QUICK INFO: Many people who are interested in binary options trading are questioning if binary options trading is gambling. Also many Forex traders will say that binary options is gambling. So is binary options trading the same as gambling?
The answer to this question has many sides and facets, and much has to do with approach one has to binary options trading. So let's try to demystify and clarify this question by approaching the answer from different angles and by giving out some of the facts. On the end, if you just want to know if making the long-term consistent profit with binary options trading is possible, the answer is definitely YES. Please, read on to understand more ...
If we take the definition of gambling, which says that gambling is
- play games of chance for money, bet,
- take risky action in the hope of a desired result,
then we can say that binary options trading can definitely be considered gambling. However by this definition, we can claim that any type of investing in financial and stock markets can be considered gambling as well.
Forex traders often like to say that binary options is gambling because of the nature of how binary options trades are executed. In Forex trading a trader enters a position of a trade at certain level and he can sell his position at any point in future. Depending on the future price level, he can sell in profit or in loss. Forex trade is not limited by expiry time and the profit or loss risk is defined by leverage and difference in price of the traded asset in time of closing the trading position.
With binary options the only factor that determines if the trade was a win or a loss is the fact if the price of the traded asset is above or below the trade opening position in predetermined time of closure. The trader only has to decide if the price will be higher or lower in for example next 5 minutes, hour, or even 60 seconds. However, the time of closure is decided when the trade is opened and it can not be changed afterwards. This might look much more like gambling as opposed to Forex trading, but this doesn't mean that binary options are more unpredictable.
I strongly believe that experienced binary options trader can make much more profit with same level of risk in the same time frame and same market conditions as a Forex trader would make.
Trading binary options can be very fast, especially with all the 60 second and 2 minutes trades, offered by majority of binary options brokers. This type of trading carries the highest reward in case of winning trades, but it also carries the biggest risk of loss. The main problem with high frequency trading is the human factor. A trader who is making many trades in short amount of time, exchanging rapid winning streaks with number of losses oftentimes will double or triple his investment (enter so called martingale trades) in case of a few losing trades in a row. If such actions are not controlled and are not in-line with a profitable trading strategy, but are based on pure emotion and adrenaline, then such trader does not hold good chances to become a long-term profitable binary options trader. This type of trader can be considered a gambler. There are many Forex gamblers as well.
Any type of trading which does not include trading discipline, trading strategy and strategy related money management can be considered binary options gambling.
Stock and Forex market and charts have certain logic and at certain points the outcomes of binary options trades can be predicted with higher odds. This means that there is a real possibility to develop a trading strategy that carries low risk and enables the trader to reach long-term profitability. A trader, who is disciplined with trading a strategy or multiple strategies that are statistically profitable, is not a gambler and his way of binary options trading is not gambling. Besides a good strategy a proper money management technique is in order to become a long-term successful binary options trader.
There are many possible ways of trading with binary options and many strategies and systems. Strategies can be based on technical analysis or on business news. Both approaches can result in making quite high profits in short amount of time, especially if a trader optimizes his strategy and is consistent with his trading. Traders who master this approach are definitely not gamblers.
Many beginners will get caught in gambling with binary options, especially because of the promise of high profits in short amount of time. When a beginner enters a wining streak with 60 seconds trades and makes for example 300% profit in 20 minutes of trading, this will make him believe that he has mastered the trading and that it is very simple to continue this way. This is when he gets caught in gambling. In the next step this will lead him to loss of his complete investment and hopefully the trader will start looking into education and start analyzing different trading strategies before he decides to make the next investment.
However, a beginner trader has to get 'burned', hopefully with small account, before he can get shaped in serious trader. This is simply the part of the learning curve. There are many steps before one becomes a successful technical analysis trader who is independent from all other sources (such as signal services etc ...).
The best advice I can give to beginners who want to start trading by themselves is to start with minimum investment, trade a lot on the demo account and always learn from your own mistakes. Also it is best to stay away from short term trades and focus on longer expiry times from 10 minutes up to 1 hour. It will be easier to understand some of the market rules reflecting on the technical charts if they are analysed on higher time frames (for example 5 minute, 15 minute and 1 hour charts).
Learning to trade with technical analysis is extremely interesting and can be very rewarding, however it is important to be aware that there are many steps before one can start building his own trading systems and strategies.
If you want to learn how to trade by yourself, it is best to take a closer look under the EDUCATION, INDICATORS and STRATEGIES tabs on this website. You can find a lot of useful information here. In future I will prepare a serious binary options trading course for anyone who is interested to become a fully independent trader.
If you are simply looking for low-risk profitable approach to start making profit with binary options without learning how to trade, I can recommend you to check out my binary options signals service at https://www.realbinaryoptionssignals.com.
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