Trading
Posted by Jeremy Rush.
Binary Options vs. Forex Trading: Understanding the Difference
Forex trading and binary trading are quite different and it is important to understand these differences in order to become
In the case of guessing correctly, both trading options provide strong profit potential. However, there are some differences between binary options and forex. In a binary market, traders only guess whether an asset, such as a foreign currency,crypro etc, will go up or down in value over a fixed period of time.
Binary options are option contracts with fixed risks and fixed rewards. In binary options trading, the trader must decide whether an underlying asset, such as a stock, a commodity, or a currency, will go up or down during a fixed period of time. Traders are shown up front the value of their earnings if their predictions are right.
Higher variability, more risk
Forex markets offer higher variability and more risk for traders. In forex markets, sometimes known as FX markets or currency markets, traders must decide not only in which direction as asset will go, but must also predict how high or low that asset goes. Thus, the ultimate risk and profit is unknown.
In forex, there are no limits to how much money a trader can make or lose, unless they use certain tools to control trading. One tool is a stop loss, which prevents traders from losing more than a certain amount. In other words, once the trader has lost a certain amount, the trade automatically closes. Similarly, the potential reward may also be fixed beforehand. The trader can decide that he wants the trade to close once it has reached a certain profit value.
