Forex vs Binary Options Trading

June 22, 2013 11:53 am

forex_vs_binary_optionsForex vs Binary Options Trading. No one can say for sure which is better – Forex or Binary? Both of these financial instruments have their pros and cons, and in fact, each type is suitable for specific types of traders. For example, some traders feel much better while trading binary options, because it is easier, quicker, and much more convenient. On the other hand, Forex can bring you a lot of money as long as you know how to properly read charting data and to understand the latest financial news. In this post, I’ll tell you about some of the major factors that determine which is better, Forex or Binary.

Risk Element

If you have read something about both markets, then you probably already know which one is riskier. If you don’t know this yet, then let me tell you that the Forex market is much riskier and it is more likely to lose your money there. On the other hand, the binary options market is simpler and more suitable for novice traders.

One of the main reasons for the risk that comes with the Forex market is that most trades are leverage. This means that your profits are multiplied, but your losses are multiplied as well. Higher losses are disastrous for novice trader, and it is strongly recommended to avoid the Forex market if you don’t have at least some experience in trading. Meanwhile, binary options brokers offer better leverage conditions, and some of them also offer refunds which you can use to restore a fraction of your initial investment in case your trade is unsuccessful.

Another advantage of the binary options market is that you have better risk control. The rollover function, early closure, flexible expiration times and some other functions are just some of the main reasons why the binary options market is less risky.

Ease of Trade

The binary options market is much easier. You can start trading in just four simple steps. Meanwhile, the Forex market is a bit more complicated and depending on your needs, you might need to set-up several settings and functions before making the trade. The four steps that you need to perform in order to start trading binary options are:

1. Choose your asset
2. Enter the amount of money you want to invest
3. Select the expiration time you desire
4. Confirm the trade
The binary options market is so simple, because the trader needs to choose between two types of order. Meanwhile, if you take a look at the Forex market, traders there must select one of 6-7 orders.

Profitability Factor

Since the Forex market is riskier, it is safe to say that the binary options market is more profitable. However, this entire depends on your experience, knowledge, bank balance and many other factors.
The money you’ll make from trading binary options depends on the terms offered by your broker. For example, most brokers offer a payout of more than 60%, but the percentage can rise to 300-400%, depending on what type of asset you are trading. Therefore, you winnings are fixed. Meanwhile, on the Forex market, you can fully control the amount of money you’ll win or lose, but despite this positive, the risk factor is still significantly higher.

Forex traders rarely make more than 2-3 deals a day. In the mean time, binary options brokers can easily make more than 10 trades depending on their strategy and likenesses. If you use 60 second expiration time trades, then you‘ll certainly be able to make more than 10 trades a day, but we strongly advise you to stay away from these trades if you don’t have the necessary experience.

Ease of Market Entry

It isn’t a secret that the binary options market is meant for retail traders who want to make some passive income. This is why binary options brokers have very small requirements for initial deposit. For example, most brokers will accept an investment of just $100 if you want to start trading. You can also trade contracts that aren’t more expensive than $5. Meanwhile, Forex brokers require a larger initial investment, and due to the leverage they offer, you may lose your money faster than you think.

The truth is both markets have their advantages, but the main difference between them is that they are meant for different types of traders. The Forex market is a suitable choice for people who want to turn trading into their full-time job, while the binary options market is convenient for retail traders who don’t want to get involved too much.

Where to Trade

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