What better suits beginners – forex or binary options?

Trading foreign currency pairs online with binary options is a simple and potentially profitable alternative to trading forex. Both of these techniques offers investors a chance to profit from volatile currency prices, but there are several advantages to trading binary options.

At their core, trading currency pairs with forex and binary options are very much the same – you are investing on two currencies and the relationship of their prices. However, there are several major differences that traders will experience when using these two trading techniques. In general, trading binary options is simpler to learn and can be done quickly and with less stress.

When you trade currency pairs with binary options the complex forex market is simplified and allows investors to capitalize on the basic idea of forex without the complicated terms. When trading binary options you don’t need to worry about margins, pips, lags or spreads.

  • It’s simple and straightforward – you pick a currency pair, the direction you think the price will go and your investment amount. When the expiry time hits your investment either finishes “In the Money” or “Out of the Money.” In binary options, there are typically no spreads and commissions, and you never have to worry about rollovers and swaps.

When trading forex, you can close the trade whenever you want (as long as the market is open), as opposed to binary options, which have a set expiry time. While it may seem great to choose your closing time while a trade is active with forex, this means that you will not know your maximum potential payout and you may miss your ideal window to close.

With binary options, you know exactly how much you will potentially earn as soon as you make a trade – there is no guessing what your payout will be when you close. There are several options for selecting your expiry time, including: 30 seconds, 60 seconds, 2 minutes, 5 minutes, as well as end of the day, week or month.

Furthermore, some binary options websites offer an “early closure” feature. This allows you to close an option early while you are “In the Money” at a percentage of the payout you would have had if you saw the investment all the way through until the expiry time.

Many traders have seen the advantages of trading binary options and have made the switch. It is simple and easy to trade currency pairs with binary options and is a great way to take advantage of currency price fluctuations without the complicated terms so common in forex trading.

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