Binary options trading and Forex are ever-growing and popular businesses providing traders with access to indices, commodities, stocks, and, ultimately, currency trade. Being such simple financial instruments, what makes the binary options and Forex so popular?
Firstly, trading binary options, you don’t actually purchase or sell the assets you trade with. Please also be aware that trading forex and binary options are highly risky.With binary options brokers you buy an option or future, deciding whether the value of the asset in question will rise or fall below the strike price in a set expiry time. This means there is far less stress than with traditional trading, where you have to sell while the value of the asset is high to actually make profit.
Secondly, binary options have a fixed risk with every option where you can’t lose more than you have invested. The traditional investors profit or lose the actual difference between current value when they sell and the value when the asset was initially purchased. The word binary itself means two options with which you can win your payout or lose your investment. However, this also means you can’t win more than the initial payout offer no matter what happens with the asset value. Forex is foreign currency exchange, where you buy and sell with set currency pairs to make profit on the constantly changing market.
Binary options are very simple to understand and easy to use financial instruments. This further attracted many enthusiasts as well as professional traders into the business. The binary trading process starts with choosing the asset you want to trade and your actual prediction on its future value in a set time frame. All you need to do then is decide the amount you want to invest and wait for the option to expire, to see if you won the trade payout or lost your investment.
Forex is somewhat more risky and can bring in more profits as such. Unlike binary options, there is no fixed expiry time frame and there is no fixed risk. The currency value in contrast to its paired currency can move and change radically, bringing in profit or loss from the point you buy it and as long as you hold the asset.
Research and make an in-depth analysis of the market, assets, platforms, and broker companies. You will want to choose a favorite asset you are best familiar with, safe platform, good and reliable broker company with good offers for volume and trades you want to execute!
Although binary options are extremely simple instruments for investing and trading, we consider it highly important to be knowledgeable and up to date with all the news regarding the assets you trade with. Thus, educational materials, webinars and even coaching are really important aspects especially when just starting with binary trading and foreign currency exchange.
Many brokers offer various assets and account types and bonuses depending on the deposits you make. The winning returns also vary and are between 70 and 85% with prominent brokers, while there are also losing propositions up to 15% with some brokers.
Brokers are there to make investments and speculation as easy as possible for the clients and, as said, to best enjoy your trading you will need to devote time to research the benefits they offer. We at Binarys.org will help you choose the best brokers for your needs! With detailed reviews based on criteria such as strict regulation, safety, quality interface, as well as bonuses and high quality customer support, you have access to information helping you best choose how to enhance your trading experience.
Explanation of Forex and Binary Options
Although they have several similarities and some people even categorize Forex as a part of binary options trading branch, it is obvious that Forex trading and binary trading are actually very much different. It’s important to understand these differences and use them to your benefit if you are to trade profitably.
As said, binary options are financial instruments through which binary brokers offer trading access to different markets without the need to actually buy any of the assets. They offer a binary outcome too, where the client can win the trade with the pre-set payout or lose the trade and his investment.
On the other hand, Forex brokers offer the opportunity to actually purchase and exchange currencies in set pairs. Leveraged, this trade can produce far bigger profits with no pre-set limit but the risks are way bigger too. While trading binary options you can lose your investment in an option, with Forex trading you can lose all the funds on your trading account. This is because there is no expiry time set or a pre-set payout amount, as Forex traders buy and sell foreign currencies when they want to.
The value of the currency in a pair can radically change over time, and a trader may choose to hold a currency for months and even years. This opens a possibility to huge profits when selling the asset, but also to huge losses due to the constant changes. Binary trading can minimize the potential loss to one investment per option and can thus be considered a safer alternative than Forex.
Binary options can be used to speculate with different assets, including commodities and stocks. The most used payout offer is $100 per option, where the price of an option is equivalent to the probability of winning the trade. The higher it is, the greater the chance that it will rise above the strike price and win you the trade. It’s also important to note that both the seller and the buyer in a specific binary contract have to cover capital of their side of the $100 contract.
Binary options are also an alternative you can use to trade Forex – with options set on popular currencies such as EUR-USD and with hourly, daily, and weekly expiry times. This is a more expensive way to trade Forex but it also minimizes the potential loss. Many consider a major advantage of binary options trading that the prize and the risk are set and known. Although Forex is more risky with possibilities of big runs in both ways, there are tools to contain these risks too, such as Stop Loss offering to automatically block the trades after certain amount is lost on a specific trade.
Forex brings several more dangers – such as rookie mistakes of taking on too many currency pairs to follow or taking big swings with no actual background research – but generally, it can be said that well-educated traders can easily get around these. Both with binary options and Forex trading you have to be careful and attentive, as they are high-risk/high-returns businesses highly dependent on different events and news stories.
To conclude, we’ve listed both, binary options and Forex advantages, as well as obvious drawbacks in a sense that the winnings are limited with no regard to how much your asset actually grows in value. However, it’s thought of as very useful with any type of assets, which brought it the mass popularity.
This is especially true in the unpredictable world of Forex trading. Beginner traders are advised to start Forex trading with binary options, as we consider it well-worth the price paid, limiting risks and lowering the required collateral while also bringing possibilities of using more flat markets.
Brief History of Forex and Binary Options
To explain the beginnings of Forex Trading, we will have to go back to the post-WWII Europe. After the World War II, the horrific economic status and the overall chaos that ensued were to be minimized by the 1944 Bretton Woods Accord. Simply put, the greatest impact that the deal had was through pegging the currencies to the US Dollar, which was pegged directly to the price of gold. This has had an immediate as well as long-lasting effect on the global economy.
The Chicago Mercantile Exchange (CME) soon offered actual currency trading, which was founded to facilitate the international commerce. The currency trading simply had to become an integral part of the international trade, especially as USSR started producing oil and getting big sums of US Dollars for it, depositing it to the banks outside of the US territories and control. Euro markets thus became very attractive as they had far fewer regulations and offered higher yields.
The year of 1971 was a big one, as US President Richard Nixon eliminated the gold standard for the Dollar to prevent inflation and further rise in the price of gold, which started the free-floating exchange and the modern currency over-the-counter market. Forex trading is not conducted in a physical location and this became one of its major advantages in the global popularity and rise together with modern day web-related technologies. This gave rise to a number of non-regulated and regulated independent brokers developing trading platforms and practically serving as market-makers.
Meanwhile, binary options trading was also there for years only open to institutional traders and banks in a situation similar to Forex trading. In 2008, US Securities and Exchange Commission (SEC) approved Options Clearing Committee (OCC) proposed changes for exchange trading of these options. This made binary options financial instruments and binary options trading became a reality for average retail traders. Chicago Board Options Exchange (CBOE) then started offering binary options for public trading and with the development of the technology and Internet platforms it soon became a widely popular trading tool.
At the beginning, it was rather complicated and limited, with only the Call option available and it was obvious there needed to be changes implemented for the business to live. The experts and the clients both wanted more types of options available for trade as well as major simplifications to the trading process. The trading software was developed with years to come offering more options and features, and binary trading reached popularity no one could have hoped for, with hundreds of thousands of traders engaging.
The advanced technology and the investments made in the platforms, features, and the overall process by many broker companies resulted in an explosion and amazing expansion where clients could trade with commodities, indices, and stocks like never before. Companies thus worked to hit the market with a product that was easy to trade and strictly tied to financial markets.
However, there was another big factor to it – introducing Forex to binary options. Although other options were appealing to traders, much similar to sports betting or roulette, Forex was a huge hit. Although the similarities are obvious and rather widespread, there’s one major difference in chance in casinos and the possibility to predict the actual movement of markets or assets in trading. For example there are trends traders follow, as well economic releases or news events which enable you to get actively involved and research the market before you invest.
For these reasons, Forex and binary trade are as popular as ever, with growing client bases, regulatory bodies already established in every big financial center, and global liberalization of trading finally there. It is, of course, important to be careful and realize the risks that the industry brings to the individual traders and best use them to your benefit with research and education.
Examples of Forex Trade
In every Forex trade, you have the base currency and the counter or quote currency. You should always look at how many quote currency units you receive for one unit of the base currency. To put it simple – how many US Dollars you would get for 1 EURO, in a EUR/USD trade where EURO is the base currency and Dollar ($) is the counter currency. You will want to research and predict the movement of the currency values correctly.
With this example, you will either buy Euro, while simultaneously selling US Dollars, or sell Euro and simultaneously buy USD. If you predict that, based on the facts you have access to, Euro will rise in value against the US Dollar, you will look to buy Euro units which will afterwards be worth more US Dollars.
On the other hand, if you think that Euro value will fall, you will obviously want to buy US Dollar units and later sell them for more Euros.
If the quote for the EUR/USD transaction is 1.2810 / 1.2813, this means you can sell EUR at 1.2810 or buy it at 1.2813. If you think EUR will have an upswing, you buy it at 1.2813 and wait for it to happen. Once you are happy with the profits, you can sell it at a new price. However, if you are wrong and the sell price goes down, you can wait or sell to close the position and stop your losses at any time.
Examples of Binary Trade
Binary trade is different in that you don’t actually buy the asset. This will best be shown with gold. For example, it’s trading at $1,200 per troy ounce and you think it will go above $1,205 by the end of the day.
You would buy this binary option at let’s say $57/$60 where 57 is the bid price while 60 is the offer price. You buy the option for $60 and if you are correct your payout will be $100, with the gross winnings of $40. However, if the gold closes below $1,205 you lose the investment.
Many traders enjoy the beauty of Forex in binary trading where you would buy the binary option contracts on a value of currency pairs valid through a certain period of time.
For example, if you choose to buy a contract EUR/USD >1.2425 at 49/55 believing it would rise, you get $100 if it closes above 1.2425. However, if it closes below the strike price you lose the investment. If you are on top for example at 1.2445 and the expiry time is coming to an end, but based on the news you think it will fall below again, you can sell the contract for $75 at 75/80 for example, which would bring you a total profit of $20 or 36%.
These examples pinpoint the essence of Forex trading as well as binary trading, where with one you can make huge profits with a sizeable bankroll with no limits on your profits, while with the other you can purchase contracts for considerably less money, with opportunities for a good but limited profit. This actually is evidence that combining Forex with binary options trading limits your losses but limits your possible profits as well.
While this would be a good safety switch for any trader, allowing you to put a time frame to your Forex investments it is also somewhat inappropriate for long-term investors. Bringing the two businesses together has brought binary options trading to bloom with many new enthusiasts and investors coming in the business.
While you can obviously cut your losses with Forex trading at any time selling your base currency, it’s somewhat less favorable to do so with binary options contracts as these were intended to be ‘yes’ or ‘no’ options with a smaller bankroll put in for one option.
What This Site Provides
Starting to trade binary options and Forex is never as easy as one thinks. Although it is popular as it is largely for its simplicity and trading opportunities if offers, we strongly believe a successful trader needs to have an almost scientific approach to Forex and binary options trading. This means thorough education, constant and detailed research, and being up-to-date with market events as well as every day and economy news.
If you want to start trading, you will need basic knowledge to build or simply choose and implement an efficient strategy. We are looking to provide the best working Forex and binary trading strategies that will help you narrow down the choices and ultimately save time and money.
Adjusting a strategy to best suit your preferences and bankroll will be a demanding task and you will need as much help as you can get to browse many systems and plans and actually decide what you want to use. We will provide multiple strategies for different levels of trading, from beginner to advanced proficiency, to bring you an ultimate tool enhancing your binary trading and Forex experience. We will also provide tools to successfully set your objectives, choose a strategy, broker, assets, and ultimately trades.
It’s very important to understand your possibilities and set objectives, and we will assist in choosing them accordingly. Choosing a best broker for yourself could just determine your trading and success path. Nowadays, there are hundreds if not thousands of brokers attracting traders and with our detailed reviews you will be able to choose safe and reliable options, with functioning and effective features as well as appealing bonuses. This is a first step to successful Forex and binary trading!
Learning and adjusting your style, you will also need proper risk control and bankroll management. Through our expert articles, we will deliver insight on how to manage risks, document and analyze your results to best improve your trading style, and finally succeed. We’ll also find best times to trade binary options and Forex, try to explain why and what you should buy and when to sell, how to set profit targets, stop loss, and much more.
Reviews to different Forex Trading Software will be directed to help you pick a best one based on their assets, features, overall popularity and service quality. We understand the importance of high quality trading platforms to your trading experience and success rate, and we will devote to providing detailed information to ease the search for your perfect software.
At Binarys.org binary options, we are dedicated to helping others become profitable Forex and binary options traders. We will ultimately provide you with A to Z broker and software reviews, as well as access to best bonuses, robots, signals, and trading strategies to help you build your bankroll and become a successful trader or simply improve your style.
You will, of course, need much more effort and persistence, as this is a high risk industry, but we believe to have built a great springboard for your Forex and binary options trading career!