The world of trading provides you with the possibility to choose among a wide variety of trading instruments. Some people prefer Forex, and some prefer Crypto. However, a lot of people associate trading with a different instrument - binary options.
What will suit your trading style better? Let’s review the main difference between binary options and Forex to help you make a choice.
Here are some helpful questions that might help you reach a decision.
Are you ready to take bigger risks?
Any trading involves a certain degree of risk and might not be suitable for all types of investors. That’s something you learn right away, but the degree of risk differs depending on your risk management strategies.
When applied to Forex, a non-aggressive trading strategy can help you rationally portion your investments and cover a certain percentage of your losses. However, when it comes to binary options, there are no such options as Stop Loss. You either get your profit or lose your investment entirely.
Some traders consider binary options more rewarding and less time-consuming. However, many more experts believe that this approach makes trading more of a game of guess than analysing the market and building an effective strategy, especially when it comes to shorter expirations.
Do you want your trades to be time-limited?
Forex trading has no expiration date if you have enough funds to sustain the margin. It’s up to you to decide when to close your deal and what level of profit is more acceptable to you depending on your financial needs and strategy.
One of the main defining features of binary options is that it has an expiration time. Brokers provide a wide variety of different time limits. However, the most popular ones are limited to a few minutes.
Do you want to apply leverage to your trades?
Forex provides a unique possibility to use the leverage - a sort of multiplier offered by a broker to make sure that you get your profit faster. Depending on the leverage you choose, you can vary the degree of risk each of your deals has, just as the amount of profit you can get.
Binary options provide payouts set by the broker. Depending on the market volatility and traded volumes, the payout percentage can change, providing you with the possibility to earn more.
Do you want to have unlimited access to trading?
Forex trading is available around-the-clock five days a week, thus providing traders with the possibility to react to breaking news and events.
Due to their variety of assets, binary options can be available just like Forex when it comes to currency pairs or be limited to certain trading hours. Please note that sometimes brokers provide binary options OTC (over the counter). Those are based on their internal calculations and cannot be considered reliable.
Both Forex and binary have certain advantages suitable for different types of investors. All you need to do is carefully review your possibilities, trading needs and risks, and decide. Just remember to answer the questions honestly!