Binary Options and Forex Trading: Understanding the Difference

Binary Options and Forex Trading: Understanding the Difference

August 30, 2017

When you search on the internet Binary Options vs Forex Trading, you will find a lot of sources on comparing Binary Options Trading Vs Forex Trading. Here we want to rewrite and censure them. Table of Contents1 Forex and Binary Options Have Become Very Popular During Last Three Years!2 Trading Comparison Forex and Binary Options3 Which […]

When you search on the internet Binary Options vs Forex Trading, you will find a lot of sources on comparing Binary Options Trading Vs Forex Trading. Here we want to rewrite and censure them.

Forex and Binary Options Have Become Very Popular During Last Three Years!

This sentence is written in a lot of articles. It’s clear that when you offer a new and unique system for earning or losing money, Many people will be eager to test it. Some of them will leave it and some of them will continue because Forex Binary Options is a new term and sometimes looks like gambling. It is obvious that a new system will attract a lot of people. But we should consider the fact that whether they will stay in Forex Binary Options or they will leave it and come back to traditional Forex trading?

To answer this question, we should know that which one is riskier and which one is better for investing not for fun! It is clear that Forex Binary Options is riskier than normal Forex trading. Thus, the serious investors will sustain normal Forex trading but sometimes they may trade on Binary Options too because it is new and more appealing. Yet how about newcomers?

It is hard to respond this inquiry: what will happen if a new person faces with Forex Binary Options and normal Forex trading without any knowledge? Which one will attract him?

We believe it totally depends on the brokers’ advertisements. In our view, that Forex Binary Options is more attractive for beginners because it is manageable and more exciting. Anyhow, maybe spot Forex trading attract them in the future.

Trading Comparison Forex and Binary Options

  • When you are trading on a Binary Options, you are forced to wait until expiry time. Sometimes you are for profit but at the last second, you will lose! Yet in Spot Forex trading, you can close your position whenever you aspire.
  •  On normal Forex trading, you can trail your order in profit. You are also able to modify your stop-loss or make a profit but in Forex Binary Options you have not these options.
  • Your profit in spot Forex trading depends on market movement. However, in Binary Options, it’s fixed then you are not worried about huge losses during Forex news or market gaps.
  • In Forex Trading you can send different order types like buy stop, sell limit, buy limit and sell stop. Therefore, you can set the expiry time for your orders with stop-loss and make profits. However, these options are not available on Binary Options.

In some sources we  have: “You can never get a margin call on Forex Binary Options!” and ” There are no spreads, rollover/swap or commissions while trading Binary Options.”

Which One Is More Profitable, Binary Options vs Forex Trading?

Binary Options vs Forex trading

Binary Options vs Forex Trading

First, we should say when you are trading in spot Forex Trading, you are using stop-loss but when you don’t use stop-loss, you will see a margin call. Margin call means you lose all your money because of your fault. If you look more wisely, you can realize that both Forex Trading and Binary Options can wash out your money if you trade badly!

Second, it is very interesting if you think that on a Binary Options you will not spend spread! Then how the broker will earn money? For example, when you call a 1-minute order, you can win 80% profit. However, when you lose you will lose 100%, means that your spread is 20%! And you can’t win in Binary Options according to your chance trading.

It is hard to answer this question. Some sources claim that Forex Binary Options Trading is more profitable. If you are a good scalper, Forex Binary Options is the best choices for you but Spot Forex Trading is more profitable for long-term traders.

Best Times To Trade in Binary Options

We believe that Forex Binary Options will develop more and more and it will be a good rival for Spot Forex Trading. Today we can find auto trading strategy robots for Binary Options, too. Then, we should wait to see a new and surprising idea on Forex Binary Options.

Risk or Reward Ratio: Binary Options vs Forex trading

In Binary Options your risk/reward ratio includes fix percentage but in spot Forex trading, you are able to change it yourself well. It seems that spot Forex trading surpasses than Binary Options trading for risk/reward ratio well.  Here spot Forex trading is a winner.

Loss of Risk on Each Trading in Binary Options

In spot Forex trading you are dubious about your real loss amount. Maybe, you put stop-loss because of market slippage but in Binary Options your maximum loss and risk have a fixed amount as well. Here Binary Options trading is a winner.

Risk

Profit Percent on Each Trading

When you open a Binary Options trade, you will receive a specified profit percent. If market goes only 1 pip through your position, your profit on spot trading depends on market movement. Sometimes you will win a lot and sometimes you will win a few amount of money. The reason is that we can’t usually see huge market movements. Sometime market movement is against our position. Thus, Binary Options trading is a winner on our competition of Binary Options vs Forex trading.

Spot Forex Trading

Spot Forex Trading

Trading Flexibility in Binary Options

You are able to send stop orders, limit orders and set a lot of indicators on spot Forex trading. So Meta trader allows you to use expert advisers for automatic trading. You can modify your orders on spot trading and close your position partially. But in Binary Options we have not these options. Maybe in future some brokers add these features. However, at the moment spot Forex trading is more flexible in comparison with Binary Options trading.

The Biggest Misunderstanding in Forex and Binary Options

Margin and Profitability in Binary Options

Spot Forex trading and also Forex brokers give you high leverage like 1:1000 to increase your profitability. On Binary Options we have not leverage because we are not trading. In fact in Binary Options we bet on market’s direction that here both are equal.

Facility in Binary Options

Trading on Binary Options is like a game. Although trading on spot market is different and more difficult to some extent, for beginners or inexperienced traders. Binary Options are easier to understand and trade.

A beginner trader just has to understand one strategy and some basics, like risk management. He can also take advantage of a Free Training Class to be ready for trading.

We hope this article has helped you to find the best answer to the comparison (Binary Options vs Forex trading).

It is highly recommended to read more about Binary Options trading and Forex Trading

 

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  1. Signe J. Petersen Monday 11 September 2017 11:36
    Signe J. Petersen

    Trading binary options can be highly profitable – if you know what you are doing. In our binary trading guide, we explain h ow to trade binary options and make money. In detail, you will learn:

Binary Options and Forex Trading: Understanding the Difference • CloseOption Official Blog