Binary Options trading involves investing funds after predicting the outcome of an asset within a given time frame. It has been likened to gambling but this is not a fair comparison. Binary Options do result in one of two outcomes; you either predict correctly and ‘win’ your trade, or, you are incorrect and ‘lose’ it. There is always one winner and one loser; in this aspect it is similar to gambling.
However, every trade is a result of studying the market and using analysis to understand what will happen next. Of course, it is impossible to get it right every time, otherwise everyone would be doing it!
There are several similarities which are worth considering further:
The House Wins
If you have ever visited a casino you will be familiar with the concept of gambling. In effect, a player places their funds on a specific activity and hope it lands in their favor. This may be that a specific color comes up or even a number. If you are right you win; although the amount you will win depends on a variety of factors, including what other players are doing.
Unfortunately, when gambling, the house will almost always ultimately win. It is almost a mathematical certainty that the longer you play the more the odds fall in favor of the house. Whilst this applies to most gambling activities, it is not the same with Blackjack. Experienced players and those who are able to track the cards will be able to assess the odds on each trade and play the game to ensure they win more times than the house. This is only possible because there is an element of skill involved and not just luck. In effect, this is the real difference between gambling and investing, the amount of skill necessary.
Is Blackjack the same as Binary Options Trading?
The key is information. A good Blackjack player will know which cards have been dealt and have been used. This means they know what is left in the pack and the chances of getting the card they need will decide whether they can play or not. The more information they have the better their decision will be; this is exactly the same principle that binary investors trade by.
The information in Blackjack is cards, in binary options it is the market conditions, the current price trend, the history of the asset and the other market influences. Understanding how all these factors can affect the price of a given asset is essential to know when to trade and when not to. The better prepared you are the more likely that your trade will be successful; just as with blackjack.
It should now be obvious that whilst information is key; it is your understanding of that information which will allow you to trade successfully. In the same way that a blackjack player must be able to predict what cards are left and the odds of getting a desired card, a binary trader must understand what to do with the information they collate.
Whilst you will never make a profit on every single trade, careful analysis and interpreting the data properly will increase your chances of a successful trade.
Assuming that you accept there are similarities between playing blackjack and investing in binary options, you will need to decide which the right one to ‘play’ is:
Blackjack is still a game; every game must be evaluated and played according to the information available in that moment. Binary options, however, is a longer term option. The information collecting on one trade affects another, helping you to understand the movement of an asset and be more accurate in future predictions.
In general it is more accessible to open a binary trading account and you are likely to receive more incentives for signing up to one.
Finally, and perhaps most importantly, your winnings and even losses are unpredictable when playing blackjack. As the cards are dealt you may need to play additional hands which could increase your stake and your return is a variable. However, when trading in binary options you always know the maximum you could lose and how much you could gain.
Despite the similarities, binary options cannot be considered to be a form of gambling. The results are driven by the amount of information you have at hand before you start trading. The concept of binary trading has more in common with standard stock market investments, except that you are not purchasing the shares, only the options on the shares. To be successful at binary trading you need to adopt the same attention to detail that any stock market trader takes ( plus you need to check binary options brokers reviews and select your broker). This is the fundamental difference between binary options trading and blackjack; with blackjack you can win by pure luck; repeatedly. But to be successful at binary options you need to study the market and understand the trades you make.