Is trading Binary Options a form of gambling

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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

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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 trading gambling?

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It is more about whether you are gambling with binary options.

If your decisions are educated and your strategy has a positive expectancy then you are not gambling.

If you make bets for the thrive of the game or the hope of getting rich quick then you are gambling.

Seasoned poker players are not gambling. Card-counters are not gambling. On the other hand, many “investors” are gambling with “safe” stocks.

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.

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    Best Choice For Beginners!
    Big Sign-Up Bonus!
    Free Trading Education!
    Free Demo Account!

  • Binomo
    Binomo

    Only For Experienced Traders!

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