Binary options are touted as a serious investmentproduct by brokers where high returns possible in a very short time . On the other hand , consumer advocatesare concerned about binary options, as they consider trading this highly speculative product primarily a dangerous game of chance, in which in the end only traders broker wins. Also, the fact that binary options are offered not only to online brokers, but now to bookies , does not put the trade in a positive direction . We Have Critics Concern In more detail, we want to provide our readers with an objective analysis of the opportunities and risks of binary options.
Is binary options gambling?
Binary options are built as a simpler financial bet : The trader has two events from which to choose: The price of an underlying may rise or fall after the set time has elapsed . During one of these events, he sets out a self-selected amount. If this event actually happens, so if the price develops as predicted by the trader, he will get profit. On the other hand, if the event doesn’t happen and the price doesn’t behave the way the original trader assumed, the bet on the bet will be forfeited. This simple design makes binary options especially popular with newbies because trading is quick to learn . On the other hand, the transaction usually falls under criticism , because by definition it is really a bet .
Just because binary options are betting doesn’t mean it’s impossible to trade with them profitable . Most people know gambling as a game of chance in which it is not possible to make profits in the long run . But that is not the definition of betting. Although binary options contain a high degree of happiness , they are not strictly a game of chance , because the probability of winning can be influenced by target analysis and good understanding of the market . Whether or not a trader can be successful in the long term depends on whether he succeeds in making binary optionsMake a bet with a positive expectation . If the average expected return per bet is higher than the bet, it is a bet with a positive expectation. Whoever bet that much will earn long term profit .
Problem with variance
As we have seen, binary options trading is about making good decisions and placing trades in a way that makes them as likely to win as possible.
There are various methods available for price analysis , ranging from relatively simple to very complex. But even traders who master price analysis very well and only execute trades that really bring positive results , often suffer high losses and can even lose their entire trading capital . How is this possible? If traders chose to give the most likely outcome every time, they would actually make a profit. This is where variance comes into play.
The so-called expected value is an average value . If a trader places a hit trade with an expected value of 58%, it has a positive expected value . So, the person trading will earn average profit if he chooses this trade. However, for individual trading, there are still only two possible outcomes : win or lose. 58% mentioned only average . If multiple trades are placed with this expected value, they will long term58% of them will win. On the other hand, it also means that 42% will be lost . The more trades are placed, the result correctis the expected value . This means that price analysis is always designed for the long term . Everything is possible for private trading. It is also possible to lose several trades of this type in a row, which can jeopardize all of a trader’s deposit under certain circumstances . For example, if 10 trades of this type are placed, it cannot be assumed that 5.8 will win, as expected by expected value. All things can happen with a small size. However, in the long run, when thousands of trades have been placed, the result is quite similar to the expected value. So if a trader completes 100,000 trades one day and has an average expected value of 58%, it can be assumed that the number of trades won will be relatively close to 58,000.
Limited ability to analyze price
In order to analyze the prices of the traded facilities in detail and to be able to place good deals , users have various methods and tools at their disposal. Course analysis can be learned quickly , but there are many complex subtleties , with results that can be improved further and new methods are developed frequently, so that even Experienced traders should also keep training , because they can continuously learn something .
Many brokers offer free training courses or videos where newcomers can learn course analysis.
While price analysis is undoubtedly one of the most important cụtools in binary options trading and crucial to long-term, successful performance, should not be overestimated . Some newbies expect to get almost any trade with newly learned analytical skills and some of the binary options adverts are also recommended to clients. However, there are many unpredictable factors of course and these are only for a short time. can only predict very inaccurately , even with an optimal analysis, the probability of hitting is only slightly increased. A trader who can achieve about 55-56% of his trades with the help of technical analysis is very good and can make profit on most brokers , provided he has to compliance with required risk management . But this agent must live with more than 40% lost transactions.
Without good risk management, binary options is gambling
The difference in binary options is high because they are “all or nothing” bets make high profit or lose all bets . Since even a good price analysis can very vaguely predict whether a trade is won or lost, there is still a very high element of luck for individual trades .
Due to variance, almost anything can happen in the short term . With luck you will win more trades than with the probability calculator and the trader will make big profits . In this example, we are talking about positive variance. Otherwise, a negative variance can occur and the trader loses significantly more trades than the average expected value. Only when looking at very high number of trades , results will match the expected value and really good traders can show positive results .
The ‘big’ problem with that is that many traders don’t even come in with such ‘high number of trades’ because the ‘negative variance’ hits and they ‘lose everything’. To prevent this from happening, any trader who wants to seriously pursue binary options trading and avoid gambling should come up with good risk management . This implies that only a very small portion of the total capital is traded. This prevents traders from losing too much in the event of a negative variance and thus unable to continue trading . As for the loss, the number of shares is reduced accordingly , so the volatility doesn’t affect the total capital too much . Of course, due to the smaller stakes, profits do not grow so quickly, requiring high discipline , so as not to deviate from the planned risk management and not yet take on more risk. Many traders are really good at blocking the road to success , because sooner or later there will be a negative variance and capital will be lost due to the high stakes .
Many brokers offer free training materials
A well-executed, targeted price analysis is crucial to long-term success . Beginners can learn many aspects of course analysis directly from their binary options broker, as they often offer free training material . It is advisable to deal with this vigorously before starting actual trading. Because a good knowledge is increased chance of winning . Many brokers also offer a free demo account . Here users can get acquainted with play money and thus no risk for binary options trading and newly learned strategies implementation and deepening of analytical methods . So, no need to invest separately to understand bet finance binary options and find out if trading corresponds to their own ideas.
Anyone who has a free demo account first experience can and now also with real money want to trade which should always only a small amount deposit, which he also Easy Dispense can, because of the danger. chance of a total loss always given. While this can be limited by proper risk management , it cannot totally be avoided even by the best traders .
Even for good traders there is high risk
Binary options are considered a very modern commercial product and are very popular. Critics, however, partially criticized the unintelligible course design , the broker, and the high risk of loss . Despite all analytical options, binary options are still a highly speculative trading variant , which at least in the short and medium term is also much dependent on luck . Even experienced traders with a lot of expertise can’t make steady profits, but usually suffer heavy losses . A good risk management , risk for a reduced all deposit loss, but no complete security. Therefore, all new entrants should know first deposit in advance , although high profits are possible, the deposit can also be lost.
Conclusion: Binary options are financial bets with a probability that profits can be affected
Allegations that binary options will be pure gambling probably should not be confirmed because there are ways self chance affects such as the success of some trading experts show. However, the truth is that binary options are financial bets where a bet is made and a predetermined payout is made on a positive outcome. The goal is to only bet with positive expectations . This will create profit in the long term .
However, with binary options, the risk should never be ignored , because even professional traders investing through binary options is a great danger . Since this is a highly speculative investment with extreme variance , it is possible and even possible for high losses to happen repeatedly . Even total damage is possible, has been many experienced traders. Therefore, it is advisable to use only funds, losses can be accepted without restriction and never exceed their own circumstances deposited with a broker, even if this animatedwith promises attractive .
Before registering and depositing with a binary options broker, potential clients should read carefully their terms and conditions and check their integrity . Only a broker trading fair and following the current rules can trade successfully binary options .