Thread: Gambling or Trading
Gambling or Trading.
I am wondering if you could assist me with this task. I am attempting to define the difference between these two fundamental binary option approaches, i. e. gambling or trading. This reason that I am interested in doing this is because traders essentially fall into one or the other of these two camps.
For example, novices tend towards gambling while more experienced individuals are traders. I have noticed that this trend prevails on the BOT’s forum.
As such, my own definition for ‘trading’ is an approach that enables you to clearly identify the reasons why a binary option either finished ‘in-the-money’ (ITM) or ‘out-of-the=money’ (OTM). As such, you are subsequently in a position to enhance your trading strategy by using analytical and scientific techniques. This means that over a period of time, albeit many months, you then have the ability to produce a successfully strategy.
In order to achieve this objective, traders tend to adopt techniques, such as the following:
1. Use longer time frames.
2. Follow proven money management strategies
3. Seek realistic profit target by restricting their losses
4. Are conservative about their trading prospects
5. Research extensively into the fundamental and technical factors supporting a trade before activating it.
6. Using other scientifically based techniques
In contrast, gamblers have no idea whatsoever about why the binary options they activate win or lose. Instead, they tend to speculate on the financial markets primarily on hope or using the recommendations of some alleged guru. They also target techniques that are adrenaline-based backed by prospects of immediate wealth.
As such, most of them opt for scalping strategies based on the ultra-fast time-frames, i. e. 1 minute where noise is the dominating factor. A major problem that they face by doing so is that their reward-to-risk ratio is appalling because payout ratios plummet as time-frames shrink. Not that they even know that or even care. As their results are totally random, there is little hope that they can ever devise successful strategies using such an approach. Even if they do hit a winning streak, gamblers do not last very long before they disappear into history.
I would be very interested if anyone has their own definitions for trading and gambling. An observation that I have recently made is that most of the BOTS threads center about this issue with our valiant senior traders desperately attempting to stop novices (gamblers) from embarking on self-inflicted disasters.