Forex Exchange vs Binary Options: Which Trading Option Is Preferable?

Those traders who are still finding their way in stock markets and deciding which trading option to choose, an account of differences between a foreign exchange and binary options might help determine their professional future; OneTwoTrade discusses this topic.

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OneTwoTrade

Feb 04, 2016, 03:00 ET

LIMASSOL, Cyprus, Feb. 4, 2016 /PRNewswire/ -- To investors experienced in stock market trading, an answer to a question of how a foreign exchange option differs from a binary option might perhaps be obvious. But to those who have just decided to try their hand at trading and are only orientating themselves at stock markets an explanation of how two options are different might help define their future trading strategies and determine their future trading behaviour. At the very least, an account of dissimilarities between foreign exchange and binary options might help novice traders decide which of them to choose and in which to invest their money.

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What immediately sets the two trading options apart is that in binary options, investors know beforehand how much they are going to win or lose. Even before investors start betting, the conclusion of a trade in this sense is forgone for them, even though the valence of its outcome remains at this moment undecided yet. An end result of a trade in a foreign exchange option, by contrast, is not settled in advance. Investors trading in Forex always set themselves up for a surprise, never exactly knowing how much money they would either subtract from or add to their accounts. For this reason, binary options are a safer choice: traders will not find their funds slipping out of their control.

Another reason why binary options might be preferable is their simplicity. Trading in binary options is less complicated than trading in Forex. All investors need to do when betting in binary options is to predict whether their chosen asset goes up or down. As its name indicates, a binary option leaves investors only two possibilities: to press either Call, if they envisage an upward movement for their asset, or to push the Put button, if they believe that their asset is going to decline. When investors bet in Forex, they do not simply theorize about the future movement of an abstract asset and then make a bet, they actually buy one currency and sell another. In Forex market, all currencies are also marked down to the fourth decimal point. This allows investors to trade currency in micro lots and, thereby, to minimize their losses, but taking these particularities into account makes Forex trading complex in comparison to binary options. Novice traders can easily get bogged down in these details and lose interest in trading or make a mistake and lose.

In binary options, traders can also close more deals during a trading session than in a foreign exchange option. Binary options leave more room for deals, because, among other variants, it has a 60 second option, which offers a contract expiration period of one minute. In other words, placing a bet in binary options might take as little time as 60 seconds. If traders choose exclusively this option during their trading session, they will, obviously, close a large number of deals (up to 40) and will win a substantial amount of money, if they trade successfully. A foreign exchange option disallows placing so many bets during a trading day. A maximum number of trades investors have a day are no more than 4. If investors are interested in more dynamic trading, binary 60 second options, then, is the faster and livelier way to trade than a Forex exchange option.

Even though Forex is a favoured trading option practiced by millions of people around the globe, a binary option, which is relatively new and less popular, is still a safer and more assured way to financial independence and profitable trading.

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