The popularity of Binary Option Trading has exploded during the last 2 years and this has caused many apparent comparisons with the three trillion dollar a day Forex industry; both are based on currency and commodity and have similar trading times, and both industries appealing investors of all types from all over the world.
On the other hand, if you take a much deeper look , you will see that there are many differences between trading Binary Option and Forex, as well as finding out the reason of why Binary Option is superior to Forex.
Simple Investment Decisions
It is certain that binary option is easier to trade and far less complex comparing to Forex. To make an investment in Binary Option generally involves only two simple investment choices:
• In / Out – This is often called Boundary. An investor has to decide whether or not the price at the end of the contract expiration will be in or out of a range of price
• Touch / No Touch – Whether or not a price will reach (touch) a predetermined price at the end of the contract expiration.
• High / Low – Whether or not the price will be higher or lower than a set price at the contract expiration.
Contracts, Payouts and Lengths
A reason of the growing mass attraction of Binary Option is the fact that when you trade in Binary Option you take part in a contract – with a set contract length and a payment. In Forex, you do not have these features, so there is no real way of determining when to “cash in” and what you will receive.
Binary Option provides the investor the information of exactly when the contract expires and what they will get if they are “in-the-money”. Contract period may be anything from a few minutes to a week and the payouts can reach to 93%.
One reason of why binary option trading is better than Forex is, the limited responsibility involved in Binary Option as opposed to Forex. Trading Forex includes leverage and increased risk, magnifying your trading power but subsequently increasing any debt that may occur. In Binary Option you just lose the amount what you invested and nothing more. Additionally a lot of Binary Option platforms provide a payout of 15% even if your investment ends “out-of-the-money” so decreasing your responsibility even further.
On the other hand, in Forex, in case your investment ends “out-of-the-money” you might end up with a liability worth a lot more than what you invested, in particular if there no stop-loss orders available. Because of these Binary Option is ideal for many investors who have little or no financial knowledge or experience.
Many people think that the Forex platforms which are full of charts can seem very intimidating for the inexperienced trader. Most Binary Option broker platforms are significantly simple to use and are created keeping the inexperienced trader in mind. In addition, as investors are trading the right to purchase an option and not the actual asset itself, the Binary Option investors can trade in more assets that could not be available to them in Forex.
A suitable example of this is in Stocks: In Binary Option, traders can invest in a high priced stock like Google without having to disburse $20 just to purchase a single share; whereas in Forex it is not possible. Also the minimum investment amount is much lower in Binary Option as compared to Forex. For example some brokers offer investing for as little as $10 or $20, compared with Forex it is extremely low.
Final Words About Binary Option Trading and Forex
Finally investors have a much wider choice of assets to trade in Binary Option compared with Forex, which means that investors can pick and select assets to focus on any technical and basic analysis and invest with far less responsibility or risk than they would have in Forex trading.
In general, there are many reasons why Binary Option is better than Forex – it can bring more profits, is easier to trade and much more accessible compared with Forex. Also, through the easy-to-use interfaces of many Binary Option providers – trading Binary Option is quicker and much more entertaining contrary to Forex.