5 Tips on why choose binary options over forex

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5 Tips on why choose binary options over forex

By now you already know that binary options are simple and that if you want to profit from it, you need to determine the price of certain asser after a certain amount of time. You have everything set and this is good sicne you already know what youa re risking.

What you will learn here:

  • Why binary options is better then forex
  • Detail explanation of every WHY

WHY BINARY OPTIONS IS BETTER?

Here is why you need to choose binary options over forex:

1. Because you can make money even every 60 seconds if you choose to do so. You can actually select 1 minute expiration time and trade only them. You just need to take in consideration that such trading is much more riskier then long-term because it shifts direction much faster but the profits are aswell faster – that is why it is so popular and people get interested. Do not forget ehre aswell to take some time for analysis and try to trade with the trend here.

2. Much more simple tools to use and start trading only by placing UP or DOWN button. When you start trading binary options you can see that the trick to trading is just to select the expiration time and click on up or down button with which you select where the price will go after the strike price till the end of the expiration time.Of course you also have option to choose other trading tools but simplicity is what give binary options trading advantage over forex, it is just easier to understand them.

3. You just register with the broker online and start trading, so no downloads required. First you have to choose the appropriate broker. As easy as it sounds, it really is not that easy because it is one of most important steps even in forex. Good broker is like a good partner in business, it makes the difference. After that, all you need is login information and you can trade from everywhere as long as you have internet connection.

4. There are predetermined risks so you can limit your losses. This is also advantage in binary options because before a start of a trade you already know what is your risk and what is your profit, it makes all the difference and easier decision while on the other hand with forex you determine all the variables – being said that, you can also make more profit. For novice traders or traders who want to have higher chance of profit, binary options is better choice.

5. You can make profits from the start BUT always trade only with certainty in mind. It is true that binary options trading is not 100% profit and that you can lose money with it but you can limit that with teaching yourself. That is why you need to prepare yourself for a trade as you do for everything in life.

FINALE

After all, everything in life has two sides, people will always be like that so you have to take your mind and choose what works best for you. If you already have expirience in forex then i see no problem to try out binary options, maybe you will have better profits with them. Or if you are a novice trader and never trader before, you should expect this is nothing like breathing air which is basicly automated, you have to learn as you have learned to walk – you did not do that in first try either!

MetaTrader 5

What is Forex trading

The foreign exchange market (Forex) is the world’s most liquid and most traded market, where trades worth trillions are completed each day.

Forex trading involves buying one currency and selling another currency at the same time. This is why you always see them quoted in pairs. For example: EUR/USD and GBP/USD.

Which currencies can I trade

Forex trading involves buying or selling these “currency pairs”. When you buy a currency pair such as EUR/USD, it means that you are buying the EURO and selling the USD at the same time.

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Currency pairs are categorised as follows:

  • Major pairs – Consist of the world’s most widely traded currency pairs
  • Minor pairs – Consist of less liquid currency pairs
  • Exotic pairs – Consist of one non-USD major currency that’s paired with the currency of an emerging economy. For example: GBP/HKD

The spread – why it matters

When you see currency pairs offered by a broker or trading service, there are usually two prices available: the ask price and the bid price. These are also known as the buy price and the sell price respectively.

The spread is the difference between the ask and bid price.

Based on the table below, can you tell what is the spread for the EUR/USD currency pair?

Symbol Bid Ask
EUR/USD 1.05652 1.05653
GBP/USD 1.24509 1.24515
USD/CHF 1.01010 1.01015
USD/JPY 113.248 113.251
USD/CAD 1.31441 1.31444
AUD/USD 0.76876 0.76879
AUD/NZD 1.06683 1.06691
AUD/CAD 1.01043 1.01050
AUD/CHF 0.77652 0.77658

Let’s calculate the spread for EUR/USD:

Ask price – Bid price = Spread

1.05653 – 1.05652 = 0.00001

What time is the market open for me to trade

The Forex is an over-the-counter market where trading takes place between two parties, and not with a centralised exchange or marketplace.

Depending on your broker or trading platform, you can start trading from the time the Sydney market opens on Monday morning to the time the New York market closes on Friday evening – up to 24 hours a day, five days a week.

Binary.com clients can trade Forex from Sunday 21:00 GMT to Friday 21:00 GMT.

How to trade Forex

A Forex trader always has one objective in mind when trading: to exchange one currency for another in order to make a profit.

This is why we’ve come up with the following three-step tutorial to help you bridge that gap and make your first trade:

Step 1: Learn to read currency pairs

One of the first things most Forex traders learn is how to read a currency pair. There are two parts to a currency pair

EUR / USD

Tips

  • The base currency is always equal to one unit.
  • The ask price of the currency pair indicates how much of the quote currency is required to buy one unit of base currency. This is more commonly known as the exchange rate.

For example, if you see that the EUR/USD has an ask price of 1.05382, you’ll sell USD 1.05382 (quote currency) for every EUR 1 (base currency) you buy.

If the bid price is 1.05229, you’ll buy USD 1.05229 for every EUR 1 you sell.

Step 2: Understand when to buy and when to sell

Think that a certain currency will go up or down? Learn when you should buy (or “go long”) and when to sell (or “go short”).

Traders choose to buy a certain currency pair if they think the value of the base currency will rise. The opposite is also true: they sell a certain currency pair if they think the value of the base currency will fall.

Let’s compare the differences between buying and selling, using the EUR/USD as an example:

  • You’re buying the EUR and selling the USD
  • You expect the EUR to rise in value so you can sell it back for a profit
  • Buy = go long

  • You’re selling the EUR and buying the USD
  • You expect the EUR to fall in value so you can buy it back at a lower price (and make a profit)
  • Sell = go short

Step 3: How to purchase your first currency pair

After you’ve decided which position you want to take, your next step is to purchase that currency pair on MetaTrader 5.

Here’s an example of the EUR/USD currency pair and its bid-ask price:

To go long, you’ll want to click on ‘Buy’ to purchase EUR 1 for USD 1.17726

To go short, you’ll click on ‘Sell’ to sell EUR 1 and receive USD 1.17725 in return.

Forex margin policy

Margin allows you to trade on leverage – meaning your existing capital can give you a much higher level of market exposure.

For example, if you wanted to purchase 100 units of a particular asset that’s trading at USD 50 per unit through a traditional broker, it would typically cost you USD 5,000 for this transaction.

However, with leverage you can purchase those 100 units at a fraction of the typical cost – depending on the leverage afforded to you by your broker or trading platform.

How to calculate margin

You can determine the margin for our currency pairs by using the formula below:

For example, if you buy one lot of the EUR/USD pair with a contract size of 100,000 and leverage of 100:1, the margin that you need to purchase one lot of EUR/USD will be calculated as follows:

What’s a margin call and how is it applied

Equity is the sum of your balance and floating profit and loss (PnL). Margin level is the ratio of equity to margin. When that ratio reaches a specified percentage (usually 100%), your account will be placed under margin call. This does not affect your ability to open new positions; it serves to alert you that your floating PnL is moving lower. However, it is recommended to add funds to your account in order to keep your positions open. Alternatively, you may close losing positions.

What’s a stop out level and how is it applied

If your margin level reaches an even lower level (usually 50%), it will reach the stop out level where it is unable to sustain an open position. This will lead to some, or all your open positions being forcibly closed (also known as “forced liquidation”).

When your account hits the forced liquidation level, your orders and positions are forcibly closed in the following sequence:

  1. We delete an order with the largest margin reserved
  2. If your margin level is still under the stop out level, your next order will be deleted. However, orders without margin requirements will not be deleted
  3. If your margin level is still under the stop out level, we will close an open position with the largest loss
  4. We will continue to close open positions until your margin level becomes higher than the stop out level

Forex contract specifications

Major pairs

Symbol Description Lot size Minimum volume Volume step
AUD/CAD Australian Dollar vs Canadian Dollar 100,000 0.01 0.01
AUD/CHF Australian Dollar vs Swiss Franc 100,000 0.01 0.01
AUD/JPY Australian Dollar vs Japanese Yen 100,000 0.01 0.01
AUD/NZD Australian Dollar vs New Zealand Dollar 100,000 0.01 0.01
AUD/USD Australian Dollar vs US Dollar 100,000 0.01 0.01
EUR/AUD Euro vs Australian Dollar 100,000 0.01 0.01
EUR/CAD Euro vs Canadian Dollar 100,000 0.01 0.01
EUR/CHF Euro vs Swiss Franc 100,000 0.01 0.01
EUR/GBP Euro vs Great Britain Pound 100,000 0.01 0.01
EUR/JPY Euro vs Japanese Yen 100,000 0.01 0.01
EUR/NZD Euro vs New Zealand Dollar 100,000 0.01 0.01
EUR/USD Euro vs US Dollar 100,000 0.01 0.01
GBP/CHF Great Britain Pound vs Swiss Franc 100,000 0.01 0.01
GBP/JPY Great Britain Pound vs Japanese Yen 100,000 0.01 0.01
GBP/USD Great Britain Pound vs US Dollar 100,000 0.01 0.01
NZD/USD New Zealand Dollar vs US Dollar 100,000 0.01 0.01
USD/CAD US Dollar vs Canadian Dollar 100,000 0.01 0.01
USD/CHF US Dollar vs Swiss Franc 100,000 0.01 0.01
USD/JPY US Dollar vs Japanese Yen 100,000 0.01 0.01

Minor pairs

Symbol Description Lot size Minimum volume Volume step
CAD/CHF Canadian Dollar vs Swiss Franc 100,000 0.01 0.01
CAD/JPY Canadian Dollar vs Japanese Yen 100,000 0.01 0.01
EUR/NOK Euro vs Norwegian Krone 100,000 0.01 0.01
EUR/PLN Euro vs Polish Zloty 100,000 0.01 0.01
EUR/SEK Euro vs Swedish Krona 100,000 0.01 0.01
GBP/AUD Great Britain Pound vs Australian Dollar 100,000 0.01 0.01
GBP/CAD Great Britain Pound vs Canadian Dollar 100,000 0.01 0.01
GBP/NOK Great Britain Pound vs Norwegian Krone 100,000 0.01 0.01
GBP/NZD Great Britain Pound vs New Zealand Dollar 100,000 0.01 0.01
GBP/SEK Great Britain Pound vs Swedish Krona 100,000 0.01 0.01
NZD/CAD New Zealand Dollar vs Canadian Dollar 100,000 0.01 0.01
NZD/JPY New Zealand Dollar vs Japanese Yen 100,000 0.01 0.01
USD/CNH US Dollar vs Chinese Renminbi 100,000 0.01 0.01
USD/MXN US Dollar vs Mexican Peso 100,000 0.01 0.01
USD/NOK US Dollar vs Norwegian Krone 100,000 0.01 0.01
USD/PLN US Dollar vs Polish Zloty 100,000 0.01 0.01
USD/SEK US Dollar vs Swedish Krona 100,000 0.01 0.01
USD/ZAR US Dollar vs South African Rand 100,000 0.01 0.01

Exotic pairs

Symbol Description Lot size Minimum volume Volume step
AUD/SGD Australian Dollar vs Singapore Dollar 100,000 0.01 0.01
CHF/JPY Swiss Franc vs Japanese Yen 100,000 0.01 0.01
EUR/HKD Euro vs Hong Kong Dollar 100,000 0.01 0.01
EUR/ILS Euro vs Israeli New Shekel 100,000 0.01 0.01
EUR/MXN Euro vs Mexican Peso 100,000 0.01 0.01
EUR/SGD Euro vs Singapore Dollar 100,000 0.01 0.01
EUR/TRY Euro vs Turkish Lira 100,000 0.01 0.01
EUR/ZAR Euro vs South African Rand 100,000 0.01 0.01
GBP/SGD Great Britain Pound vs Singapore Dollar 100,000 0.01 0.01
GBP/TRY Great Britain Pound vs Turkish Lira 100,000 0.01 0.01
HKD/JPY Hong Kong Dollar vs Japanese Yen 100,000 0.01 0.01
NZD/CHF New Zealand Dollar vs Swiss Franc 100,000 0.01 0.01
NZD/SGD New Zealand Dollar vs Singapore Dollar 100,000 0.01 0.01
SGD/JPY Singapore Dollar vs Japanese Yen 100,000 0.01 0.01
USD/HKD US Dollar vs Hong Kong Dollar 100,000 0.01 0.01
USD/ILS US Dollar vs Israeli New Shekel 100,000 0.01 0.01
USD/RUB US Dollar vs Russian Ruble 100,000 0.01 0.01
USD/SGD US Dollar vs Singapore Dollar 100,000 0.01 0.01
USD/THB US Dollar vs Thai Baht 100,000 0.01 0.01
USD/TRY US Dollar vs Turkish Lira 100,000 0.01 0.01

How to read the contract specifications table

The Forex is typically traded in lots. One standard lot is equivalent to 100,000 units. Each time you open a position on a currency symbol, you can start with a minimum transaction of 0.01 lots.

For information about Forex leverage refer to our Margin Policy.

Important notes on our swap rates (overnight funding)

If you keep any positions open overnight, an interest adjustment will be made to your trading account as indication of the cost required to keep your position open.

This interest adjustment (or swap rate) is based on interbank lending rates, on top of a 2% fee.

The interest adjustment is calculated in ‘points’ – meaning we will convert the relevant interbank lending rates to ‘points’ in the base currency.

Please take note that our swap rate also depends on the time and days you hold your positions open:

  • You will be subjected to swap rates if you keep a position open past 23:59:59 GMT.
  • Positions that are still open on Wednesday at 23:59:59 GMT will be charged three times the swap rate to account for weekends – a standard practice for all Forex brokers.
  • Our swap rate may also be adjusted to take holidays into account.

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In the EU, financial products are offered by Binary Investments (Europe) Ltd., W Business Centre, Level 3, Triq Dun Karm, Birkirkara, BKR 9033, Malta, regulated as a Category 3 Investment Services provider by the Malta Financial Services Authority (licence no. IS/70156).

Outside the EU, financial products are offered by Binary (SVG) LLC, Hinds Building, Kingstown, St. Vincent and the Grenadines; Binary (V) Ltd, Govant Building, Port Vila, PO Box 1276, Vanuatu, regulated by the Vanuatu Financial Services Commission (view licence); Binary (BVI) Ltd, Kingston Chambers, P.O. Box 173, Road Town, Tortola, British Virgin Islands, regulated by the British Virgin Islands Financial Services Commission (licence no. SIBA/L/18/1114); and Binary (FX) Ltd., Lot No. F16, First Floor, Paragon Labuan, Jalan Tun Mustapha, 87000 Labuan, Malaysia, regulated by the Labuan Financial Services Authority to carry on a money-broking business (licence no. MB/18/0024).

This website’s services are not made available in certain countries such as the USA, Canada, Hong Kong, Japan, or to persons under age 18.

The products offered via this website include binary options, contracts for difference (“CFDs”) and other complex derivatives. Trading binary options may not be suitable for everyone. Trading CFDs carries a high level of risk since leverage can work both to your advantage and disadvantage. As a result, the products offered on this website may not be suitable for all investors because of the risk of losing all of your invested capital. You should never invest money that you cannot afford to lose, and never trade with borrowed money. Before trading in the complex products offered, please be sure to understand the risks involved and learn about Responsible Trading.

In the EU, financial products are offered by Binary Investments (Europe) Ltd., W Business Centre, Level 3, Triq Dun Karm, Birkirkara, BKR 9033, Malta, licensed and regulated as a Category 3 Investment Services provider by the Malta Financial Services Authority (licence no. IS/70156).

In the Isle of Man and the UK, Synthetic Indices are offered by Binary (IOM) Ltd., First Floor, Millennium House, Victoria Road, Douglas, IM2 4RW, Isle of Man, British Isles; licensed and regulated respectively by (1) the Gambling Supervision Commission in the Isle of Man (current licence issued on 31 August 2020) and by (2) the Gambling Commission in the UK (licence reference no: 39172).

In the rest of the EU, Synthetic Indices are offered by Binary (Europe) Ltd., W Business Centre, Level 3, Triq Dun Karm, Birkirkara, BKR 9033, Malta; licensed and regulated by (1) the Malta Gaming Authority in Malta (licence no. MGA/B2C/102/2000 issued on 01 August 2020), for UK clients by (2) the UK Gambling Commission (licence reference no: 39495), and for Irish clients by (3) the Revenue Commissioners in Ireland (Remote Bookmaker’s Licence no. 1010285 issued on 1 July 2020). View complete Regulatory Information.

Binary.com is an award-winning online trading provider that helps its clients to trade on financial markets through binary options and CFDs. Trading binary options and CFDs on Synthetic Indices is classified as a gambling activity. Remember that gambling can be addictive – please play responsibly. Learn more about Responsible Trading. Some products are not available in all countries. This website’s services are not made available in certain countries such as the USA, Canada, Hong Kong, or to persons under age 18.

Trading binary options may not be suitable for everyone, so please ensure that you fully understand the risks involved. Your losses can exceed your initial deposit and you do not own or have any interest in the underlying asset.

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 78.6% of retail investor accounts lose money when trading CFDs. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.

Binary Options vs Forex

Binary Options vs Forex Which One You Should Choose?

Binary Options vs Forex | If you are just about to start investing, you may wonder which one you should choose. Or maybe you have tried other one and you are thinking if you should change to the other? Or maybe you have just another reason why you want to compare the two and to know if superior in some way. In this article I will go through pros and cons of both so that you have easier decision to choose the one that fits your personal preferences better.

Binary Options are actually a new form of investment, while foreign exchange trading has been for as long as there have been various currencies. Therefore, it is obvious that the currency markets are much bigger by turnover. In fact, they are the world’s largest market, currency trading takes place five days a week 24 hours a day averaging over $ 5 trillion per day. When you invest in currencies, you are directly competing against other top professional investors such as Warren Buffett and George Soros.

Binary options markets are hundreds of time smaller than currency markets, and there are surprisingly small number of professional investors involved. Also, investors have much more trading assets to choose from than currency traders have. In addition to that, only a few people know how to use auto traders like binary option robot, when for currency traders, highly sophisticated trading software is almost a necessity.

Binary options trading is much easier for novice investor than forex trading

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Which One Should You Choose Binary Option vs Forex? Read Out Thorough Investigation And Find Out Which One Is Better And the Reasons Why?

How to Make Money with Binary Option Robot

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Claim your free binary option robot, get started with three easy steps:

  • Name of Robot
  • Min. Investment
  • Min. Deposit
  • Rating
  • 1. Your Binary Option Robot will analyse the market and decide, which asset (currencies, indices, commodities and stocks), is right to trade at that point in time.

    2. The Binary Option Robot Will Predict the Price Movement

    Your robot will assess a wide-range of factors, and then make a prediction on how the assets price will move, saying: Call (up) if it believes the price will rise and Put (down), if it believes the price will fall.

    3. Decide on how much you want to Invest

    Then you need to decide how much you want to invest in the commodity and when that investment will expire.

    4. Collect your Earnings

    Finally, you collect your earnings (the good part!)

    TABLE OF CONTENT

    Main Reasons To Choose Binary Options

    First I’ll go through the main points why you should choose binary options over forex. After that I will tell you what kind of investors should choose forex trading over binary options. Basically, by far the majority of investors binary options fit much better, while currency trading is suitable for a small minority of people who are able to specialize and possess certain characteristics.

    • With binary options, you have much wider selection of different trading assets. In currency trading you trade only currencies. Binary Options allows you to trade, forex, commodities, indices, stocks and basically any investment with a variable value. This is limited only to what the broker is willing to take to the selection. Unless you only want to trade currencies, this is huge factor and main reason to choose binary options.
    • In binary options trading, competition is not that fierce, at least not yet. As already mentioned, the foreign exchange market is world’s largest market by turnover, where participants are the world’s smartest and most successful investors. In foreign exchange market, you are competing directly against these investors. In binary options investing, competition is still at a very low level. The main reason is that with the really large sums, direct investment in equities is cheaper. This gives a great opportunity to investors who are investing with smaller amounts, the toughest competitors are totally absent and all the talented mid-level competitors are so far absent also. You should use this great opportunity now while you still have time.
    • Binary options investor gets access to much greater bonuses. In foreign exchange market, competition is relatively stable due to its long history. Sometimes new viable comes into the market and shakes it a little bit by offering cheaper prices, but usually consumer will have to settle with what is currently offered. In binary options trading, markets are still constantly developing. New brokers appears every day, and they are trying to attract customers to themselves with large and juicy bonuses and benefits. For you as an investor this is a great thing, all freedom of choice is left to you.
    • As a binary options investor, there is a number of great software available for free. Intense competition does not extend purely into brokers, also different software developers are having tough competition because of scarcity of customers. As a result, the best applications such as The Real Robot, Binary Hedge Fund, Binary Stealth, Copyop, PayDay FM and OptionBot 2.0 are all available completely free of charge for now. This may not continue for very long so I recommend you to register all of these through our links while you still can. In this way, you ensure that you will have them for free in the future also if they become chargeable. On the other hand, best forex software costs at least thousands of dollars, and if you want that you have any hope of progression as an investor, you are practically forced to use these. This will drive investors with little money into hopeless situation.
    • With binary options you know exactly what your payout will be if you hit right. In forex trading, you can never know exactly how much you will earn in the best case or lose at worst case. This makes the choosing of right investment amount extremely difficult. Sometimes you will have the risk a bigger sum what was originally intended. With binary options, you know beforehand exactly what is your potential winning and what is the potential loss amount if the investment goes wrong.
    • With binary options, you choose beforehand when you wanna close the position. Some investors may view this as a disadvantage, but I think this is clearly an advantage. When binary options investment has been set, you do not have to worry about or keep track of it in any way if you do not want. You can spend time with your family or even go to the beach. In forex trading, you need to follow the changes in value of the investment continuously and to consider whether now is the best time to close the position or would it be perhaps sometime in the future. At worst, you will not be able to do anything other than follow the investment.
    • There is no transaction costs in binary options. Binary options investor do not pay any transaction costs. Expenses are in fact already directly tied to payout percentage. In forex trading transaction costs can be quite high and the minimum costs can make investing with small amounts unprofitable.

    Candlestick chart is the most common form of forex chart

    Main Reasons To Choose Forex Trading

    Forex trading fits better for a small number of experienced investors who know for sure what they are doing and invest in larger sums. If you invest in currencies using mere intuition, you will only lose your money.

    1. If you have comprehensive expertise about the currency markets. There I mean the know-how that comes from years of studying and practical experimentation. That is, if your expertise is such a high level that the acquisition of the same skills with binary options would take you a really long time. You also have to remember that skills must be such that you can apply it directly to the practice profitably. Mere theoretical knowledge without the ability to apply does not take you very far.
    2. You want to invest only really large amounts of money. Most of the binary options brokers allows you to invest only up to $ 5000 at one time. Some of us this amount may be too small. In currency trading, you can set investments worth even tens of millions of investment at once. With such a large sums, transaction costs are also significantly lower proportionally what they would be in binary options.
    3. If you are not interested in other trading assets except currencies. If you’re absolutely sure you want to invest exclusively currencies in the future also, currency trading is probably a better option. Even in that case I recommend to starting with binary options using small amounts of money and gathering some knowledge before you decide to convert fully only in currencies.,

    The Difference Between Forex and Binary Options

    Though it looks similar, the binary and the forex trading is very different from each other and it is of high importance to understand the differences in order to be successful.

    The Basics

    The binary options are contracts which have a fixed risk and reward ratio. The binary options trading requires you to predict the direction of an underlying asset within stipulated duration. The binary options are available for commodities, stocks, indices, and currency pairs. The traders are informed their reward upfront in case their prediction turns out to be correct.

    Binary trading, as the name suggests and as explained earlier, requires you to predict the direction of the asset. The setup is very simple; traders get 80 percent payout in case their prediction is right. For example, if you invest $ 100 on USD/JPY and payouts is 80 percent for the winning trade, in this scenario if you predict that the USD/JPY will move higher at expiry and if that turns out to be true then you receive your investment amount ($ 100) plus the payouts (80 % of $ 100 that is $ 80), totaling to $ 180, however, if the USD/JPY moves in the opposite direction of your prediction then you will lose your investment amount of $ 100.

    To be a successful binary options trader, you must win a majority of your trades. While in the case of the forex trading, you are allowed to set your profit target and stop loss for the trade, which allows you to make a profit even if the underlying does not achieve your set targets. So, in the case of the forex trading, the traders can make money even if they do not win a majority of their trades.

    Both the forms of trading are tradeable online, and also you can start trading with small capital. Traders speculate on the movement of the underlying in both the markets and if the prediction is true both reward the traders with the handsome amount.

    Variability

    In binary options trading, the traders predict the direction of the next move within certain time period. In this way, there is no variability in the risk or the profit potential. As the name suggest, the binary market operates on only two outcomes (Up of Down).

    While in the case of the forex market, the traders are required to predict the direction but also they have to estimate how high or how low the asset can go. This way there is an uncertainty in terms of the return and a higher risk.

    The forex market doesn’t have a ceiling on how much money one can make or one can lose unless the trader’s use risk mitigation tools like stop-loss which limits the amount of loss one can have in a transaction. Meaning, the trade will automatically close if the stop loss has been hit. Similarly, the trader can decide how much money they want to make by deciding the value at which they want to close the trade.

    So, in the case of the binary options, the maximum amount of loss could be the entire investment amount whereas in the case of the forex the risk can be mitigated by using certain tools.

    Expiry

    The binary options trade with specific expiry durations and once the trade has been initiated, the traders have no control till the expiry over their transaction. Each and every binary option have a specific expiry attached to it and the trader needs to select the expiry before initiating the trade. Though some brokers allow closing the trade before expiry with restricted payout options, the majority of the brokers does not allow to close the trade before expiry.

    However, the forex trading allows you to initiate and close the trade whenever you want. The rollover is possible in case of the forex trading while the majority of the binary broker does not offer this facility.

    Leverage

    The forex trading allows to invest higher capital with the leverage allowed by the FX broker, but such facility is not available with the binary options trading. This allows the forex trader make higher winning with limited investment but in the case of the binary trading, the trader can only allow investing the money which is available on the account or the amount which is restricted as per the brokerage site.

    Types

    The binary trading offers 5 variants of the trading types. These options are high or low, 60 seconds, one touch, boundary, and option builder. Whereas, the forex trading offers several option types for the trading including buy or sell, limit, stop, One Cancels the Other, trailing stop, hedge amongst others.

    Although the forex trading and the binary options trading look similar, there are some striking differences and one should be aware of these before initiating their first trade.

    Pros and Cons of The Forex and Binary Trading

    In the recent past, the binary options trading has seen an unprecedented rise. The little known binary options of early 2000, now have more than 400 operators who offer binary trading.

    Accepted, that the binary options trading is growing at a rapid rate but why you should indulge in it? Or why should you learn a new trading platform when you are already deep into forex trading? Is it really superior to already known trading mechanisms?

    There are several advantages and disadvantages of the forex trading and the binary trading. The following text describes some of the most pros and cons, and hopefully, it will assist you in making the selection.

    Maximum Risk

    The biggest advantage of the binary trading is that the traders are aware of the maximum risk per trade, and it is the amount of money the trader invest in the underlying. Certain brokers, also allow you to close the trade before the expiry allowing you to further cut the losses, of course with certain conditions.

    However, the same is not true for the forex trading. Even if with stop losses, you cannot be 100 percent sure that you will lose only the pre-decided amount. Though less likely, there is a chance that you may lose higher amount due to slippages, illiquid asset, price jumps, technical issues, amongst others.

    Flexibility

    In the case of the binary trading, except high or low options, the strike prices are set by the broker and even if you have a fair idea on how an underlying asset will behave, you cannot place an order to be executed at certain price points. On the other hand, the forex market offers the flexibility of placing limit orders or market orders during market hours to suit your requirements.

    In an open trade, there are limited brokers in the binary arena who allows you to close before the expiry with certain conditions while the majority of the broker disallow pre-closing of open trade. On the other side, the forex trading allows you to close the trade even after 1 second of opening the trade, giving you a complete control over your transaction.

    If you are on a winning trade, then the forex trading allows you to scale the investment and gain higher returns, whereas, the risk and rewards are fixed in the case of the binary options trading.

    Cost

    The forex trading attracts transaction costs in terms of a brokerage or spread or both. Whereas, in the case of the binary trading there is no addition cost for trading the instruments.

    Assets

    Unlike, the forex trading which has only one asset type for trading, the binary options have evolved to provide trading in commodities, stocks, indices, and currency pairs. This is one of the biggest advantages as one can diversify the trading portfolio by staying only with one broker whereas the same cannot be said for the forex brokers.

    Risk Volatility

    This is another advantage for the binary options traders. As the traders are well aware in advance the maximum loss they can incur in a single trade. So the events which induce high volatility in the market have a limited impact while trading with the binary options. Also, along with the risk, the reward is also fixed in the case of binary trading, and there is no possibility of scaling in more amount to gain higher rewards.

    Whereas, in the case of the forex trading, the market reacts to events and sometimes the reactions cases heavy volatility increasing your risk multiple times. For instance, if you have taken a position in a specific currency pair expecting it to move higher, an unfavorable event can crash the prices of the currency pair, giving you no time to cover your losses. This way the volatility risk is very high in the case of the forex trading compared that with the binary options trading.

    Errors

    The errors in entering the trade are very low in the case of the binary trading as there is only one action which needs to be taken which is to open the trade and the rest is being done by the software. The binary options trading does not offer limit orders or stop losses for adjustments, these have their own advantages and disadvantages.

    Even if you are a professional trader in the forex trading, your one mistake has potential to wipe your entire account. For instance, you forgot to exit from an open trade and the tide has turned unfavorable, in that case, the trade will continue till you may lose the total amount available for the trading in your account. Such errors will never occur in the binary trading, as the expiry is set and the trade will close automatically limiting the loss only up to your per trade investment amount.

    Finally

    As discussed above, both the platform provides ample opportunity for the traders to make money and both offers distinct advantages and disadvantages over others. The above text provides definite insights into both the trading world. However, the ultimate decision of selecting the trading market rests in your hand.

    Best Binary Options Broker To Start With

    My number one recommendation is IQ Option, the best broker site there is. When you invest with IQ Option you can be sure that you can start easily and effortlessly. They have comprehensive learning materials, friendly customer service and brilliant bonuses. Besides all that you know that your money is fully secured with one of the world’s most trusted broker sites. When you open an account to IQ Option by clicking the button below you are qualified to get 100% bonus when you deposit at least $ 200. Unfortunately, IQ Option does not accept US customers, so if you are from the United States, I recommend reading our GOptions, CTOption of Porter Finance reviews.

    Conclusion: Binary Options vs Forex

    As you may have came across many times in this article already, my personal recommendation, especially for novice investors is definitely binary options. You get to compete against other beginners from the same starting line, and you will also might find that investing can be really fun. Forex trading is a hard game dominated by experienced professionals. For a novice trader, it is really hard to make profit with forex trading, most likely result is a rapid loss of money. If you are nonetheless fascinated by the currencies I recommend investing in them by using binary options.

    Best Binary Options Brokers 2020:
    • Binarium
      Binarium

      Top Binary Options Broker 2020!
      Best Choice For Beginners!
      Big Sign-Up Bonus!
      Free Trading Education!
      Free Demo Account!

    • Binomo
      Binomo

      Only For Experienced Traders!

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