We know all this may not have been fully understood. What we see is not necessarily also complies with the fact. So guess if we are getting into the world of forex trading. Forex trading has been developing since the 40s and until now it turns out there are options or other ways of trading. The way it is referred to as a binary options trading. Well, this time we will discuss binary trading vs forex trading. The purpose of the discussion this time is so that we can understand a difference of forex trading vs binary option. the binary option that is growing and many are offered by some well-known broker.
Understand a difference of forex trading vs binary option
Prior to the discussion of the subject matter, perhaps I need to know what the heck the binary option is it? Binary option is a way of trading with other risks and rewards remain fixed within the time specified. In trading, the trader has to guess selected assets, such as stocks, commodity, or currency. Whether to go up or down over a period of time. Profits will we get when we select the time period is over and our guess was correct.
If we compare with forex, obviously very different. We know, in forex trading we can choose what we want assets to trade, in an unlimited period of time, and an unlimited benefit as well. But because of the nature of trading is not very limited, advantages and disadvantages also directly proportional. We may lose all our balance while doing a wrong position. And that can be prevented by placing a stop loss.
In addition to forex differences vs. binary option above, the following will be described as what the heck actually binary option in General. Afterward, we will understand the forex trading vs binary option differences explicitly.
I. Roulette games vs. Real foreign exchange
The binary option works the same way as the game of roulette. If our predictions are wrong, we will lose all our money League, but if our predictions are right, we will receive the money advantage. In the binary option, the advantage that we can get generally about 80% of the amount of money we wager. As an example for example, if a trader is risking money 10 bucks on the EUR/USD EUR/USD prediction by going up, and guesses correctly, the trader will receive $8 dollars plus a number of they’re betting. If the guess is wrong, then the trader will lose 100% of the money their League. How trading like this is almost the same as gambling in General. So the binary option is also known as another form of gambling that reek of forex.
If compared to that, in fact, is the forex market currency exchange. It is almost the same as the system of buying and selling in the market. Where if we predict that the currency rate will increase, we dare buy it with the benefit of our liking. Whereas if we are wrong, we can also recoup all of us. For example, suppose we put up the Chart position BUY EUR/USD at 1.0750 figures. It’s the same meaning like buy 1 EUR is priced at 1.0750 dollars. If the price is EUR rising and we want to increasingly take advantage in price 1.0760. Then we have to sell 1 EUR we buy earlier with rewards 1.0760 dollars. So it’s an advantage that we get is of 10 pips.
There are some similarities between the binary options vs forex trading. Similarities include:
- Both are same can be traded online,
- Enables users to start trading with a small capital.
- In the case of guessing correctly, both options and forex binary trading between giving a big enough profit potential.
II. Risk vs. Benefit
In trading binary options is a very risk is directly proportional to profit. We will only lose money we once in a League round. So much was agreed when the binary option is more secure than the forex trading. But learning from experience is the author of getting, the binary option is indeed very safe from a technical point, but it is actually not the case. Why is that, because in the binary option does not see the number of pips we get but the predictions are right or wrong only. So traders will have the initiative to make a trade for a short period of time. The short examples like this. If we open the deal order in binary with a period of 5 minutes and 10 dollar bet, then predictions wrong we hold every 5 minutes, how many losses we have responsibility.?
The forex market offers a higher variability and trading riskier. In the forex market, sometimes known as the FX market or currency markets, traders have to decide not only which way the next asset, but also have to predict how high or low the assets go. Thus, the main risk and profits are not known.
III. The ease in analyzing vs. full features
In forex, there is no limit to how much profit can be made or a loss to be borne. Unless we use some way to control the profits or losses. How are some of the features that are provided if we are trading in the forex? But, with a complete feature, one of the difficulties in trading is an analysis. The first analysis is about the direction of the movement of assets, the second is the target asset prices. But in binary we need not bother to find out where the market is going to go, we know enough assets that we will trade up or down.
In my opinion, a forex trading platform is very flexible. So we can do some strategies to profit in forex trading. During the strategy we use is legal, certainly, will be approved by the broker.
IV. Order Timelines
In trade on the binary option, we can determine the time of the order. Order or contract that we open can we specify. Like order in such a short period of 5, 10, 30, etc. And long-term such as daily or monthly. By the time the period ended, and the profit will be closed order nor losses are determined at the time of the expiration of the time.
In forex trading, users can take a trade lasting from one second for many months, because they can open and close trades whenever they feel like it. This flexibility has its advantages and disadvantages.
V. Margin Requirements
In forex trading, any open positions we need margin. Each broker determines the maximum margin. Margin trading allows traders to increase their capital investment so that they can make a bigger profit if compared with the capital they have. But in trading binary options there is no margin is required like in forex.
By reading some of the above explanation, it is hoped that we can understand a difference of forex trading vs binary option. As a novice trader, it is highly required to know the difference nor the equation binary option and forex trading. Because this is the key to the early success we do trade currencies. So want to choose binary options or forex trading? All options now in your hands. Don’t get the wrong step in determining the choice between the two types of trading above.