Today we will tell you how binary options differ from Forex. First, let’s repeat what binary options are.
Binary options is a stock exchange within which you can enter into transactions for the fall or growth of a currency in a specific time period.
Now let’s move on to Forex.
Forex — the market for interbank currency exchange at free prices (a quote is formed without restrictions or fixed values). Often used the combination of “forex market” (Eng. Forex market, FX-market).
The Forex market is considered one of the most popular and profitable, but in addition, Forex is an interbank market, and banks and investment funds trade accordingly.
Many people who are interested in the topic that we are talking about now asked themselves the question: Binary Options, or Forex? What will be more profitable and affordable for me? To do this, you need to compare them.
In fact, both Forex and Binary Options give us the same thing — the ability to close deals.
What do we need to conclude transactions on Binary Options?
1. The amount of the option.
2. The direction of currency movement (up, down).
3. The timeframe of the transaction.
Binary Options will be easier for beginners. If the currency has moved from your bet at least a little in your favour, this is a winning bet, and you will immediately receive your money.
What do we need to conclude transactions in the Forex market?
1. Select a lot.
2. Choose leverage.
3. Choose the correct type of account (with a fixed or floating spread).
4. Understand what ECN accounts are for, what NDD and STP accounts are.
5. to study which spread, it differs among different brokers; this is the fundamental difference between binary options and Forex because there is no spread in the BO.
6. select the type of order execution — market or instant.
7. If the order is pending, you need to select its type (buy stop, sell stop, buy limit, sell limit).
8. In Forex, earnings come from how many points the price will gain, minus the spread.
9. in forex, you always risk the whole deposit at once, it does not have any “bets” at all.
As you can see, there are a lot of nuances in the Forex market that need to be studied for a long time, and it will be quite difficult for a beginner.
Now we will tell you what are the pros and cons of Binary Options and Forex.
Pros of Binary Options.
1. Easy entry to the market — a forecast based on two buttons.
2. A known (fixed) amount of payment.
3. The ability to return part of the funds if the forecast is unsuccessful.
4. From 80% for 1 transaction.
5. With equal bets, it is necessary, on average, from 57% of successful forecasts to be in the black.
Cons of Binary Options.
1. For the simplicity of the two buttons, people forget that on the charts there is a real foreign exchange market or a stock market that a beginner cannot predict (however, this is a drawback of forex as well).
2. If the work is carried out according to the trend, Forex allows you to earn significantly more for one transaction (in BO it does not matter how far the price has gone for the forecast — the payment is fixed).
3. In BO we put 100%, and we get only 80–90%. If one transaction is unsuccessful, then the second profitable one will not even return the amount of the last transaction to us.
4. BO provokes excitement and promiscuous transactions.
Now let’s move on to Forex.
1. Forex is ideal for trending. While in BO we receive a fixed payment regardless of how far the price has gone, in forex every point costs money. And the more the price picks up these points, the better for us.
2. Forex is a very flexible tool, even too much. Pending orders allow you to automatically open/close transactions at any time when the price reaches a certain level.
Cons of Forex.
Alas, forex is much more complicated than binary options. Essentially. This is what repels many newcomers from him, who go to binary for the simplicity of two buttons.
Not only that — in binary fixed loss of funds. You cannot, physically, lose more than the amount of the option. Plus, you can return a part of the lost by specifying the desired percentage of return in advance.
But in forex trading is carried out immediately for all the money. And there are no “bets”. With the help of the lot and leverage, you actually choose the rate at which your deposit will increase or decrease as the price picks up points according to your forecast or goes against it.
We hope you make your choice where to conclude transactions on the Binary Options or the Forex market, and you will not regret your decision. We wish you successful deals!
If you liked our article, then we recommend the following topics:
1. How signals work for binary options,
2. How to choose a binary options broker,
3. What’s better than binary options or Forex? Choose and do not make mistakes,
4. Binary Options Trading on the News.