Difference Between Binary Options and Trading: A Comprehensive Comparison 📊💹
In the world of investment 💼, there are many tools that investors choose to make profits 💰, including binary options and traditional trading. Although both are related to price movements in financial markets 📉📈, there are fundamental differences between them in terms of how they work and the risks associated with them ⚖️. In this article, we will discuss the difference between them, highlighting the fact that binary options are not trading and are considered a type of gambling that may be forbidden by Islamic law 🚫.
What are binary options? 🤔
Binary options are a type of investment that depends on determining whether the price of an asset will rise or fall 📉📈 over a certain period of time. If the prediction is correct ✅, the investor receives a fixed reward 💵, and if it is wrong ❌, he loses the entire invested amount 💸. These instruments do not involve owning the assets themselves 🏠, but simply betting on their movement over a specific period of time.
Binary Options Are Not Trading 🚫
Although some may think that binary options are a type of trading, they are not actually. In traditional trading, the investor owns the financial instrument 🏦 and buys and sells it according to certain strategies 📊. While in binary options, the investor does not own the asset itself 💼, but is limited to predicting how much the price of the asset will change at a certain time ⏳. This fundamental difference makes it not a real trading instrument 📉, but rather just a bet on the market 🃏, which puts it in the category of gambling.
Binary Options: Gambling is Haram in Islam ⚖️
Legally speaking ⚖️, binary options are considered a type of gambling 🎲, which is forbidden by Islamic law. The main reason for this is that the investor does not own any real asset 🏠 and does not participate in commercial or economic activities, but is merely gambling on price movement. In gambling, profit is not made from real work or effort 💡, but from mere chance or luck 🍀. Accordingly, this type of investment is considered to be in violation of the provisions of Islamic law 📜, which prohibits gambling in all its forms.
Risks and disadvantages ⚠️:
High Risk ⚡: Although the profits may be tempting 💰, the losses may be very large 💥, as the investor loses the entire amount if his expectations are wrong.
Not owning the assets 💳: In binary options, the investor does not own the financial instrument itself 💼, but only anticipates the price movements.
Encouragement of betting 🃏: Binary options encourage betting rather than real investment based on analysis and understanding of the markets 🔍.
What is traditional trading? 💹
In traditional trading, an investor buys and sells financial assets such as stocks 📈, currencies 💱, or commodities 🛒. This type of trading relies on market analysis and the use of advanced strategies to make a profit 📊. Traders have the ability to own the purchased assets 🏦 and hold them for long periods, which gives them the opportunity to profit from the increase in the market value of these assets 📈.
Advantages ✅:
Full control 🧑💼: The trader owns the financial instrument and can sell or hold it 📅.
Diversity of strategies 🛠️: Multiple strategies can be used such as technical and fundamental analysis 🔍.
Ability to Hedge Risk 🔒: The portfolio can be diversified and risks reduced using tools such as stop loss orders ⚖️.
The difference between binary options and traditional trading ⚖️:
1. Financial structure 💡:
In binary options, the trader does not own the underlying asset 💳, but rather bets on price movements.
In traditional trading, the trader owns the financial instrument and can buy and sell assets as needed 🔄.
2. Risks and returns 📉📈:
In binary options, the risks and rewards are predetermined and limited to a fixed profit or a complete loss 💥.
In traditional trading, risks and returns are not predetermined and may change based on market movement 🌍.
3. Complexity and Strategies 🔧:
Binary options rely on simple predictions of future price 📅, while traditional trading requires more complex strategies such as technical and fundamental analysis 🔍.
4. Legitimacy 📜:
Binary options are considered gambling and are forbidden by Islamic law because they rely on betting on price movement without owning the underlying asset 🏠.
Traditional trading is a real investment based on buying and selling assets and is considered legitimate as long as it is done in accordance with Sharia controls ✅.
Conclusion 🔑
Ultimately, binary options are not trading 📉 but rather a type of betting 🃏 that lacks a real economic basis 💡, which makes it close to gambling 🎲 and religiously forbidden 🚫. In contrast, traditional trading provides real opportunities for investment and analysis 🔍, which makes it a legitimate financial instrument ✅. Investors should be aware
With these differences before making their decisions 💡.