There are many who are confused as to whether they should opt to trade binary options or forex. There are futures or stocks that can also be considered but these are usually more capital intensive investments, and it’s usually a good idea to start looking at binary options vs forex, before jumping into stock trading.
In comparison, the binary options and forex trading are accessible to the average persons due to the online trading platforms. It’s really easy to pick a broker (top broker list here), sign up, deposit some money and get started. Most binary options brokers have a minimum deposit of only $250. This is far less then what you would need for stock trading. On forex it’s even less: some brokers allow a minimum deposit of $100, to get started.
There are certain similarities as well and differences of both forms of trading need to be known in order to make the right choice.
Similarities Between Binary Options And Forex Trading
- Nowadays, most people are comparing forex trading with binary options trading as both can be traded online and can be done anytime as long as the market for the underlying asset remains open.
- Both the markets can be traded in round the clock during the working days.
- Both markets allow one to start trading with a small amount of capital. One can start with hundred dollars or less when one is unsure about the trading positions or new in both trading platforms. However, it is advisable that one starts with a large capital and uses a small percentage of the same to trade in.
- In both trading platforms, one can lose or gain money based on the direction in which the asset or the currency value moves.
- In both cases, one can trade on a short time frame, though forex trading can take place for longer time frames as well.
Differences: Binary Options versus Forex Trading
- The profit and risk potential is fixed in binary options trading while in forex trading, this is variable for which there is more risk inherent in forex trading. When one embarks on a trading platform for binary options where the payout percentage is eighty percent, you will know that, as per the option chosen, you will either lose out their ten dollars invested or gain back eight dollars on the same. In forex trading you can opt for the stop loss option to minimize risks as well as a profit target can be used, but there is no certainty about the price that will be hit.
- Lets take a look at the closing position: with forex, you can choose when to close the position, but with binary options you will have to choose the timeframe of the contact. If you pick a 60 seconds contract, then you know that the closing position will be in 60 seconds.
Binary options are a simpler way to trade than forex as the variability factor is absent. In binary options there are only two possible outcomes: you either win or lose and there are two possible actions you can pick from: CALL (the price of an asset will increase) or PUT (the price will decrease). One is aware of the fixed output at the outset of a binary options trade. For that reason, for anyone looking to make a quick and profitable gain from the online trading platform the binary options trading is a better option.