Are Binary Options gambling?

Are Binary Options gambling?

binary-code-2Again and again the question is asked whether binary options are a gamble. In the eyes of some observers, they carry this character. Even an authority – the Maltese Financial – it placed temporarily so and therefore subjected the Binary Options Broker of the corresponding control, as it also applies to betting shops. According to the judgment of trading and financial professionals however misconceived the assessment that Binary options are pure gambling. Of course, can approach inexperienced investors with gaming ambitions of the binary options, they will then probably lose predominantly as gambling.

Advantages and disadvantages of the financial product
Binary options offer investors high chances on the Broker refer rightly so. The risks must be identified, and of course, they can be found regularly in the disclaimer of broker websites. Of course, traders must read the fine print. With binary options, total losses of the capital invested are quite possible. But this has nothing to do with the fact that they are a game of chance – which they are not at all that is. Here advantages:

The benefits actually are also disadvantages:

– Total loss is possible
– Without trading experience gains are not easily achievable
– OTC trade can influence the broker feared
– Short terms of high risk

The essence of Binary Options: financial bet versus trading plan

Binary options are speculative investment instruments that are all systems that are based on market prices. Important to know (and mentioned in the handicaps): Binary Options are traded OTC. That is “Over The Counter”, translated “over the counter”, it denotes a counter trading directly with the issuer of a financial product. This is Broker in this case, the binary options. This means that the price determination of Binary Option occurs due to the market price of the underlying asset, but the broker sells the option and buys it back also, a stock exchange order placement as with knock-outs or classical warrants does not take place. Also CFDs are traded OTC incidentally. Traders rely in this case on a fair price determination of the broker. This can be a disadvantage if the broker price manipulation allowed, but these are not expected to licensed brokers. But the most important thing about this fact is that the OTC trade has nothing to do with any gambling nature of binary options. This needs to be studied from other points. There are two points of view are contrary opposite:

1. Position: Binary options are a bet on stock market prices, a financial bet. They are “binary”, which means the trader can only win or lose, because the course randomly in the direction goes to which the trader has bet. That be like a coin toss: Number or head wins. Is he correct in his bet, the trader receives between 70-90% profit paid (exception: high yield returns on Touch options), the trader is wrong, he loses his bet, unless the broker makes a refund to 15%. If really go the courses just happen in one or the other direction, as the coin happens to fall on heads or tails, then would probably exceed the gains in the long term losses. For a coin falls in very many litters the statistical random following the same frequency in each of its two sides. Since the profits an average of only 80%, but 85 losses – amounted to 100%, the traders on this premise, the long term would not have a chance.

2. Position: The output of a binary option can predict with a certain probability. The same fundamentalist and chartist rules apply as with any trading. The fact that the binary options are constructed somewhat differently, does not change this principled stand: Trading can be planned. There are reasons why rising or falling prices, they can be read from fundamentals and from the chart. Of course, there is no sure-fire predictions, but there is the possibility to increase the probability of winning considerably by a good plan. Then good traders have a high chance of getting good profits with binary options.