Forex vs binary optionsMain Differences between Binary Options and Forex
In binary options when we open a position we already know our potential win or loss since the payout is fixed regardless of whether the price will change much or little. The expiration is determined at the beginning, so we will just have to wait because it will close itself automatically.
In forex, however, the duration of the trade is not defined at the beginning, the position must be manually closed depending on the strategy, therefore, it must be continually followed in order to be closed at the right time.
The win or loss is not initially known, only at the end, and it will be a variable that depends on the price we decided to close it at.
But let's examine these points in detail:
As a beginner, the trader yearns to gather a significant insight during his early days of his trading career and when the concepts involved with the type of trading chosen is simpler, it enables him/her to establish a stand pretty easily.
This is where Binary Options proves its simplicity when compared to Forex trading for the latter is more variable as written above. Binary Options gives the trader an approximate idea on the profit and risk potential and when the particular option completes its tenure, the defined amount under profit and risk potential is either gained or lost respectively.
Time factor or the expiry period is another critical reason why amateur traders prefer Binary Options. The time frame in Binary Options is well defined based on the options, while Forex trades could last for a variable amount of time which could also be in terms of weeks.
The fact that we have to set the time is, however, a more variable than we have to guess, and it increases the complexity of the forecast. Instead in the forex we are free to leave the trade open until it becomes convenient.
Forex trading requires a lot more involvement and constant monitoring or better follow ups during the trading cycle, while traders who go for Binary Options have the privilege of doing a lot of preliminary planning, acting off a strategy and lesser monitoring post the beginning of a trade as there is no change which is to be anticipated post the commencement of a trade.
In forex there is no real limit on wins or losses, in fact until we close our trade they will continue to run, and in the case of loss it could also clear the balance of our account with only one operation. For this lack of control it becomes a too big risk.
As a beginner, traders are more reliant on trading signals and statistics to establish them in the trading arena. Under such a scenario, traders are more likely to go with Binary Options as it greets the trader with absolute and well established trading statistics while the stats associated with Forex trading are relative. In fact, knowing our payout of winning in advance it is possible to calculate exactly even our breakeven point, that is, to know the number of winning trades needed to get a profit, but above all it allows us to fix in our statistical plan our individual amounts of investment
Although binary options are simple and easy to use for everyone, this does not mean that we will make more profits… In the long terms, forex promises greater satisfaction
attention! BO can induce addiction as a bet, while forex is really a tool to invest.
the Analyst's answerJean Grossett - Financial analyst
If you are skeptical about which method of trading you should go for, you can always sign up for a demo account with reliable Binary Options or forex Traders to get a real time experience of the scenarios….
Here’s my opinion: forex is a professional tool more suited to those who want to do this business with passion. Binary options seem a tool well-trained by brokers to make the game strong with beginners. No doubt … I recommend forex
the Manager's answerRobert Danvil - Investment Manager
Trading seems to be gaining a lot of interest across global markets today and most of the new aspiring traders are subject to a potential dilemma as to whether he/she should go with Forex trading or Binary Options.
While the other alternatives in the world of trading include stock or futures trading, they might seem to be a tad complex for the beginner, who could find some comfort in learning the nuances of Binary Options or Forex trading, a little easily as an amateur
However, In a choice between them, some operators with considerable commercial experience and expertise are more likely to experiment with Forex trading because the characteristic of “variability” from their point of view make it more challenging and exciting than Binary options.