Binary options – trading, NOT gambling
Is Binary Options Trading Like Gambling?
What is Gambling
Gambling is essentially an investment into an activity in the “hopes” of winning something of a higher value. Gambling is extremely popular the world over; places like Las Vegas are frequented by millions every year who try to find that lucky break which will turn their thousands into hundreds or thousands or even millions. Of course such an outcome is tempting! All you do is show up, place a bet and chances are you will walk away with enough money to make the rest of your life hassle free and comfortable. Popular forms of gambling include lottery, horse race, casino games like blackjack, roulette, bingo. There are even wagers which are placed on the outcomes of certain sports such as cricket and football, these bets include predictions such as who will win the toss, how much will the team score after a particular time period and whether a particular team will win or not.
- You have absolutely no way of knowing how the activity will turn out.
- You are making financial decisions purely on an emotional level.
- You did not bother to study the game you are investing in.
- You believe that chance, luck or fate favors you.
Difference between Gambling and Investing in Binary Options
So does Binary Options fit the above description? Well for starters there is no way you can state with a hundred percent confidence that the outcome of the trade will go as you saw it, but the same could be said about anything else in life, ALL activities have some degree of risk attached with them and there is no way you can ever predict with total certainty that your plans will work out your way.
So there is no doubt an element risk that you might lose the amount you invested to purchase the trade. However, most people do not realize that part of Binary Options trading involves rigorous study of market trends, chart analysis and how assets tend to move from time to time. This is why those who bother to understand the market in general are the most successful at it.
Therein lies the difference between gambling and investing, while gamblers are emotional people, willing to lose money against a hopeful outcome, traders are intelligent smart persons who understand risk and place money in a carefully selected scenario which offers the highest chance of a positive return. If Binary Options could indeed be classed as gambling then all traders in stock markets are gamblers and surprisingly, many of them are some of the richest people on the planet.
|Money is wagered emotionally.||Money is invested intelligently.|
|Risk is maxed out.||Risk is understood and accounted for.|
|Gamblers like to rely on luck.||Traders like to rely on careful analysis and planning.|
|Predicting outcome is often impossible.||Outcome is treated as a statistical probability.|
|Gamblers are easily tempted.||Traders are inherently suspicious of too good to be true scenarios.|
Mitigating Risk in Binary Options
Risk in Binary Options can be brought down systematically by a careful use of charts, market analysis and strategies. With the aid of charts you can understand how the price of an underlying asset is moving so that you can make an informed decision. When you have the history of how the asset has been behaving through a set period of time, you can at least gain an idea as to how it may behave in the next few minutes or hours.
Next, you can use strategies to reduce the risk as well. For instance, Option Bot 2 allows you to use a strategy called “Spreading” where you can duplicate a trade across all the five supported platforms. Since each of the five trades will be placed a few seconds to a few minutes apart from each other, it instantly increases your chances of scoring a winning trade on at least a couple of them. On an average you can hope to win 70% to 80% of all the trades that you will place when you make a use of the signals which you will receive from Option Bot 2 if you use spreading.
Avoid the Winning Streak Pitfall
One of the biggest errors which both seasoned traders and gamblers commit is getting carried away by winning streaks. A smart investor knows when to call it quits and move away, under no circumstance should you invest more money than you can afford to lose and the best way you can hope to win at Binary Options is by trading slowly and steadily rather than hunting for those special days.