How Trading Binary Options Is Like Playing Online Poker

Trading binary options has become one of the trendy ways to put your money on the line. In fact, playing the binary options market is more similar to playing online poker than you would think. I want to argue that poker players looking for a new challenge should try trading binary options, while options traders could consider winding down the day by playing some online poker. The skill set for successful people in each field is remarkably similar.

Before I discuss the skills you need for success in Internet poker and the binary option exchanges, I want to discuss the basics of binary options for the uninitiated poker players reading this. A binary option is named because it can go one of two ways: either it pays off a set amount (if the investment goes well) or nothing at all. For this reason, binary options are sometimes called “all or nothing options” or digital options, in reference to the binary nature of digital programming. Binary options can be lucrative, but they have a high risk factor.

BinaryOptions.net is a great place to start learning about the world of online binary options trading

A Game of Equals

Both binary options and online poker are better than the average online gambling proposition. If you go to an online casino, even the games with the best expected return have a house edge, so the playing field is tilted against you. When you bet at an online sportsbook, the vigorish assures you have to win at somewhere between a 52% and 55% rate to make any money.

When you’re playing online poker, the house takes a certain rake, but you’re not matching yourself against a house edge or the juice–you’re taking on other people. If you’re smarter, better prepared, and make better decisions, you’re likely to walk away from a poker table the winner. The risk-taking dynamic is the same in forex binary options trading. Transaction fees and spreads have to be accounted for, but you’re using your superior knowledge and intuition to get ahead of the crowd. The market isn’t tilted against the knowledgeable traders, but actually tilted in their favor. With that in mind, let’s discuss common traits of an online poker player and a binary options trader.

Control of Emotions

If I was told to name the one major trait a binary options trader has in common with an online poker player, I’d say it’s “emotional control”. Poker players have a term for someone who stops making rational decisions and starts making emotional plays–it’s called “going on tilt”. This often happens when a player losing a big pot–often on an unlikely come-from-behind hand called a “bad beat”–and suddenly changes strategy to a looser, more aggressive style in hopes of making back the money they just lost. This often leads to sloppy play and more risk-taking, so the poker player finds they’re just digging a bigger hole. The top poker players seldom go on tilt. They realize that good decisions sometimes lead to bad results, so they don’t deviate from their basic strategy when bad luck strikes. They realize Texas hold’em has a luck factor and sometimes bad players win because of lucky breaks. This is no reason to change the way they play.

The same goes for trading binary options. Good traders realize they can make rational, well-grounded calculations, only to see the market go the other directions. Luck happens in Forex trading and other binary option markets, because of late-breaking news or the herd mentality or one of a hundred other factors. The worst thing a smart binary options trader can do is to lose control of their emotions and deviate from their overall strategy. One famous sports executive is famous for saying, “never let your money get mad”. A good binary options trader, like a good poker player, should never let spend their money according to any emotional reaction. Good binary options traders make rational decisions and live with the results.

Theoretical Knowledge

Poker and binary trading are two activities which reward the person who knows more. If you understand the foreign exchange and make it your goal to master the economic concepts, analyze broad trends of the market, and execute an investment strategy, you’re much more likely to success than someone who just begins trading assets one day. In poker, if you read books, magazines, and online articles to study the game, you have a much better chance of winning than someone who registers an account, makes a deposit, and starts playing cards. Poker is considered a game of chance. On a hand-by-hand basis, you can say it is. Professional poker players will tell you poker is a game of skill, because the better player eventually wins.

The same can be said of Forex. If a trader knows more and is consistent in applying correct principles, they might have setbacks along the way, but enough good decisions should work out that you win the end. Any one decision playing the foreign exchange might misfire, but solid knowledge of this niche of the economy is bound to pay out. Remember, Forex doesn’t come with a built-in house edge.

Practical Experience

Being book smart isn’t enough in either online poker or binary trading. Understanding the theory is good, but theoretical knowledge isn’t enough. When you start playing the market, you’ll make some bad decisions to begin with, because it takes time to develop an intuitive feel for the trading process. The market isn’t just about financial and economic factors. The market has a human personal and social component to it, too. It’s not about reading the financial periodicals, but also getting a feel for how the mass of traders are going to react to good and bad news. This makes binary trading not just a science, but an art. Traders need experience before they gain a more subtle understanding of market factors.

The same can be said of online poker. Each new table is an entirely different society in microcosm. The players sitting at the poker table are different people with various strengths and weaknesses. Some are rational, while others have emotional quirks that affect their play. Some poker players enjoy the game for an adrenaline kick, while others enjoy social interacting while competing. Experts tell you poker is about playing your opponent, not the cards. That’s harder in online poker than a live setting, because you can’t see the body language of your opponent. But poker has a social aspect to it that’s unmistakable. The longer you play with a group of players, the better the chances of a good poker player. They learn their opponents’ tendencies.

This kind of experience at the poker table isn’t just about this micro-experience. On a macro scale, experienced poker players become junior sociologists and amateur psychologists. They view the many friends, enemies, and other acquaintances they meet along the way as case studies. Over time, they become adept at reading people in a poker setting. They gain a feel for their potential opponents. That’s why the best poker players tell beginners and intermediate players they need to play all the time. Even the best tournament professionals and cash game specialists tend to play online, because it helps hone their poker skills.

Learning Tools for Poker and Binary Trading

Now that you know what makes online poker and binary options trading similar, let’s talk about where a person starts in either field. Tools exist in both fields which allow people to test their knowledge and gain experience without spending a ton of money. Almost every online casino has its freeplay section of their site, which helps players learn their software and act as a promotional tool for the real-money gambling part of the website. Free-play online poker sites which don’t act as real casinos also have poker demos. Name any poker variant and you’ll find a tool which helps you practice that game.

The same goes for Forex trading. Sign up for a free demo account where you get virtual cash and real time quotes and this helps you practice binary trading without spending cash. What’s more, when you practice trading, a prospective Forex traders starts to construct their own “trading regimen”. Gamblers should view this as the binary options counterpart of a poker player’s style of play. Figure out if you’re going to be cautious or aggressive and whether you trade assets based on long-term analysis of a commodity’s value or on more human-based market trends. The important thing to remember is not all of the experience you gain has to cost you money. Once you learn the basic knowledge and test it through real experiences, you’ll have the mastery of your field (whether it’s binary trading or online poker) to maintain emotional self-control and make the right decisions.

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