Binary betting is gambling that can be used as an alternative to regular day trading. Binary betting is a form of fixed odds betting, where there are only two possible outcomes (winning or losing), and the maximum possible profit and loss are known in advance. Binary bets can be placed on the same markets as regular day trading (such as the DAX and Z futures markets), so regular day trading charts can be used to monitor the status of binary bets.
An example of a binary bet might be whether the DAX futures market will close the trading day at a price that is higher than it opened at. If the DAX opened at 7500.0, and a binary bet was placed a few minutes after the open (or at any other time during the trading day), the bet would win if the DAX closed at any price above 7500.0, such as 7750.0, or even at 7500.5 (only 1 tick higher).
Advantages
Binary betting is considered gambling, and in some countries such as the UK, gambling profit is not taxed either as income or capital gains. This allows day traders to make significant profits from their usual markets without incurring any tax liability.
Disadvantages
There is a drawback to the tax advantages of binary betting, and that is that US traders are restricted from gambling by the US government, so US traders are not usually allowed to open binary betting accounts, may have problems finding a binary betting company that will accept them.
As binary betting is gambling, it is offered by bookmakers (instead of day trading brokerages), and it is not subject to any of the usual trading regulations. This means that binary betting can be subject to price fixing (bid and ask prices that are different from the exchange), and bookmakers that may trade against their clients to take profit for themselves.
