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| Digital
options - trading or gambling? |
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As you know, gambling
can be an incredibly
exciting experience. That feeling of the unknown and the
elation of ‘getting it right’ can be euphoric. I like to gamble on
sports events, not because I want to make a lot of money, but because it adds
an extra layer of excitement. Gambling is generally frowned upon by society but
the dictionary definition states: “an act having an element of risk”.
Judging by that description, we can regard every form of investment as a form
of gambling because there is a risk of losing it all.
Digital options
is a relatively new form of trading which has
become very popular due to its’ perceived simplicity. You
simply need to choose whether a currency, stock or commodity will either
increase or decrease in value over a specified period. There is a turbo mode
which has a low expiration time of 30 seconds. Potential returns for the turbo
mode can be as a high as 90%. Critics argue that this adds an
element of
chance because how can one tell what will happen within such a short
period?
Notably, some of the world’s smartest minds weren’t
able to predict the 2008 recession, and they had a lot of data and time. If you
have been gambling for an extended period, you might have heard from friends
and family that there is no skill involved, and it is all down to luck. Yet,
there are poker players who make significant returns tournament after
tournament, not to talk of sports gamblers so good that they get banned.
Ask any good digital options trader and they will tell you that the
moment they make a trade, it is no longer in their control. However, they do a
lot of research to swing the
probabilities in their favour. Someone who tries to trade stocks using
guesswork is a fool and unlikely to get consistent returns. In a similar
fashion, the best gamblers look at all the factors involved and find ways to
swing them in their favour.
If you are anything like me you are
obsessed with data. Before placing a bet on a football match, I like to know as
much as possible. I look at past performers, the individual form of each
player, the home vs away form of each player, etc. It would be stupid of me to
simply guess who is going to win, or just go with my gut. I might be lucky and
get it right, but over the long term, this will be an ineffective strategy.
Obviously, high payouts equal increased risk. However, humans are
greedy; therefore, we tend to go for the option with the highest potential
return. Digital options traders are able to manage the risk involved. They have
a long term perspective. There are times when their data shows that the risk
level is significantly lower than what the brokers deem it to be. Good digital
options traders are constantly looking for these
types of opportunities.
Going back to our football
example, you might find that betting on the underdog has a very high potential
return because the house thinks it is unlikely to happen. However, after
delving deeply into the data you find that there are some factors going for the
underdog. For instance, they might have performed well against opponents of
similar skill, and their opponent has a key player injured. After spotting this
value you might decide to bet on the underdog because there is a good chance of
a win.
The thought process of a successful digital options trader and a
gambler aren’t that different. Both are trying to limit their risk and
weigh up different options. Both put their money where it has the best chance
of providing a return. Most importantly, they are both able to
manage their emotions and know when to walk away.
The
digital options industry is largely unregulated. It has been banned in the EU
and is under tight regulation in the United States. This is due to the high
number of fraudulent websites. In order to cash in on the hype some sell
digital option products which don’t do anything, Some people have even
lost their life savings to these scams. Sadly, most fraudsters are able to
remain anonymous and escape with the money.
Here are some things to
look out for if you choose to trade digital options:
1) Look for
platforms which have been trading for at least 6 months. Scammers close their
platforms over a shorter period because their aim is to get as much money as
possible and flee before people realise what is going on.
2) A good
digital options broker has multiple withdrawal options. Ideally, you should be
able to withdraw money via wire transfer and ACH.
3) You shouldn’t
feel pressured to invest more money. Fraudsters tend to send out emails or even
call people to bully them into ‘investing’ more money.
4)
Legitimate digital options platforms offer excellent customer service and are
easy to reach. Look for registered phone numbers and a company registered in
Westernised countries.
5) Does the platform promote a luxurious
lifestyle above all else? People are drawn to money and success. Therefore,
scammers rent mansions, models and supercars in order to create an illusion of
a successful guru. Scammers make it seem easy to become a digital options
success. Legitimate platforms emphasise that there is a risk of loss, and their
marketing emphasises the skill involved.
To conclude, all investments
carry an element of risk/gambling. An entrepreneur setting up a new company
isn’t 100% certain that it will be successful. They only hope that all
their hard work and preparation will pay off. We all gamble, whether we know it
or not. You need to be in the game in order to become successful. You might bet
it all and lose; however, at least you are trying. Smart traders and gamblers
assess their losing trades to see what they could have done differently. If you
want something you have to be willing to take a risk and do whatever it takes.
So yes, digital options is a form of gambling, but can you tell me what
isn’t? |
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