Binary Options: Trading Or Gambling?
Binary options... Is it about gambling or trading? This is the question that many people ask when considering binary options trading. The ideology behind this is simple; no matter how much research you complete, the basis of trading in binary options is simply deciding in which direction the price is going to move. This can be compared to taking a gamble on any kind of sport.
The Truth – Is Binary Options Trading Investing or Gambling?
The only true way of deciding whether any activity can be classified as gambling is by understanding what gambling actually is. Of course, most terms have an array of options regarding their definition. Gambling is no different, but the common theme in any description is that it is the process of attempting to generate funds through estimating the outcome of any given event. For it to be truly classed as gambling it would need to rely on chance.
Trading in binary options may, at first glance appear to fit these criteria. It does involve investing money in an attempt to generate funds and the outcome is controlled by chance, or fate. However, binary options trading may be classified as gambling by these standards, but, there is much more to it than many people originally think. The ultimate outcome is controlled by chance, but the decision as to which direction the price is likely to move in is controlled by the amount of analysis you complete before parting with any funds. Anyone involved in these transactions will quickly realize that those who apply analysis and methodology to their trading have much better and more consistent results than those who do just leave it to chance.
Certainly investing in this way can be seen as trading and relying on chance. Unfortunately, it is never this simple to define any activity. Generating profit from this opportunity involves a solid and analytical approach; this cannot be considered gambling. But, if you have a casual approach then you could be considered to be gambling! The answer perhaps lies in the approach of the trader.
Deciding which Binary Options Trading Route is Right for You
If you are not prepared to analyze and assess the market then you can consider yourself a gambler. This will quickly become apparent to others as you will never develop a strategy, you are unlike to worry yourself with basic principles such as money management and you generally lose money over the long term; even if short term successes seem possible.
The alternative is trading in binary options professionally. This means studying the different methods available and devising your own method of trading. Part of this strategy will involve basic money management; this limits your exposure should a trade go wrong and ensures that you develop your knowledge and improve your options with every trade. Granted, chance will always play a part but a binary options trading professional will seek to minimize the intervention of chance by knowing the market and adopting the best approach possible.
Perhaps one of the simplest ways of understanding the difference between gambling and trading is to compare it flipping a coin. Without a system every flip has a fifty percent chance of being right for you. It is possible to be right more times than wrong but it can just as easily go in the other direction. However, if you know something about the coin and can predict how it will land then each flip will be more likely to land in your favor. You will no longer be relying simply on chance and will be trading to generate a monetary yield.
Learning to read and understand the markets will separate you from those who denounce binary options trading as gambling; simply because they are unable to master it themselves. The approach and planning is what really makes the difference to how you define this and your profit level.