Is Binary Options Gambling or trading? Probably this is one of the most asked questions by every new trader lured into Binary Options. However it still remains a hot topic in many under-regulated countries. Surely, lack of knowledge and experience is the main issue when it comes to Binary Options and overall this misconception have direct impact for the rest of true retail financial markets.
It is not a surprise that even regulators are confused on how to classify Binary Options. Is it a gaming product or a financial product? In short industry regulators throughout the world do not know whether to classify binary options as a financial instrument or gambling product. This issue has opened too many loopholes in the system and of course many Binary Options scams have risen due to these loopholes. Of course, ordinary traders are the ones baring major losses.
However, this does not mean that Options are fake products. In another word, gambling is taking a risk in the hope of gaining an advantage or a benefit. In binary options, it is committing your put or call orders in order to gain a financial return. Indeed, in our Forex Halal or Haram article we discussed about how gambling could make Forex Haram too.
Is it the same in Binary Options? Options are financial products. Since their inceptions, analysts have focused on developing trading a systems with positive expectancies. Making, Options a financial product. What about Binary Options? In retail market as we know, none of the orders executed by the binary options providers go to market. As a result, even if you have a good strategy you end up in the hands of hungry sharks, your broker! There is a thin line between trading and gambling.
The good news is that you can test yourself to see if you really are trading or gambling. To test yourself, you need to look into yourself, what you are trading and how you are trading. Time is money, we all get it! However, it is almost impossible to put a financial product into time perspective. Even the best fund managers will fail to predict what will happen to the market in minutes. They can analyze the price however can not put it into timeline. It is already difficult to analyze a product from price perspective.
Trying to trade a product against a selected time period will make you lose on the long run. The house wins all the time! Sharia law is not clear even with the traditional finance as we know.
Majorly there are 2 problems when it comes to trading as far as Shariah law is concerned:. Even if you manage to bypass the Riba issue in Binary Options, you will still have issues with Greed and Gambling.
Binary Options is Haram if you have greed involved. Binary Options is Haram if you are gambling. Although, you can find a way to have Halal Forex trading, in Binary Options it will not be very easy. This means that you have to avoid greed in every case and find a way to take decision based on logic, not based on speculation. If you can not keep up with these terms, your Binary Options will be Haram.
Thus, Binary Options is not permitted under Islam. Are you able to generate your strategy with a long term positive expectancy? If you can not defend your strategy for flaws or for its logic, you are then most likely gambling. In traditional binary options as you know, you are likely to be gambling.
Instead of you, your broker has a positive expectancy. To sum it up, Retail Binary Options as you know is designed for traders to make losses. They target people failing to cntrol their greed.
Especially, if you have lost your job, or are financially distressed, you are likely to fall a victim to one of many binary options scams. Many traders have lost hundreds of thousands of USDs into this industry as they never understood their trading objectives.
As a result, we can conclude that Binary Options is a gambling product. Log in Lost Password? All you need in Forex. Binary Options — Trading or Gambling?
Is Binary Options gambling? If yes, why not to put it under gaming regulation. Is Binary Options a financial product for trading? If yes why not to apply financial regulation to its full extend? There are indeed various types of binary options: Is Binary Options a financial product? How to distinguish trading from gambling? Why are you in Binary Options? You got a call or heard that Joshua made X amount in a day with Binary Options. It means you are attracted by your greed.
You are likely to gamble too! What are you are trading? Do you understand the fundamentals of the instrument you are trading? How are you trading? Is Binary Options haram? Majorly there are 2 problems when it comes to trading as far as Shariah law is concerned: Earning interest Riba Greed or gambling Even if you manage to bypass the Riba issue in Binary Options, you will still have issues with Greed and Gambling. Is Binary Options gambling or trading?
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