Selecting between Forex Trading and Binary Options
Forex and Binary Options are two different methods of trading. It is very important for a trader to know the difference between the two before you start trading. This is important so you will know what is the best method for you considering your personal style and preference.
In Forex trading, you compare two currencies, and you speculate on the values of one compared to the other. Trading in this platform always involves a pair. In binary options, however, predictions are made whether there is an increase or decrease in the asset over time.
Margins are used in Forex trading. The margins that can be used in trading are decided by the brokers. These margins are used so that traders are able to increase their investments to make large profits even with small accounts.
In binary options trading, margins are not used. If there are margins, traders can opt for it to make bigger profits. In binary options trading there are no margin calls.
If you are a Forex trader, you cannot fully know how much maximum profit you can make for a trade. What you can do is simply to give a stop order which will guarantee you a percentage of profit when you stop trade at a particular time. In some ways, Forex trading is able to manage losses. However, in binary trading, the trader already knows how much he can lose and how much payout percentage he gets even before he places a trade. Payouts in binary options varies, and it all depends on the broker.
In Forex, the closing position can be selected. Trading can be closed when the market is open, and it is the broker who does the immediate closing. However, in binary options trading, the trader is the one who chooses the expiration of the options before placing a trade. It can be in an hour, in a week, etc. When the expiry time comes, then the trading is automatically closed. It is possible to get predetermined expiry times on different options from brokers.
Forex trading offers many types of orders. Here are the more popular types of trading orders: buy, sell, limit, stop, trailing stop, and hedge orders. On binary options you have five types of orders which includes, high and low, boundary options, touch and no touch, 60 second options, and option builders.
Brokers also allow trading in micro lots. A thousand units of the basic currency can constitute a micro lot. The maximum amount that can be traded is also determined by the broker. The minimum and maximum trade size is also determined by the broken in binary options. The minimum trade can be as low as five dollars and the maximum amount is up to five thousand dollars.
Here are the differences between Forex trading and binary options. Choose the trading platform you want to trade with so that you can easily make profits.