The growing popularity of online trading has mostly been circulating around Forex and binary options market.
Forex trading and binary options trading are quite different and it is significant to understand these differences in order to build a successful trading career.
Both Forex and binary options trading involve risk. On the other hand, if we take a closer look at both types of trading, we can conclude that binary options trading is a bit less risky. Namely, what immediately sets the two trading options apart is that in binary options, investors know in advance how much they are going to win or lose.
To earn money in binary options, you must win the majority of the bets. Since forex trading allows users to set their own profit targets vs. stop loss orders, trader can still make a profit even if they do not win the majority of their trades.
The maximum margin is determined by each broker, and sometimes can be up to 1:200 or 1:500. Margin allows you to augment your investment capital in order to make a larger trade and make a larger profit if your trade is a winning one.
Margin cannot be used while trading binary options. On the other hand, it is possible to still make a large return in comparison to initial investment (sometimes 400%).
Considering Forex, there is a variety of order types. The most important ones are the market (Buy-Sell) orders.
Additionally, there are more advanced orders such as Limit, Stop, OCD (One Cancels the Others), Trailing Stop, Hedge orders etc.
There are five Binary Options types which you can trade. They include High/Low (Call/Put or Up/Down), 60 Seconds Options, Touch/No Touch Options, Boundary Options, and Option Builder.
Closing a position
In Forex, you choose when to close the position. It is possible to close your position anytime the market is open.
Considering Binary Options, before you make your trade, it is necessary to select when you want the option to expire (example: 1 week from now) and at the “expiry time” your trade will close automatically.
To summarize, forex and binary options are quite different, therefore it is important to understand these differences in order to become a successful trader.