

By the above definition, trading in binary options does indeed fall into the gambling category but so does every other form of trading such as stock trading or currency trading. In fact, so many things that we do in life can be considered gambling. For instance, you may think that the new job you got was a good thing because the salary is 30% higher but turns out the workload might be 50% more and the new boss has a terrible personality.

Binary Options Trading vs Casino Gambling

Upon closer inspection of this question, I suspect what most people are really asking is whether binary options trading is like casino gambling in which the odds are already fixed against the player.

I believe many people have this notion because of the many immediate similarities between binary options and casino games like blackjack in which there are only two possible outcomes:

  1. Your cards are higher than the dealer’s and you get paid or
  2. The dealer’s cards are higher than yours and you lose.

Furthermore, with binary options payout being comparitively lower at only around 70%, many people are wondering why not just play blackjack where your payout appears to be much better at 100%.

Random vs Non-Random Outcomes

When comparing these two activities, what most people do not take into account is that for casino games such as roulette or blackjack, the outcome of each game is entirely random and is not dependent on any external factor. However, in binary trading, the outcome is greatly influenced by real world events.

For example, when the BRExit event happened on June 23 2020, the British pound fell sharply. People who did their homework, studied the rise in nationalism across the European Union and predicted that BRExit would happen had a much higher chance of correctly ‘guessing’ which way the price of the British pound will go after the BRExit referendum vote.

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  • BINOMO
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However, in the case of casino gaming, there is simply no way the casino game player will ever be able to gain an edge in guessing the outcome of any individual game no matter how much effort he is willing to put in.

Observed Odds vs True Odds

Hence, in binary options trading, the true odds you will get is highly dependent upon how much information you have in relation to the bet you are making.

Conversely, for pure casino gambling, the odds are already fixed against the player and the house ensured that the player can do nothing to increase his odds of winning. The casino will take every measure to ensure this and even suspected card counting Blackjack players are quickly banned from their premises.

Continue Reading.

What are the Main Types of Binary Options?

Learn how the One-Touch, No-Touch and Range/Boundary binary options differ from the common high-low viety and how to trade them. [Read on. ]

What Assets can be Traded using Binary Options?

Many of the most popular financial instruments such as currency pairs, equities and commodities are available to trade using binary options. . [Read on. ]

Binary Options: Trading or Gambling?

Is binary option a legitimate financial instrument or just another form of gambling. [Read on. ]

Binary Options & Trading Robots: A Perfect Match?

Unlike humans, robots have no emotion and do not need to rest, so they can make a lot more trades than humanly possible, combined with perfect consistency. [Read on. ]

Is Binary Options Trading a Scam?

Learn how you can get scammed when trading binary options if you are not careful. [Read on. ]

How to Select a Binary Options Broker?

With so many scam brokers out there, before you learn how to trade, one must know how to separate the wheat from the chaff and find a trustworthy binary options brokerage. [Read on. ]

Binary Options: Calculating Breakeven Win-Rate for a Given Payout

How often does my trades need to be successful in order to be consistently profitable in the long run when trading binary options. [Read on. ]

Are Binary Options A Form Of Gambling?

Whether Binary Options are gambling is a question asked far and wide, asked by traders, brokers, regulators, and other interested

Whether Binary Options are gambling is a question asked far and wide. A question asked by traders, brokers, regulators, and other parties interested in binary options. So let’s settle this once and for all, binary options ARE gambling. However, before you start picturing flashy lights and playing cards, let me further explain what this means.

First, let’s take a look at the definition of “gamble” as defined by Merriam-Webster:

1. Something that could produce a desired result or a bad or unpleasant result

a : an act having an element of risk

b : something chancy

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2. The playing of a game of chance for stakes

Are All Investments A Gamble?

Judging by this definition, a lot of what we do in daily life is gambling. Let’s focus on finance. What do you think, dear reader, a stock trader does when compiling a portfolio? He risks a certain amount of money for an outcome that is not guaranteed. That, by definition, is gambling. What about Forex? The same story. Let’s take a broader investment, real estate. People buy land, houses (usually mortgaged) with the hope that the property value would rise, and they could sell it for a profit, or at the least break even. Would you say there is no risk in that? 2008 (USA) would disagree if you did, yet real estate was considered a “safe” investment before the crash. Very few would call real estate investment gambling, but by definition that’s exactly what it is, and history proves it.

Let’s be honest, any investment activity is gambling. Venture capitalists also gamble when they invest into start-ups, there is no guarantee that the company will survive let alone bloom. Anyone offering guaranteed earnings or profit usually get locked up behind bars at one point or another. Especially if they add to that claim that there is absolutely no risk involved.

Be Smart, Manage Risk

What you need to do as a smart investor/gambler, and what many do, is to manage and mitigate your risk. The risk will always be there and the higher the payouts the riskier the investment vehicle is. With binary options, the payouts are high but the risk is fixed. You will never lose more than what you’ve invested in one position. 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.

Binary options are gambling much like other financial instruments, tangible or intangible. This is not a bad thing, people gamble their entire lives. What we learn as a result of survival is knowing what we are risking and for what result and on what odds, this is something you must do in personal finance as well if you want results. There are successful equities traders, Forex traders, binary options traders, venture capitalists and even poker players, it is all about the approach. So take this information and become a successful investor.

Is binary options a new form of gambling?

Binary option has supposedly taken Forex and stock trading to a completely new level. With new and improved technologies, brokers are providing platforms that claim to make trading super fun, quick, and effective. If binary option is an actual trading instrument and is not gambling then it has successfully taken out all the boring elements from normal trading and have replaced it with a fast and interesting platform.

Is binary option Gambling?

There are two sides to this story. If you ask this question to a broker, then most of them say no i.e. they will claim that it is not gambling. On the other hand, there are several clear indications that suggest binary options is gambling. Just for the record, it is my personal opinion too i.e. binary trading is 100% gambling.

Broker’s stance:

Majority of brokers will tell you that options is not gambling, and they will defend their position by giving different reasons. An account manager once told me during a phone conversation that their website is connected to some network by which their site get real-time trading data from the markets, and when a customer wins a trade, a third party pays the profit. “His company wants its customers to win as many trades as possible; on each trade customers execute, our company receives a small commission by a third party,” he added . He further explained that when a trade ends in a draw then they don’t get any commission; they receive commission only when a trader either wins or loses a trade.

Binary option brokers lie!

The account manager continued the story and said that they want traders to win and make money so that the company can continuously get commissions. “If a customer loses all his money and stops trading, we stop getting commissions,” he said.

If what the account manager said is true then all of this could make sense. Traders win trades and make profit while the broker gets commissions; it seems to be a workable system that actually does exists in ECN Forex Trading. Another thing they brag about is being a licensed entity. Most brokers reside in Cyprus and they get their trading license from Cyprus Securities and Exchange Commission [CYSEC]. They ask traders to trust them blindly because they are regularized by CYSEC.

Reality:

Binary brokers are trying really hard to give the impression that what they do is same as Forex Trading and I must say they are doing a great job, however; there are several unanswered questions like, who exactly is this third party? Moreover, if majority of traders make money then how is it surviving? How does it make money for itself?

Broker want to make, not lose money

Companies do business to make money for themselves; they don’t do it to make other people rich.

If you search on Google, you will find tons of withdrawal related complaints against majority of brokers. Traders who are able to make profit are not getting their money from brokers; they make up numerous excuses for not paying. Why do they have such a hard time paying profits to the traders?

You will find countless complaints against famous brokers who spend thousands of dollars every day on advertisements. They will make up all kinds of lies to hide the truth.

Nevertheless, there is hope. There are few honest companies in this otherwise awful business, one of which is MarketsWorld. This broker is famous for paying profits without any issues. Unlike other dishonest ones, they operate under the law.

MarketsWorld or MW is the only financial betting site that operates in Isle of Man, UK.

Gambling Supervision Commission [GSC] regulates this company. Gambling Commissions do not regulate currency-trading companies, so if binary option is not Gambling then why does GSC regulate MW?

In online casinos, if you play and win, the casino owner pays you the money from his pocket. You win and the casino loses. Binary trading operates in the same way; the real name of this business is “Financial Betting.” Binary options trading is completely false label for this business.

A live chat representative of MW gave the following statement:

“However since all trades you buy are against the company, we view it as a conflict of interest to offer trading advice directly.”

Here is a screenshot of the live chat discussion:

It is up to you to decide whether this is gambling or not. Additionally, you should know that making profits in this business is only possible if you can come up with a good trading strategy otherwise, you will lose all your investment. Brokers advertise this as an opportunity that you can use to get rich quick; these are all lies. Without a solid working strategy, you cannot make profits.

Following is an example showing how financial betting, aka binary options trading, work:

Step 1: Select An Asset

Step 2: Select An Expiry Time

Step 3: Select Direction

Step 4: Select Investment

Step 5: Start Trade

Featured Comments:

Opteck said they matched dollar for dollar. I invested 126,357 US dollars and Opteck made an even 300,000 US dollars. And all gone with out a guilty conscience.
DO NOT INVEST WITH OPTECK CYPRUS.

Best Binary Options Brokers 2020:
  • BINARIUM
    BINARIUM

    Best Binary Options Broker 2020!
    Ideal for beginners!
    Free Demo Account + Free Trading Education!
    Get a Sign-up Bonus:

  • BINOMO
    BINOMO

    2nd place in the ranking!

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