Typically every new forex trader faces a dilemma in his early days of whether to trade forex or binary options. The difference between this two is not always apparent to the new investor. We are going to talk about both of this to eliminate the headache this normally brings, but even more importantly we will discuss the concept of binary forex signals, which makes binary option worth the while when compared to forex trading as it will soon become clear as below.
WHAT ARE BINARY OPTIONS?
This is a something that has been bandied around for a while and every investor worth his salt must have at one point come to ask his/herself if he’s not missing something by staying on the sidelines, before you join the bandwagon let us take a moment and discuss what this is all about.
In our changing financial empire, new financial products have hit the market diversifying our pathways to wealth, binary options is one of such, but really is it. Through the clutter of misinformation here is the ounce of truth. Trading binary options is indeed not gambling as is being insinuated in some quarters, but its legal, the reasons for this include
There is a completely regulated binary option that trade on NADEX and NYSE
There is also a Binary Option Exchange where you can either be a writer of a trader
Binary option is an exotic financial option, a type of derivative option where a trader makes a bet on the price movement of an asset in the near future for a fixed amount. This option has a fixed payout for a trader.
HOW BINARY OPTIONS WORKS
Simply, a trader decides whether an asset such as stocks or commodity will go up or down during a specified period. If your prediction is wrong you lose all the money you risked, but if your prediction is right eventually, you receive your money back plus a fee, you can make up to 80% of the money you invested, all things being equal.
OTHER NAMES OF BINARY OPTIONS
There are a variety of acronyms referring to one and the same thing
All or nothing options
fixed returns etc
SIMILARITIES BETWEEN BINARY OPTIONS AND FOREX TRADING
Both allow for small startup capital
Both are tradable online
There is speculations as to the direction of price in both
DIFFERENCE BETWEEN FOREX AND BINARY OPTIONS
In forex there is no limit to how much money that can be made or lost, while in binary options these are fixed
In forex the trader has no control over the time the trade will last while in binary options, one can choose the start time and finish time of a particular transaction
The points have been made to explain binary options in clear terms because its relatively new, the investor can now decide whether to continue in the good old forex trading or join this new vehicle which promises wealth and freedom.
The content of this article reflects the author’s opinion and does not necessarily reflect the official position of LiteForex. The material published on this page is provided for informational purposes only and should not be considered as the provision of investment advice for the purposes of Directive 2004/39/EC.