Is Binary Options considered as Gambling?
Dennis BIG D





January 11, 2016 at 8:45 am

Today’s article is something I put a lot of thought into since it is highly debated amongst traders. One of our members actually posted this exact question a few months ago – Is Trading Classified As Gambling? Although he was referring to trading in general, we will be focusing on Binary Options Trading specifically. Secondly, I think it is time to finally put this topic to rest for once and for all moving into 2016. I am simply going to state the facts, be non-biased while taking real life scenarios into account. I will also share my personal view at the end of the article. In the end, it is still up to you whether or not you agree or not. Be open minded and think things through after reading the article. Is Binary Options considered as Gambling – YOU be the judge!

Before we jump into this article I would like to take the opportunity to remind you what Meta Binary Options is all about. I encourage each and every one of you to give your input, comments or feedback. We allow all and any feedback, positive or negative. Speak your mind! We would love to hear from you, not only in regards to this article but other as well. We try and help out where we can and so do our members. Please remember that there is no such thing as a stupid question. The only stupid thing would be to not ask the question. Just like you, myself and others also started out exactly where you are right now. Time to put your thinking caps on.

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What Is Gambling

Since this article is about gambling I think it is important to look at the definition of the word ‘gambling’. I think this should be made clear before we venture further into this topic.

Definition of gambling

• Play games of chance for money; bet.
• Take risky action in the hope of a desired result.
• To play a game in which you can win or lose money or possessions.
• To bet money or other valuable things.
• To risk losing (an amount of money) in a game or bet.
• To risk losing (something valuable or important) in order to do or achieve something.

Our Own Interpretation/Explanation

We can see that the definition is based around ‘risk’ & ‘money’ in simple terms. The ‘outcome of something’ also plays an important role. Keep these 3 (risk, money, outcome of something) important factors in mind as I will refer back to it later in the article to state a few facts. Now that we have a better understanding what exactly gambling is we can start a valid argument or debate to ultimately answer our questions; Is Binary Options Considered As Gambling.

What Is Binary Options Trading

It is just as important that we know what the definition of binary options is, right? This way we can way them up against each other to come to a better conclusion and understanding. I am sure you Google the term “Binary Option” you will find hundreds, if not thousands of search results, explaining exactly what a binary option is. The only issue is the way it gets explained. It’s a more complex, non-newbie friendly and confusing first time enthusiasts. Explaining something in a way that is hard to understand goes against the whole purpose of writing about the topic in the first place. This section’s purpose is to explain “what a binary option is” in a simple to understand format, hopefully shedding some light on this topic. So what exactly is this popular form of trading called binary options?

Definition of binary options

Binary option – Wikipedia, the free encyclopedia
• In finance, a binary option is a type of option in which the payoff can take only two possible outcomes, either some fixed monetary amount of some asset or nothing at all (in contrast to ordinary financial options that typically have a continuous spectrum of payoff).
I am sure most of you reading this find the Wikipedia definition somewhat confusing. Technically there is also a few misleading errors that should be cleared up when looking at Binary Options Trading as it stands now. Multiple changes take place on a regular basis by brokers expanding the way traders can trade.

1. A Binary Option actually has 3 possible outcomes.

• In-The-Money (winning trade)
• Out-The-Money (losing trade)
• At-The-Money (trade resulting in a tie)

2. A Binary Option trade does not offer a fixed amount or nothing at all.

• Out-The-Money insurance is offered by some brokers
• Some brokers offer an early close feature

The reason for these 2 misconceptions is most likely due to how Binary Options “evolved” so to speak. It has changed immensely over the past few years, making it a truly unique form of financial trading.

Our Own Interpretation/Explanation

Referring to the financial markets, a binary option is a trade that only has three possible outcomes. The payout can either be a partial or fixed amount. The maximum risk and reward is known before the trade is executed. You cannot lose more money than your predefined risk. A binary option contract can be purchased on any asset class. The trade’s outcome is determined when a trade is manually or automatically closed at expiration. A calculated decision can be made in regards to where the selected asset price is moving.

If you do find any of the terms used unfamiliar you can make use of our Glossary Of Terms available on the forum.

As you may have noticed is that the word ‘money’ & ‘risk’ also comes into play. Reading these definitions, you might think, wow, they sound very similar. No so fast! If we quote the last sentence mentioning ‘a calculated decision’ we see a whole new meaning and interpretation.

I can imagine a lot of you are thinking but both can have a Glossary Of Terms. 100% Correct. Each industry has its own fancy terms unique to it. The fact that the 2 industry terms are completely different is what separates them in that respected aspect. So now that the confusion is out of the way it’s time to state some facts. To make it more interesting, we will through Forex Trading into the mix just to state a point.

There Is Risk Involved
• Gambling
• Binary Options
• Forex

You Can Lose All Your Funds
• Gambling
• Binary Options
• Forex

Know Your Risk/Reward Before Hand
• Gambling
• Binary Options
• Forex

Money Is Involved
• Gambling
• Binary Options
• Forex

Make Calculated Predictions/Decisions
• Binary Options
• Forex

Emotions Come Into Play
• Gambling
• Binary Options
• Forex

You vs. The House
• Gambling
• Binary Options
• Forex (Market Makers)

By looking at the above we can see a lot of similarities but most importantly the fact that separates trading (Binary Options, Forex) from gambling. The fact that we can make calculated predictions and estimates. It is not purely based on the luck of the draw. Don’t get me wrong, some ‘traders’ have no idea what they are doing and do rely on pure luck. This brings us to a final conclusion.

Is Binary Options Considered As Gambling

Although it has a lot of similarities but so does Forex, there is a difference. You have to realize that you decide whether or not it turns into gambling or not. Remember that I mentioned in the beginning of the article that you’d be the judge. Starting to make sense now? You have the control. If you really want to get technical we can say that we gamble on a daily basis. Not by going to the casino but making choices and decisions. I hope you see the value in this article and enjoyed reading it. Defined as gambling or not, what difference does it make to you?

Ethan Weigand





January 11, 2016 at 9:31 am

I honestly don’t know why people are even bothered whether or not binary options is seen as gambling or not. I personally know people who gamble and make money this way for a living. So does it really matter what it is classified as? I could not give a damn if someone tells me you are not trading, you are gambling. As long as you can do it profitably I have a smile on face.

Back to the article… Do I consider it gambling? No!!! I am not relaying on pure luck or flip a coin when making my decisions. I make my trading choices based on my market analysis. I have an actual trading and money management strategy I follow. Regarding the emotions, well that comes into play at some point or another. As long as you can keep it under control you should be fine. I do have to admit that it can turn into gambling when newbies and professionals start doing revenge trades so to speak.

My conclusion is to simply stick to what you are doing if it is working for you. If you have an issue because you or others consider it as gambling – Then Don’t Trade! As simple as that guys.

Jed Monreal





January 11, 2016 at 12:58 pm

Thanks for writing this article. I hope this puts the debate to rest. I am so tired of people arguing about this! I love the fact that you though in FX as part of the explanations. It is a fact that if you are using a Market Maker as a broker that it is no different than trading against the house/broker. We can probably expect the haters to drop a few posts on this topic. They will always try to make binary options out to be bad.

Well, guess what! FX MM also manipulates prices, they also take the order side of your trade, they also delay withdrawals and some are also not regulated with anything other than a Cysec regulation. So what is the difference?
Happy Binary Trading 😉

Luigi Wallick





January 11, 2016 at 3:14 pm

Hi guys

I trade binaries myself and have nothing against it at all but I have to disagree that forex and binary options fall under the same category. There are highly regulated FX brokers that offer ECN accounts and super-fast withdrawals. We must keep that in mind. Safer alternative options are available. Although on the other side, binary options exchanges are starting to pop up which is pretty exciting for the industry as a whole. Nevertheless, I love trading binary options. I have had my fair share of BS brokers but I am happy to say I have been trading with StockPair for 2 years now without issues! No complaints at all.

Eduardo Lanni





January 12, 2016 at 8:59 am

Very informational article Dennis! I actually enjoyed reading for a change. Was straight to the point with some facts and points of view I never even thought about. I can honestly say I now look at binary options differently than I have before. As you mentioned, it is not the much different than Forex or even Stocks etc. They all carry RISK with some advantage to analyze and make calculated predictions, stacking the odds in our favor. Yet there is still no guarantee. So in the sense of the word “gamble” it is 100% accurate in my opinion. Does this mean we should stop trading? Hell no.

Eduardo L.

Leonel Hosier





January 13, 2016 at 5:01 pm

I just finished reading “Making The Switch From Forex To Binary Options” and this article was an excellent follow up as I needed a piece of mind. It was bothering me about the whole gambling point of view. After going through this article, it makes complete sense. Gambling or not, all forms of trading can be seen as gambling including FX. I agree due to the fact that each carries risk of losing money with no assurance. Keep the great content coming mate! I sure get great value out of it. We are in theory just trying to stack the odds in our favor as mentioned by a previous member. We are gambling that our prediction will indeed pay off. That sums it up for me.

PS: Some people are just addicted to the adrenalin rush and to them it is straight our taking a gamble blindly. Can we judge? No.

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