Forex Binary Options
Trading currency pairs in the Forex marketplace is exciting, and there is a lot of potential to make money. It’s also really complicated once everything is taken into account. There are a lot of things to take into account other than just whether the currency pair is going to go up or down in price. You need to be aware of the spread, how much prices will change, how long it will take to get there, and extra fees and protective measures, such as stop-loss points. The end result for many people with all of these things can be a steady source of income, but for most, it ends up being a loss of money.
Obviously, this is something that you will want to avoid. No one trades currencies in order to lose money. Sure, it’s a fun thing to do, but the end goal should be to make money. One thing that many Forex traders are finding is that binary options give them a great opportunity to alleviate the problems that come from the complex process that Forex brokers have created. Trading Forex binary options is really easy to do–all that is involved for many types of these is to just pick a currency pair and determine whether it will go up or down in relation to each other over the given period of time. The ranges can be as short as 30 seconds, and they go up to as long as a month, depending upon which binary options broker you decide to work with.
There are good and bad things about this. For starters, if you are a small trader, you have the opportunity to make a lot more money than you would be able to in the traditional Forex market. A worthwhile trade in the Forex market could involve several hundred dollars or more once leverage is accounted for. Yes, you are only fronting a little bit of your own money with these, but the truth is that if there are losses, you are still accountable for them and your account may be frozen until you can cover everything. Trading binaries completely avoids this since you can only trade with money that you have, and you are almost always going to be trading in much smaller amounts of cash because of the increased trading frequency. This is good, though, because of the fact that you will be earning a much higher percentage on the amount that you invest. The Forex market rarely sees a major currency pair move more than 2 percent or so in a single 24 hour period, but you can easily make a 75 percent return on a single trade. So, even though you are going to be trading less, the higher return more than makes up for this.
Another positive aspect of binary trading is the fact that you don’t have to monitor trades as closely. Good or bad, the trade ends when the expiration point is reached. All you have to do is initiate the trade and the rest is done automatically for you. This can be accomplished in the Forex market if you program in all of your stop points, but this takes time and can lead to premature losses if you are not careful. It also can lose you money if no stop point is ever reached since many Forex brokers charge a service fee if your trade is open for longer than 24 hours.
The downside is that if a currency moves in a huge way, you cannot make extra cash off of binary options. Binary brokers give you a flat return. If the pair changes one pip or a million pips, your return will be the same. The plus here is that this only happens very rarely, and usually only with lesser traded pairs. Many binary brokers do not offer some of the more obscure currencies, so this may be a downside for you. In most cases, this does not matter though, giving binary options brokers, like 24option a big advantage over the Forex market.