Whether To Trade Binary Options

This guest article was written by Simon Klein who is a professional trader with over 10 years of trading experience. Simon has a passion for trading and loves to train and coach others – whether a complete beginner or an experienced trader. He is also the founder of. Binary Options are a hot topic at the moment.

There is a lot of misinformation out there and conclusions are being drawn based on a lack of knowledge instead of being based on a deep understanding. This article will cover the interesting topic about how to classify whether the activity you are doing is considered trading or gambling and will uncover how to ascertain whether what you are trading is a financial instrument or not. It appears, based on a, that regulators in different countries do not know whether to classify binary options as a financial instrument or gambling.

This statement shows a shallow understanding of binary options as well as financial instruments. There are a number of types of binary options and this article appears to imply that there is only one.

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Call/Put options are the simplest ones when it comes to binary options. This makes them the best entry level for traders who are new in the world of binary options trading. We suggest you to stick to this type of binary options until you gain some experience and confidence in your skills. Whatever the type of binary option trade it will help to remember that binary means one or the other, as this concept is applied in all the various types of binary option trades. Calls vs Puts – We’ve already touched on this particular type, but basically it refers to whether an option is going up or down.

For example, there are fully regulated binary options that trade on the. There is also a Binary Options Exchange where you can be the writer and seller of binary options. Gambling or financial instrument? According to the Merriam-Webster dictionary, gambling is defined as “to bet on an uncertain outcome”.

Isn’t trading any financial instrument according to this definition gambling? Well, it is if you are just looking at the outcome of one individual trade in isolation. If on the other hand, you are trading a system that has a positive expectancy then the outcome of a large enough number of trades is not uncertain anymore – you will make money! I would like to offer a different and novel approach to understanding the nature of trading and gambling.

Suggested articles Swiss Precision in Trading Technology The approach is based on a two prong analysis that looks at both the nature of the “instrument” that you are trading and how you are trading. • What are you are trading? If there is no system that can be developed that has a positive expectancy, then you are gambling and what you are “trading” is not a viable financial instrument.

Basically, avoiding trading during illiquid time periods and in highly volatile markets can save you money, both in terms of your trading position and in the amount of the bid offer spread you may be quoted for the transaction. You can also trade into the thinner markets in New Zealand that opens at 4:00pm and Australia which opens at 5:00 PM. Banks that may stay open as late as 7:00PM. This represents a window of time during the trading day, when the market could be thin and so price spreads may widen significantly.

• How are you trading? If you trade any financial instrument without a strategy that has a positive expectancy, then you are gambling. Let us take a look at a few examples to see whether you are gambling or trading. • Playing the slot machines in a casino. This is clearly gambling as the odds are in the favor of the slot machines over time. If you play long enough you will always lose. The casino always wins.