Forex vs Binary

                                       

Higher variability, more risk

Forex markets offer higher variability and more risk for traders. In forex markets, sometimes known as FX markets or currency markets, traders must decide not only in which direction as asset will go, but must also predict how high or low that asset goes. Thus, the ultimate risk and profit is unknown.

In forex, there are no limits to how much money a trader can make or lose, unless they use certain tools to control trading. One tool is a stop loss, which prevents traders from losing more than a certain amount. In other words, once the trader has lost a certain amount, the trade automatically closes. Similarly, the potential reward may also be fixed beforehand. The trader can decide that he wants the trade to close once it has reached a certain profit value.

The maximum loss in forex would be all the money on your trading account. In forex, both losses and profits can be managed with limit/stop orders.

                                         

                                   Timelines

Binary trades operate on specific timelines. The trader has no control over when a trade begins or ends once a trade has started. Before a binary options trade begins, users must select when the order expires.  Each option has a start time and an end time.

At the expiry time, the trade automatically closes. Some brokers allow you to close early but you will exit your option at a percentage of the expected return. Not all brokers offer this option.

Similarly, some brokers allow traders to delay the expiry time to the next expiry time. This is called “rollover” and is only possible if traders increase their investment by a certain percentage.

In forex trading, users can take trades lasting from one second to many months, since they can open and close the trade whenever they feel like it. This flexibility has both advantages and disadvantages.

                 

                                        Margins

Forex also has a tool called margins. Each broker determines the maximum margin. Margins allow traders to increase their investment capital so that they can make a larger profit if the trade is a winning one. Margin is not a tool available for binary options.

There are five types of binary options you can trade. These are high/low, 60 seconds options, touch/no touch options, boundary options, and option builder. There are many different types of orders in forex. Buy/sell are the most important type. However, there are more advanced types such as limit, stop, OCTO (one cancels the other), trailing stop, and hedge orders, among others.

Forex trading and binary trading are quite different and it is important to understand these differences in order to become a successful trader.