Do Traders Add Value to the Economy?
Whether you are a beginner or you have been trading binary options for some time, eventually, sooner or later, you are going to be accused of performing in a role which contributes no value to the economy. If you have been trading for some time, odds are you have already had this accusation lobbed at you many times. If you are new to trading, you may be caught off guard the first time you hear it. The conversation generally goes like this:
You: “I just started trading binary options. I am making a lot of money, and I love every minute of it! I finally have discovered something that I enjoy doing, and I think I can make a living at this.”
Friend or family member: “That’s nice, but daytraders don’t add value to the economy. All they do is move money around. They don’t create anything, they don’t perform any services. You are making a living doing absolutely nothing. It isn’t fair. And when you win, other people are losing. You are a parasite. You should quit trading and get a real job which allows you to participate meaningfully in society instead of sitting at home on your computer and being selfish.”
While the arguments are often phrased more subtly than this, they often are just that openly hostile. Again, it is only a matter of time before somebody says something like this to you. What should you answer when they do? Is trading really an activity which “contributes no value to the economy?” Are binary options traders who win parasites, profiting off of the losses of other traders?
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The Value of Trading
It is tough to define value, but we can define it loosely as anything which has usefulness. Is trading valuable to you? Certainly. It has the obvious usefulness of providing you with income. Is trading useful to the economy as a whole? Here are several ways you can argue easily that it is:
- As a binary options trader, you are effectively placing a wager concerning the performance of a stock, commodity, index, or currency pair. As such, you are sending a message as to the value of that asset at a given point of time. You are just one voice in a crowd, but the crowd as a whole does have a point to make. Traders who are making their decisions based on trading methods (not random, wild speculation) are performing a service by conveying the value of financial instruments. Actual speculative traders (gamblers) do not provide value.
- Traders provide liquidity to firms. This makes it easier for firms to get the capital that they need when they need it, which alleviates the burden on consumers. It can reduce prices for consumer goods and can help companies to stay productive. Without this valuable liquidity, you would see mass failure throughout the economy.
- Traders do not always work for themselves. Oftentimes they are hired by companies which do produce goods and services for consumers. They may hire traders to help them build up capital or reduce their own costs. You may be trading for yourself now, but your valuable skills could lead to a job with a company later.
It is also something of an oversimplification to imply that your trading activities alone create value. A lot of people who trade for a living also have other goals and projects. Many take the capital they raise through trading and feed it into those other projects, creating start-up companies and creative works that could not otherwise come into existence. Those creative works and start-ups can provide a great deal of value for society. On top of that, many traders are very generous and give regularly to charitable causes. There is certainly a great deal of value in that. So the idea that traders offer no value to the economy is a binary options myth.
Are Traders Parasites?
The other half of the accusation comes down to parasitism—that you are essentially a bad person because you are profiting only when others are losing. Your first thought may be to argue that all businesspersons make money when others are losing money, but the person arguing with you will then point out that customers are receiving products and services in exchange for their money. You are not giving anything to the losing traders who ultimately fund your winning trades.
Here is the reality, though. Will those losing traders still lose even if you do not win? Yes. In fact, the vast majority of binary options traders lose, which makes it easy for binary options brokers to stay in business, and makes trading very lucrative for the few who win. Assuming you are a serious trader who trades with a method, you are part of a small minority. The vast majority of binary options traders are speculative gamblers. People who speculate and gamble will lose with or without your help. All you are doing is collecting on their losses through your skill and efficiency. And remember, you are the one creating economic value by acting as a gauge for the value of firms. The gamblers are the ones detracting from the economy through speculation. Profiting while they lose is all kinds of fair.
So there you have two very solid arguments to refute the accusation that traders do not add to the economy and live parasitic lives. Gamblers will gamble, and there is nothing wrong with taking advantage of that fact. And so long as you are trading responsibly and intelligently, you are contributing value to the economy, not subtracting it. And remember, you are a part of the economy. Nobody exists in a vacuum. When value comes into your life, you have a chance to offer more value back to others by embarking on well-funded personal and professional endeavors and giving to charitable causes. Live your life in a conscious way, and you can be proud of your career as a binary options trader.