When it comes about trading the financial markets, binary options is the newest trend.
Instant gratification and transparency are the features that give binary options the advantages that place them ahead of other financial markets.
As we have already said in one of the first articles, binary options are a fixed odd bet that is placed on the price movement of the underlying assets.
The traders anticipate the price movement of the underlying security. If the anticipation is correct, they get the predetermined fixed amount as payoff.
This might be a trading activity that provides an opportunity to make money by correct anticipation of the price movement. This is not just an instrument, which can be used to get a lot of money quickly. It needs analysis, research and experience to be able to read the price trends of the underlying assets.
If we look for binary options online, the search results page will, unfortunately, consist of a lot of articles on different sites asking if binary option trading is “gambling”.
Based on the online dictionary, to gamble is ‘to play at any game of chance for money or other stakes’, ‘to take a chance’ or ‘to stake or risk money, or anything of value, on the outcome of something involving chance’.
The last definition ‘to risk money on the outcome of something involving chance’ is probably the closest to what people mean when they say gambling in binary options.
Here the thing that makes the difference between trading and gambling: the attitude, which is trading rationally.
A person who approaches binary options’ trading as a make-money-very-fast is sure to find out sooner or later that if one can get a lot of money, he may lose more than that and even more quickly. This is the reason why such people put aside all strategies and trade management theories.
On the other hand, an expert trader that utilizes money management strategies weighing the risks of losses would not put all his money in one big position. He would analyze and use strategies.
Risk management is important for any rational trader. It’s closely related to money management, which is important for any trader or gambler.
Another important aspect that a rational trader would look at is the leverage. A real trader would never allow a single trade to wipe out his entire portfolio as a gambler. He is aware that despite all the analysis, there are chances that the market would go against him.
In summary if we want to go to the essence of the meaning of the question we can say that: gambling with binaries is to buy binary options like playing the game of roulette making random bets like betting on a coin flip, while trading binaries is to buy binary options using rational thinking and analysis to make predictions about future prices.
Of course everyone can do what they want, but it is clear that most binary options traders trade them, and do not gamble with them.
It is up to you if you want to trade or gamble, both choices are available for you to pick.