Forex trading is the biggest investment market in the world. However, binary options is also getting increasingly popular among traders. There are many reasons why binary options are better than forex.
There is a lesser risk level in binary options compared to forex trading. Binary options has a far better rewards to risk ratio than forex. In binary options, the profit potential is fixed. Most brokers offer a payout rate of between 60% to 85% for traders. The fixed payout percentage lets you know how much money you will earn or lose in binary trading. In forex, the profit or loss of the traders will depend on the market conditions. Many traders have used stop loss to predict the trade risk.
Forex is different than binary options trading in that it allows traders to customize the potential profit or loss. In binary options, the loss is always bigger than the profits. Usually, you will lose all the money in binary trading if you lost the trade. There may be some brokers that offer to refund a small percentage of the money you lost. The rollover feature in binary trading helps to reduce the risks by extending the expiry time of unprofitable trades. The rollover feature is usually available to traders who have increase their investment up to a minimum percentage. The early closure feature in binary trading enables traders to capture profits and prevent losses by closing trades that are profitable before the expiry time.
Unlike forex, margin is not available in binary options trading. However, you will still be able to generate profits of up to 400% on your investment. With binary options, you will never receive a margin call. The profit percentage depends on the type of options you trade. There are many binary options traders that are active and make more than 10 deals per day. Besides, you don’t have to invest a large amount of money like forex. Forex traders often have to deposit a large sum of money because of the low leverage. Although low leverage can help you to increase your profits significantly, it can also cause you to lose all your money quickly.
The minimum account size in binary options is about $1 per trade to $1000 per trade or more. In forex, the minimum trade size is $1000 up to $10 million. Binary options has low deposit requirement. Many binary options brokers allow you to open an account with a deposit as little as $25. Forex account usually have a higher minimum deposit requirement.
There are several types of options you can trade including speed options, touch/no touch options, boundary options, option builder, and high/low. Binary options offers a large range of assets including indices, stocks, and commodities. In forex, you are only limited to trading currency pairs. Forex also have a variety of order types including limit, OCO, trailing stop and hedge orders.
It is very difficult to make error when placing a trade in binary options because it only involves two actions which are open and close. You can trade a binary option in 2 directions including call/up or put/down. The trading method applies to both short term and long term trading. There is no need to monitor, close or adjust your trading. On the contrary, forex has a complicated process for placing orders because you have to place exit, and make adjustment order. Forex traders can choose when they want to close the position during the market hours. Binary options cannot close the trade anytime they want. Instead, they have to select the expiry period when placing the trade. The expiry time ranges from 30 seconds to 1 year. The trade will automatically close when it reaches the expiry time.
There are no additional transaction costs in binary options. You will not be charged any per trade fee in binary options. On the other hand, there are many types of different costs in forex including spread, swap, rollover and commission.
As you can see, binary options is better than forex. Binary options brokers have made their platform accessible to traders by offering web based, desktop and mobile. This allows traders to check their traders conveniently at any time.