We can’t entirely assure you that either forex or binary is the best because both financial instruments have their features and pros and cons. So choosing a better one is distinct to your trading needs and risk tolerance.
A trader might want a more convenient, easier, and quicker way to make a profit so the trader might opt for binary options. Then, another trader might want to earn a lot of money and opt for forex as long as the trader knows how to read charts and get financial statements or news on time.
To help you with an answer, we will unravel some key factors that would help you know if forex or binary options are better.
What are binary options?
A binary option is a financial instrument that involves making a proposition on whether an asset’s value would go up or come down within a specified duration. It involves the call option or pull option.
You can trade diverse assets on binary options, you can trade either stocks, currencies, commodities, or assets.
There are three types of periods/expiry dates for trading binary options:
- Short-term period (60 seconds to 15 minutes)
- Medium-term period (30 minutes to a few hours)
- Long-term period (a few days to years)
What is forex trading?
Foreign exchange (also known as forex or FX) is simply buying and selling of currencies.
The term forex trading involves making prediction movement between two currencies, for instance, British Pounds versus US Dollar (GBP/USD), or Euro versus British Pounds (EUR/GBP).
The movement can be affected by shifts in the market’s supply and demand.
There are three (3) types of forex that traders can engage in:
- Futures FX
Futures FX involves buying and selling currencies at a specific price and date in the future. Future FX contracts are legally binding and traded in exchanges.
- Forward FX
Just like future FX, forward FX trades also involves purchasing and selling currencies at a specific price and date in the future. Forward FX contracts are set over-the-counter (OTC).
- Spot FX
Spot FX trades are paid up or resolved within a short period.
Three (3) things to consider when deciding on engaging in either type of trade
1. Ease to trade
When it comes to how easy it is to trade, binary options are much easier to trade. In binary options trading you only have to choose from two orders— call option or pull option.
Binary options take only four easy-to-follow (after you have opened an account) steps:
- Choose your preferred asset.
- Set your trading fee.
- Select your preferred expiration time.
- Confirm the trade.
On the other hand, forex trading is complicated in comparison to binary options because forex requires setting up diverse functions and settings before you trade. In the forex market, a trader has to select one out of 6 to 7 orders. So if you want a straightforward type of trading, you might want to opt for binary options trading.
2. Reasons and requirements for market entry
Traders who are trading for a passive income and wish to trade or make minimal deposits should trade binary options. But, traders with huge capital to invest and wish to trade for a long period or even make trading a full-time job should go for forex trading.
3. Profitability and risks
Forex trading could offer higher or larger profits since they can be leveraged, this implies that traders can borrow capital above their actual investment to increase their position size which can lead to either greater profit or loss.
Binary options may not offer huge profits like forex but they do not involve as many risks as forex because binary options do not offer leveraged investing.
Forex trading is highly unpredictable and volatile because the market fluctuates on numerous uncontrollable factors which influence supply and demand.
In comparison, binary options are less risky since losses are predetermined by the original investment. The trader can establish profit or loss and market volatility is a minor concern.
Conclusion
Just in case you still can’t answer the question; is binary options better than forex trading, listen to this.
The best way for anyone to decide on which form of trade is better between binary options or forex trading is to carefully consider two things. First, your goals or objectives, and second, your level of risk tolerance.
Please note that both binary trading and forex trading are considered high-risk investments.
So whenever you trade remember to only invest money that you afford to lose.
Don’t stop learning here, there is more to know about binary options and forex trading so, read more about binary options vs forex trading.
Frequently Asked Questions (FAQs)
1. Binary options or forex, which is better?
Your choice should be dependent on your trading needs, availability, risk tolerance, and trading strategy. However note that forex trading is highly volatile, it requires patience and more research as well as consistent monitoring. Forex also offers leverage trading.
The binary option is straightforward, less volatile, and less influenced by third parties, you can make profits in a short period, and you are aware of your potential profit or loss before you start the trade.
2. Which broker is best to trade with?
There are hundreds of brokers in the market and making a decision is dependent on your research, preference, and trading goals however you can trust IQcent.
IQcent
IQcent is a reliable, professional and regulatory-compliant broker. The team and services provided are top-notch and always provide beneficial trading resources to help customers attain success.
