The currency market is the top-selling and biggest market worldwide and also offers private traders a large variety of opportunities. With binary options you can trade currencies, too, but why should you do that when you can also directly register at a forex broker?
There are several good reasons that are in favour of this but of course, trading currencies with binary options has a few disadvantages. The best is to take a closer look at the advantages and disadvantages and to examine binary forex options carefully.
Binary options are undoubtedly the easiest way to trade in the finance markets. No other finance tool is as easy to understand and trading with no other finance tool is as easy to learn.
With binary options you already know how high your return is going to be before purchasing the option. And with up to 85 % it can be really impressive. You also know your risk because it corresponds in generally to your investment.
When you directly trade at the forex market things are completely different. Before the expiry of the trade you do not know how high your return is going to be. Your risk is neither limited but you can lose a lot at the forex market because you are trading on margins.
Therefore, it is really that important to set stops and especially to calculate correctly.
Simple money management
You should only bet between 2 and 5 % of your trading assets per trade. By doing so, you avoid unnecessary risk and the threat of a total loss, if things are not going that well.
With binary options this is very simple: If your trading account is 20000 €, e.g., and according to your money-management-strategy you risk 3 % per trade then this would be 600 €. You simply invest 600 € in an option and everything is alright.
At the forex market, this is much more complicated. There, with 20000 € you might want to risk 600 €, too, but you have to calculate a lot. First, you need to think about where to set your stop. The scope between stop and entry course represents your risk. Then, by converting the trading currencies into your account currency you need to set the necessary scale of your position that corresponds to this risk -for example 2 lots (a lot is a quantity unit in forex trading)
You do not need any stops
The currency market is very volatile and therefore the risk of getting stopped out of the position is very high. But stops in forex trading are inevitable because otherwise there is the risk of a total loss.
With binary options this cannot happen to you. Why? You do not need any stops!
Binary options have an expiry time and the only thing that matters is if the option expires either in the money or out of the money.
With up to 85 % the return of binary options is very high but even when the course explodes it is limited to these 85 %.
You have to say it clearly: Binary options-broker do not provide you with an adequate chart software. When you want to make analyses -and you should- then you need to use another charting tool. You can read more about this topic in our article about charts.