A lot of financial discussions have been asking: is binary options gambling?
Regulators can’t decide how to classify binary options.
In the Isle of Man, binary options were classified as gambling, so operators need a gambling license. But in the Netherlands, they’re considered financial instruments.
That doesn’t take into account the fully regulated binary options available on certain stock exchanges.
If you’re still not sure, read on to find out if you’re gambling or trading.
You’ve probably asked yourself, is binary options gambling?
Some might argue that it comes down to your approach.
Maybe you study the market every week. You might trade based on news or political events. Perhaps you have charting software to notify price movements based on levels you’ve devised.
Then you’re a trader, not a gambler.
You have a plan in place, based on a solid understanding of the market and how it works.
Even if you’re trading as a side business, separate from your day job.
But maybe you’re different. Maybe profits aren’t your sole motivating factor.
Maybe you only invest small amounts of risk capital. You want large profits and you want them fast.
You only check in with financial news occasionally. Or you take safe bets.
Then you’re a gambler. Trading binary options for you is no different from others betting on sports events.
It’s that approach that led to binary options being labeled as gambling way back in 2010.
But all investments are a gamble in a way.
So if you’re asking is binary options gambling, then the answer is yes. Just like every other investment.
Because all investments require risking money for a return that can’t be guaranteed.
Whether you’re buying property, you have the same risk. There’s no guarantee the value will rise. Venture capital investments are the same.
Don’t worry about the gambling part. Worry instead about the management aspect.
If you manage your binary options well, then you can offset some of that risk. And higher payouts usually imply higher risks.
But binary options offer a managed form of risk.
Unlike investing in venture capital or property, it’s easier to work out the return rates.
You can call a 50:10 bet, which gets you your money back, plus half. If stock prices drop, you keep 10% of what you invested.
Read our Binary Options 101 guide for more information.
Not only that, but you can’t judge an act based on a single investment. So one trade is a form of gambling because you can’t reliably predict the outcome.
But taken over time, then you’re more likely to make money. It’s no longer a gamble because you know the overall outcome. With a strong system in place, you’ll make more.
If we ask is binary options gambling at this point, then the answer is no.
It is absolutely possible to treat binary options as a legitimate form of trading. If the Netherlands and the UK both see them as a financial instrument, then so should you.
Still interested in binary options? Check out the 5 binary trading strategies that you need to know.