Binary option vs. Forex trading – let's understand the difference

A binary option is an option in which traders get some fixed amount according to the price of the assets and he gets nothing if the price of the stock goes negative. It is a new version of Forex trading that is very simple and easy to understand in comparison. Binary Options trading is long term trading and it sold directly by the issuer to the buyer. Both binary options trading and forex trading include making bet on the price of the stock but have a different way of trading and rules.

Both binary options and forex trading require basic knowledge about the relevant market as an investor has to deal with the various situation. If he wants a better return in the market he can refer best binary option trading tips and forex tips from financial market experts to avoid silly mistakes.

Following are the main difference between binary options and Forex trading -

1. Binary options trading is more simple than trading in forex market because there is no variability, you know how much risk involved and how much you will get or lose and when the option expires either you gain or loss. With forex trading, you don’t know your actual risk and profit until you close the trade. Binary option offers a little flexibility in customizing risk according to the risk bearing capacity of the trader.

2.Forex trading is more professional and it needs high market expertise. It requires professionals with experience in foreign currency trading while Binary Options is simple and easy to understand as compared to forex trading. This simplicity makes binary options more demanding but doesn't think that you do not need to learn anything about binary options. Better knowledge about trade market is a key of success for an investor.

3.In Binary Options, an investor has more assets to trade while in Forex trading only currencies can be traded. When it comes to Binary Options, there are various available choices including stocks, indices and commodities. It provides more opportunities to get a higher return.

4.The time frame is also a difference in both forex trading and binary options trading. In forex trading, you can take a position that will last from 1 minute to many months while with binary options you must have to trade only on the time frame of the options provided to you.

5.Forex trading is more leveraged than binary options, this can be both good or bad depending on how you look it. It is totally up to you how well you perform in the market by managing your risk smartly. Binary Options are simpler as the comparison to forex because they are not leveraged.

Both markets require better financial market knowledge and experience, for better learning you should start will a small amount, by this, you can ascertain your risk bearing capacity.Many investors follow financial experts advise their market calls recommendations, trading tips like stock tips
, forex tips and much more to increase profitability in the market and decrease loss percentage.