Wednesday , 18 October 2017
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Are binary options comparable to gambling?

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Binary options are nothing like casino games and gambling. The strategy and the arguments supporting the investment are completely different. Casino games are, most of the time, probability games. You get a return based on the probability of realisation of an event and it is always at a disadvantage to the player and at an advantage for the casino. The casino has a positive edge and the house always wins in the end.


Binary does not mean gambling – gambling is a probability game

Indeed, what most people don’t understand is that binary does not mean 50%-50% chance. Binary only means that at the maturity of the option, only two alternatives are available, either you earn the return on your invested amount, either you loose your invested amount (you may eventually recover a return on loss or refund). Investing on a binary option has nothing to do with betting on casino roulette where the probability of red number is truly 50% (it is even less than 50% if you take into account the 0 number). This is called gambling. It is the same as sports betting when you get a return that is propositional to the odds of a team winning against another one. This is the pure definition of gambling.

Binary options payoffs are based on multiple factors

With binary options, the return is not proportional to the probability of the underlying asset price moving up or moving down. This is thus not comparable to gambling. Most of the time, you earn the same return whatever the direction you want to invest in (High binary option or Low binary option) until the maturity of the contract. With binary options, you are investing on assets that are impacted by much more factors than only probabilities. The forex market is impacted by the monetary policies of central banks. Stock prices are impacted by company results and corporate actions (dividends, share buybacks…). This is why you are able to implement strategies in binary options trading.

Binary options trading is a professional investment activity

Binary option trading is a professional activity. Although the instrument is really easy to understand and has a lot advantages, the factors impacting the underlying asset prices are multiple and you will have to gain experience and strengthen your knowledge to understand these factors. This is what is called trading, as opposed to gambling, an investment activity that requires knowledge, experience and curiosity. We highly recommend you to improve your technical and fundamental analysis skills should you want to increase your chances of success with binary options trading.

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