Is Binary Options Trading A Real Form Of Investing?


Ever since the start of retail binary options trading in 2008 and 2009, the investing vehicle has been the subject of quite the debate. On one hand, binary options advocates argue that this is a quality form of investing in which there is quite a bit of money to be made. On the other hand, others say that binary options are nothing more than a new way to gamble; ultimately leading to strong chances of losing money. Today, we’ll discuss the topic from both sides and finally find out whether or not binary options trading is a quality investment vehicle or a new way to gamble.

Why Some Experts Argue That Binary Options Trading Is Not Investing

Those who are against binary options trading argue that it’s a new form of gambling, not a viable investment. The reason behind this argument is relatively simple. Unlike traditional forms of investing like stocks, bonds and commodities, binary options traders aren’t actually purchasing an asset. Instead, they are making an all or nothing prediction. This means that binary options are a derivative investment; meaning they have no real value as their value is derived from an all or nothing proposition. Some experts argue that there is no way to tell what’s going to happen in the future and without actual ownership of an asset, binary options traders aren’t investing, they’re gambling.

Why Those Experts Are Wrong

In my personal opinion, I have to say that I believe that those experts are wrong. However, I can understand why they’ve come to that conclusion. After all, there is some truth there. The reality is that binary options are a derivative investment and no asset is every purchased or sold. Also, no one can tell exactly what’s going to happen in the future. However, I have to disagree with those that say that binary options are nothing more than gambling. Here’s why…

When gambling, you have absolutely no control over how the cards are dealt, no insight into possibilities, therefore, decisions in investing simply aren’t educated decisions. However, in the world of binary options, traders have the ability to do their research. While I could predict that I’ll get a royal flush, chances are that that prediction won’t come true. However, knowing that there’s an oil supply glut and that Iranian oil is likely to hit the market, making the supply glut worse, I can predict that the value of oil is likely to continue falling. Unless something drastic happens that reduces supply or increases demand for oil dramatically, this prediction is incredibly likely to come true! So, while I understand the premise that the gambling argument is built on, as a binary options trader and expert in both fundamental and technical market analysis, I have to say that binary options and gambling are two completely different things.

It All Boils Down To Education

The bottom line is that as with any other investment, profitability in trading binary options all boils down to education. Think about it, this same argument was made with regard to forex trading in the past; as no-one can predict future movements in the currency space at a 100% rate. However, these days, forex is an incredibly trusted investment vehicle that’s used by the masses. However, as with forex, in order to be a profitable binary options trader, you have to take the time to learn about the assets you intend on trading, strategies that help to increase potential profits and decrease risk, and the binary options market as a whole.

Most binary options brokers will provide educational resources but in many cases the level of education provided is more of an after-thought.

Final Thoughts

While some people may argue that binary options is nothing more than gambling – you can also argue that all investing is gambling. But, the difference is in the detail – investments are based (or should be) on educated guesses. So too are binary options.  – You say ah, but you are guessing, and I say yes but it’s a guess based on solid fundamental and technical research. This to me is far cry from letting the dice role gambling.

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