There are many people who dismiss binary options as being little more than a form of gambling. Yet financial regulatory commissions in dozens of countries—and not gaming commissions—regulate, manage, and approve of binary options.
The truth is, they’re a form of trading, just like Forex, the stock exchange, or any other type of trading you might get involved in. They’re a financial product. They’re basically short-term options that let you profit off price fluctuations.
The binary options trader buys a call when bullish on a stock, index, commodity, or currency pair, or a put on those instruments when bearish.” –Investopedia
In short, they have more in common with stock trading than with blackjack.
Binary Options are Data-Driven
When you buy binary options you typically aren’t just guessing whether to buy a put or a call. Smart traders understand the markets they trade in and have taken the time to study the data. They’re watching the trends, and may even pay attention to the news items throughout the day which could impact those trends.
While there are always surprises, talented traders get a good sense of what the markets are going to do. They also, through journaling, experimentation, and practice, get a good feel for how many trades and what types of trades they need to make to make a fairly consistent income every day that the markets are open.
Binary Options Offer Ways to Minimize Losses
At their simplest, binary options are a sort of “yes or no” question. Will the price of a given item be higher or lower by a certain time?
If you trade like that’s all there is to it, though, you might well lose far more than you win. Sophisticated traders take an example of the ability to exit their trades or sell their options before certain expiry time. That means they can carefully watch what the market is doing and make decisions that minimize their risks.
The more time and energy you invest in learning these advanced strategies the better you’ll do. If you just jump in and start making trades without taking the time to develop this understanding then yes, you absolutely might as well be gambling. If you do develop your understanding, you could be building a wonderful foundation for becoming a successful day trader across a variety of products and options.
Consistent Returns of 70% to 80% Are Possible
There are people who make a full-time living on binary options because they hit on strategies that ensure they’re right about 70% to 80% of the time. That means they understand how much they’re likely to lose when they set out to start making their trades on any given day, and have worked those losses into an income-generating strategy.
Combine that with the fact that most traders work with just 1% of their capital at any given time, and you begin to understand how it’s possible to make money in this area.
Want to get started? Begin your education at Binomo.com, which offers a host of free resources, or open a free trading account at Deriv.com.