Binary Options Trading vs Forex Trading: Just the Facts!
Nowadays online trading is available in several forms. For many novices, the options of forex trading online and binary options trading online are available. However, each comes with a unique set of positives and negatives. This creates a degree of confusion for traders since it is not inherently clear which one will best suit a trader’s investment objectives and individual trading style. Additionally, each of these trading alternatives requires a different approach to be taken.
If you are interested in trading forex online, or trading binary options online, the changes from one market to another can prove costly. It is best to compare both of these options to ascertain where the most consistent returns can be generated. The positives and negatives of forex vs binary options trading need to be explored before you invest any of your hard-earned money. Some of the areas that come into play include your profitability, trading accessibility and the level of risk that you are comfortable with.
Reasons to Trade Binary Options over Forex Trading
With binary options trading you can place trades a whole lot more easily than you can with forex trading. In most cases you simply have to complete a series of easy steps to trade in the financial markets. These include choosing your asset & strike price, choosing the trade amount, picking your expiry time and finalizing the trade. There are myriad tradable assets with binary options, including currency pairs (forex), indices, commodities, and stocks.
With forex trading you are limited to currency pairs. Also with forex trading you have to have a much deeper understanding of the trades. It requires a lot more effort in terms of stop loss, take profit, limit orders, pips and the like. With binary options forex you simply decide if you are going to place a call option or a put option and then you verify the trade. Another factor to consider with forex is that you will likely be dealing with multiple orders simultaneously which complicates the process a whole lot more. In binary options forex trading you are only dealing with 2 orders.
The Level of Risk in Binary Options Trading
Believe it or not but binary options trading is less risky (although risk is always present) than forex trading. This is because there is a rollover function in binary options trading. By extending the expiration date of your active trades you are allowing for the possibility of a profitable outcome. This is coupled with the option of early closure in binary options (closing accounts before expiration) to enhance your profit potential.
Consider for a moment that the forex market is characterized by extremely high leverage. This works in your favour when trades go your way but it can work to your detriment when trades do not go your way. Another reason why binary options are a better bet than forex trading sites is the refund potential they offer. You can generate as much as a 20% refund on losing trades with binary options that expire out of the money.
With binary options you always have plenty of flexibility in the way that you can trade. Your contract timelines range from 60 seconds to 1 month or more. Binary options are better suited to novices and expert traders alike since the simplicity and choice with binary options far outweighs the complexity of forex trading. As a new trader it is far preferable to engage in binary options trading for the many reasons listed above. Traders looking to compare the finest binary options brokers will do well to take a look at www.toptenbinarybrokers.com.