A new trader may become confused as to what option he or she should choose between binary options and forex trading. In fact, these two options are the most popular trading options that are newbie friendly. Hence, you should be cautious when picking the right option to begin your trading. This read offers a comprehensive overview of the similarities and differences between forex and binary options trading.
Both these trading options are similar in some ways but different in some other ways. First, we will take a look at the similarities between forex and binary options trading. Both the investment opportunities are tradable online. In fact, a trader can access these trading platforms around the clock, throughout the day and night. The amount of investment is quite low compared to stocks and futures. You can begin trading in forex or binary options with a small amount of capital which is less than $100 most of the time. A new trader will not have to risk a lot on these trading options. That's why forex and binary options are both popular as newbie friendly investment opportunities on the market.
The trader profits or loses money based on the way the asset or currency moves. This is common to both these trading options. On the other hand, forex and binary options are both tradable on short-term time frames which are not the case when it comes to stock and futures trading. These are the major similarities of these two trading options.
There are many differences between forex and binary options trading. The profit and risk potentials are fixed at the start of the trade when it comes to binary options. For example, if a trader invests $10 on a trade that pays out 80% to winning traders, he or she will either lose $10 or make $8 at the end. Also, the trader gets to keep the initial $10 as well. That's why binary options trading is considered more newbie friendly compared to forex. On the other hand, forex is more complicated since it is more variable. That's why you should not invest in forex trading until you have the necessary experience to do so. Forex trading will not let you know the ultimate risk or profit potential until you close the trade.
You also have the option of having binary options software trade on your behalf, like Swarm Intelligence software that has recently been released to the public. This video has a full review on this trading software.
In conclusion, these are some of the major similarities and differences between forex and binary options trading.