Binary options – Investing or gambling?

Contents

We love binary options, they are fascinating, fun and potentially profitable in both the long and short term.

Myth: binary options is investing

We find it a bit disingenuous that proponents of binary option present them as a solid investment to be traded with professional institutions that take a commission % the same as financial advisors do. They call the customer service agents “financial advisers” and refer to depositing into your account as “investing”.

In fact when you trade binary options you are betting, and the brokers are as much like a sportsbook as they are like an investment house. They do not take a commission, they get your money if you lose and they lose money if you win.

Myth: binary options is a crapshoot

We disagree even more with the way binary options are presented by opponents. That binary options are a form of irresponsible gambling with no skill involved offered to suckers by dishonest brokers.

The truth

Both of these characteristics are inaccurate and the truth is happily in between. Trading binary options is more like what we think of as betting than investing, but they can be really good bets with positive expectation for long term profits.

These are new wagering markets that are full of inefficiencies which smart traders can take advantage of. That does require research, patients and skill, not at all like games of chance such as craps.

Some of what Wall Street traders and stock brokers do is more like “gambling” than “investing” as well! On the other hand there are professional sports bettors and poker players who take a systematic, data based, business like approach and make long term profits which makes their “gambling” more like “investing”.

For more see our comparison of binary options to other types of investing and gambling.

Binary options are fun and profitable

Don’t get hung up on whether binary options trading is investing or wagering, they are all ways of taking an opinion about an uncertain future event and placing a monetary consideration on it, with the possibility of profit or loss.

What is more important is are they enjoyable and can I make a profit? The answer for us and many others is yes and yes! See how to be a winning binary options trader for how to make it happen!

2 comments

  1. Dorie

    I cannot tell a lie, that really hepled.

  2. Angela

    If it seems too good to be true, then it probably is. I’d avoid it. It’s great that you are asikng about risks. There are a lot of high risks in the investment community If you invest in common stocks, you can’t lose more than you invest.You need to have some goals; i.e, 3% per year? 5% per year? 10 %?. The bigger the return that you are aiming for, the higher the risk.You also need to have a Time Horizon For how many years will you be investing?There’s also another fact of life: The less you spend, the more you save. the more you save, the more you have available for investing.For many years I invested in blue chip common stocks (NOT PENNY STOCKS). I seldom knew when to sell, so I didn’t sell very often. Besides, there are capital gains taxes to be paid. It usually takes years to get that money back via new investments.

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