Is Binary Options Trading Gambling Or A Financial Instrument?
Are binary options trading, gambling, or a financial instrument? It is the most curious question that we got from our readers.
In the USA, Binary trading approved by the Securities and Exchange Commission (SEC) in 2008. After that, it has gradually become one of the simplest ways to trade assets.
The shortest binary options trades take around 60 seconds to complete. But, during the last couple of years, the bulk of binary options trading is shifting from traditional exchanges to other financial institutions.
Today, many virtual trading platforms have made market entry easy for retail traders. Such people’s uprising interests for online binary options result in creating lots of misconceptions about it.
One of the most common misconceptions is that Binary Options are pure gambling. So, today we will attempt to clear this delusion from the rational point of view.
What Is Binary Trading?
The direction is more important than speed
Accepting the bitter truth is your primary task if you choose binary trading over other investment options. Traders predict the future asset price movement on a fixed outcome.
If the investor is correct, they “win” and should see a return on their investment; if they’re “wrong”, they lose their full investment.
Keeping up-to-date is essential for either you trade binary options or other trading instruments. Always keep track of the economic trends to make the best investment possible.
Observing the market, the trader may identify when the assets trends are increasing or decreasing in a short period. Still, it is good to keep in mind that no matter how professional the trader is, no one can predict the outcome with absolute certainty.
Is Binary Options Trading Gambling?
Investors regard Binary options as gambling than a more “traditional” form of investment methods. In most cases, this myth spreads by many non-professional traders. They use gut instinct to win instead of following the direction of the market.
For each wrong movement, novice traders end up losing their accounts. As a result, they blame the trading form other than their mistakes.
And we all know that any investment decision is gambling without a strategy. Moreover, gambling is an unpredictable occurrence. The outcome is decided by mistake or chance. For traders, the explanation here is ’emotion.’
On the contrary, trading binary options attract investors, who are especially willing to take higher risks to potentially high returns. By choosing variable time expires to match different strategies, there is a possibility to gain throughout the day.
However, performance in trading depends entirely on in-depth knowledge of the market, reliable trading strategies, careful management of money, and the avoidance of trade emotions.
Specialists and professional investors rely more on market research, trading plans, etc. than temporary instincts. So, there’s no way we can claim that investing in binary options is gambling.
The Bottom Line
Binary trading is a financial instrument. Yet, there is no way to remove all the existing risks from binary trading. Other than this, knowing the spots where certain difficulties may lie solely can help traders to focus on proper investment assets.
So, having an intense awareness of the potential risk is a must. It can help to reduce the uncertainty in a considerable portion.