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Digital options - trading or gambling?
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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