Table of contents:
- 1 Binary Options Vs. Forex – Why You Should Choose a Variant
- 2 Beginners Can Easy Start Trading Binary Options
- 3 Binary options have no obligation for additional payments
- 4 Forex trading or binary options – where is more profit possible?
- 5 The role of the broker
- 6 Binary Options Forex Difference: My conclusion
Basically, currency trading and Binary Options are very similar. This is not surprising, since forex trading, among other things, was a model for the development of Binary Options. These were created some time ago because a simple financial product was needed for beginners. The financial instrument sought was to offer the advantages of forex trading and at the same time be simple enough to be understood and used very quickly by laymen. With the Binary Options, these ideas have been implemented very well.
Like the Forex, Binary Options have the property that the trader can improve his chances of making a profit by means of targeted price analysis and thus trade profitably. With both products, it is important to set the price in advance in order to then profit financially. Binary Options have been greatly simplified compared to trading currency pairs. While with Forex, a decision can be made at any point in the trading process as to when to exit, with Binary Options this is fixed from the beginning. The potential profit is already determined, how much the price rises or falls is only important for Forex, but not for Binary Options.
Both financial instruments also show similarities in terms of chances of profit and risk, because high profits are possible in a short time as well as a total loss of the entire portfolio. Currency and Binary Options are both very volatile and therefore highly speculative. Therefore, only money should be used whose loss does not cause the trader great harm, regardless of whether Binary Options or forex are traded.
See the comparision of Binary Options vs. Forex
|Binary Options||Forex Trading|
|Limited profit||Open profit, you can earn more|
|Limited loss||Open loss|
|Limited expiry time||No time limited|
|Profit ist depending on the strike price||You earn more profit if the price goes into your direction|
|Easier to understand||More complex|
|Every position size is possible||Every position size is possible|
Binary Options Vs. Forex – Why You Should Choose a Variant
Binary Options are easy to understand and the trading platforms can be used quickly even by beginners, while forex trading has some additional decision options and is therefore much more difficult to learn. As the two financial instruments are otherwise similar in many ways, it is theoretically possible to trade both binary options and forex, as knowledge of one area can be an advantage when trading the other.
- Choose the asset you want to trade
- Make a forecast of the price movement
- Choose the expiry time
- Choose the investment amount
- Trade on rising or falling prices
- Wait for the result till the trade is over
However, there are very few successful traders who use both options on a permanent basis. This is not because it is not possible, but because it simply does not make much sense. Profitable trades can be found in both areas, so it is not necessary to add a second financial instrument to get a corresponding number of trades. Both are products with high variance so that there is no mutual balancing of risk here either. It is therefore advisable to choose forex trading or binary options and then specialize accordingly because in this way all the time and energy available to the user can be concentrated on one product so that maximum profit is achieved.
- Choose the currency pair you want to trade
- Choose the position size
- Set up a stop loss or take profit to limit the risk
- Buy or sell
- Close the trade in profit (no time limit)
Beginners Can Easy Start Trading Binary Options
Binary Options make getting started particularly easy as only a few decisions need to be made per trade, the rest is done automatically. Even as a newcomer to the field of Binary Options the handling of the software is quickly learned, and even the first simple analysis methods can be easily understood and implemented thanks to the free training material provided by many brokers.
This means that active trading can be started quickly and the first profits can be made soon. Because of this easy start, beginners are often advised to start with Joinbinary Options when the question of Binary Options vs. Many traders who trade Forex, CFDs, or futures professionally today started with binary options and made their first profits there.
With all the good features and easy availability for beginners, it should never be forgotten that even with Binary Options there is a high risk of losing everything. Beginners can, therefore, see trading as a good start, but should always use only money that they consider risk capital and that they can easily lose without this having a serious impact on their financial situation. Many brokers only advertise the advantages and only point out the high risk of loss in small print.
Binary options have no obligation for additional payments
Binary Options have another major advantage over Forex trading: traders can only lose as much as they have just bet on current transactions. If the money for a trade is not in the trading account, the trade cannot be placed. As a result, no more money can be lost than is in the client’s trading account.
This may sound obvious, but losses are possible on the Forex that is far beyond the account balance. Currency pairs are usually traded with a fairly high degree of leverage, which allows traders to move a multiple of their deposit into the financial market. When the loss in an open position threatens to exceed the current account balance, a margin call is made and the position is closed automatically. This is to prevent losing more money than the trader actually has available.
In most cases, it works, but when high volatility occurs, a position may not be automatically closed in time and the losses may be significantly higher than the client’s account balance. Due to the so-called obligation to make back payments, the trader now has to clear his account balance. As the required subsequent payment can, in extreme cases, amount to a multiple of the credit balance actually deposited, not only the payment but also the customer’s existence can be at risk. To avoid this risk, transactions can only be closed with a stop loss, i.e. the early closure of the position is guaranteed with a predetermined loss.
- Binary Options are easier to understand
- Both financial instruments are risky
- With forex, you can limit your loss by a stop loss
Forex trading or binary options – where is more profit possible?
Both products have winners and losers, although the number of losers is significantly higher. In order to trade financial instruments successfully in the long term, a high degree of discipline, and a constant broadening of horizons is necessary. Only a few of the initially enthusiastic newcomers are able to create the conditions for long-term successful trading.
When it comes to whether Binary Options or Forex are better suited for trading, the maximum profit should not be the decisive factor, as it depends on many different factors for both variants and no binding statement can be made as to which product offers the higher profits.
In terms of costs, Forex trading is clearly ahead. Here, fees are usually calculated using spreads, which represent the difference between the buy and sell price of an underlying instrument. In some cases, the spreads are replaced by comparatively low commissions. There are no direct fees for binary options, but the broker makes a lot of money by making up the difference between the money he pays for a winning trade and the money he takes for a losing trade (usually the full stake). The payout here is usually only between 80 and 90 percent, while in case of loss 100 percent of the stake is taken. Some brokers pay even less.
The role of the broker
The choice of the online broker is crucial for the expected profit. Whether it is a broker for forex trading or binary options: The conditions can vary greatly, and each trader should be careful when comparing the various providers in order to find the best trading account suitable for him.
I can recommend the broker IQ Option where you can trade Forex and Binary Options on one platform. Check out the list below:
In addition to the cost of trading, which directly affects traders’ profits, seriousness plays a crucial role. Regardless of whether you are trading Forex or Binary Options, a safe and reliable broker is essential if you want to make any profit at all when trading. Always make sure that a broker has a valid license and is therefore regulated by a tax authority. EU-regulated brokers have the advantage of being bound by the strict MiFID guidelines and are therefore preferred by most professionals.
Binary Options Forex Difference: My conclusion
There is no clear answer to the question of whether forex trading or Binary Options are the better choices. Both can lead to high gains, but also to very high losses. This can go as far as losing the entire deposit, in the case of foreign exchange trading it may even be necessary to make additional payments in the event of a loss. Therefore, you should always use only money that can be lost without causing the trader great difficulty or restrictions. Trading these highly speculative products is therefore only suitable for traders who have the appropriate capital with which to trade freely and which is not intended for other things. Both products can be traded with a very low minimum deposit.
Before you register with online Binary Options or forex broker, it is important to check whether it is a reliable and reputable provider. This includes reports from other clients of the broker, information about reliable regulation, and a full reading of the general terms and conditions because there are many dubious brokers who hide restrictions that could prevent successful trading.
It is not possible to clearly determine whether forex trading or binary options is the best choice. Each trader must determine this according to his personal skills and needs. Although it is not advisable to trade both financial instruments in parallel, switching to the other product is never a major problem. Many successful traders have changed their preferred trading product over the course of their career because their own skills have evolved or the change in personal or financial situation has led to different conditions.
Tips and trick for Binary Options and forex trading:
- Both financial instruments have advantages and disadvantages
- Binary Options are risky like forex
- It is possible to limit the risk on both financial instruments
- Binary Options are easier to understand
- Forex is more complex but got no limits
See my other articles for Binary Options:
- 15 Rules for Binay Options – Tips & Tricks
- 5 best Binary Options Broker 2020 – Review & Comparison
- Are Binary Options a gamble?
- Are Binary Options a scam?
- Are Binary Options Robots a Scam? – Honest review
- Best Binary Options App – Comparison & Review
- Binary Option Markets
- Binary Options – Call and Put
- Binary Options – Range Options – Boundary Options
- Binary Options – Touch Options
- Binary Options 60 seconds Trading Strategy & Tips
- Binary Options Bollinger Bands Strategy
- Binary Options commodities trading
- Binary Options demo account – Recommended For Beginners
- Binary Options Money Management Strategy
- Binary Options News Trading
- Binary Options regulation – Why is it important?
- Binary Options review – Critic and warning
- Binary Options RSI Strategy
- Binary Options trend following strategy
- Binary Options volatility strategy
- Binary Options vs. CFD Trading – Which one is better?
- Binary Options vs. classic options
- Binary Options vs. Forex Trading – Which one is better?
- Chart analysis for Binary Options
- Forex Trading with Binary Options
- Hedging Binary Options: Can You Hedge Against Losses?
- How risky are binary options?
- How to avoid Binary Options Scam Brokers
- How to trade Binary Options – Trading Tutorial
- How to Trade Stocks with Binary Options – Tutorial
- Is Binary Options Trading safe? – Consumer protection
- Learn to read Binary Options Candle Sticks
- Trade Binary Options with MetaTrader
- Trade Pivot Points with Binary Options
- Warning about Binary Options – A form of betting
- What are Binary Options?
- Why Binary Options Signals are a scam