Trading currencies with binary options
Forex or currency trading has become one of the most lucrative investment avenues in the stock market these days. With a daily turnover of more than $5 trillion, the Forex market has expanded exponentially, making it one of the biggest trading markets in the world.
However, if sources are to be believed, only 5% of online currency traders actually prove to be successful in the run for profits. Since there are a lot of factors governing the prices of currencies these days, there is a lot on stake when it comes to Forex trading.
What are binary options?
Binary options deal with the movement of commodity prices, assets, Forex as well as stocks and shares. The imminent reason of popularity is that traders have to just make one or two initial decisions, before beginning to trade an asset of their choice. Being one of the riskiest sources of financial profits, trading in binary options is a relatively popular source of trading on the stock exchange. With Binary Options, at the time of trading, there are different types of expiry limits available to traders. These range from 60 seconds to several months. But before you jump onto the bandwagon and start trading in binary options, it’s imperative to decide which assets you would be dealing in, the kind of time period you would be investing for, the investment amount as well as the kind of risk you are ready to take, while trading.
What are Forex Binary Options?
The pertinent question here is, “What are Forex Binary Options?” Like Binary Options, even Forex Binary Options share some of the characteristics of their counterparts. They have their own expiration date, an expiration time, a strike price as well as a premium which is payable.
A Forex binary option trader will always get a fixed payout for his investment in currencies. No matter which way the price moves, the trader will get a return on his investment. When it comes to expiration dates, Forex binary options have 3 categories: intraday, daily and weekly. The intraday forex options expire on an hourly basis while the daily options expire at pre-determined times within a day. The weekly options expire at 3 pm every Friday.
What makes Forex Binary Options so popular?
- Helps capitalize profits due to market volatility: If a trader trades in Forex binary options, they stand a chance to capitalize on the volatility of the market, and rake in substantial profits in the bargain. The wilder the market movements, the higher the chances of price fluctuations.
- Absence of commission:Unlike other trading options,there is no commission levied on the transactions between currency pairs, making it the perfect combination for any Forex binary options trader.
- Lack of complications: Even beginners can invest and trade in currency exchanges, making it the easiest possible investment source on the Stock Exchange. Predict the direction of the prices and you stand a chance to make a handsome profit for yourself.
The bottom line
Forex trading is extremely beneficial to traders; however, it comes with a highly leveraged level of risk. The drawback of trading currencies with binary options is that limits the total reward for the trader, since the amount of profit and loss is capped initially.
If you look at the positive side, you would realize that the loss is capped, making it a very clear method of trading and containing risk. Along with the capped risk, binary options also need lesser collateral, making the list of advantages extensive. Add a degree of trading flexibility to the existing list, and you will definitely never want to stop trading in Forex binary options.