Is trading binary options classified as gambling?
Hallo there! My name is Cedric.
I came across binary options some time ago and got really interested. I spoke to one of my friends the other day. He does investments for a few firms on a daily basis. I asked him if he has ever heard about binary options trading before. He told me yes but as far as he knows it is not trading and you are only gambling like you do in blackjack. I am not sure what to think of this statement because I have seen some people making good money trading binary options on the internet. I am starting to wonder if all of these account statements are fake.
So my question that I want to ask you guys are: Is trading binary options classified as gambling?
I have also heard this statement being made before. But I have to say that it is normally people that think they know better because they have some sort of degree in investments. The only way they know of doing stuff is the way they have learned. This is why they see binary options as gambling. My counter question is why would binary options trading be seen as gambling but not normal trading or investing?
Yes, it could be qualified as gambling if you have little to no idea what you are doing. On the other hand, if you are experienced you could make a huge success with trading binary options. So to me it all comes down to the amount of experience you have. This is what will classify it as gambling or trading.
Binary options are not considered as gambling by governments. As such, any successful trading is considered as earnings and not winnings therefore any money that is earned is usually taxable. One of the main reasons it is considered as earnings rather than winnings, is because of the skill involved in trading. You could, if you wish, ‘bet’ on binary options blind and guess the outcome. That’s your choice. Buts there are plenty of financial tools available to help a trader make informed decisions so they can minimize the risks. It’s up to you to do to the research and choose whether to gamble or to lower your risks and make informed trades.
Trading becomes gambling when the trader begins to trade on emotions and gut feel. Greed and fear rule the emotions here and it is easy to get drawn into such type of trading. Unfortunately, most traders tend to fall for this trap, which is why it has led to so many critics that call for binary options or trading as a whole as gambling and nothing more.
The trader researches, calculates the risk and ensures that the trade that they make gives back more than the amount that they risk.