If you are new to the world of trading, you may be feeling bamboozled by all the terminology and the options open to you. There are many ways to trade in the modern world. We will answer one of the most frequently asked questions in the world of trading: Which trading is better Forex or Binary Options?.

Discussions of which trading instrument is the best can go on for ages, but sooner or later, trader should choose the most suitable option. In this article you will find detailed answers to the questions with in you.

Instant Profit

About 10 years ago, most brokerage companies specializing in exchange markets suddenly started promoting a new «super service» – binary options. At that time, few people understood what they were, but the thirst for instant profit made this tool very attractive. It was an exclusive offer for that time, because it was basically a pocket casino, but with constant online access and a low starting amount. Enough time has passed now for the consumers to start realizing that binary options is not such a brilliant tool, and that you lose more often than win. In order to assess this tool, you need to understand what it is.

What is a binary option?  

So what is a binary option? To answer this question, let’s look at its structure. The name itself consists of two words – binary and option. The word binary is a derivative of the concept of “binary model” – a model that has only two options for the occurrence of an event: either “yes” or “no”. This model is one of the foundations of the tool: you either win or lose, there are no other options. The word option however derives from real stock options. Stock option is a derivative financial instrument, which is based on the rule that the contract is executed in the future in case some pre-agreed condition is fulfilled.

By combining these two concepts we get a tool that works according to the rules of the stock contract and has only two options for the occurrence of the event. In other words, if you conclude such a contract, you either win or lose.

What is term of Forex Trading:

By the term Forex trading, we refer to an international platform where the currency will be exchanged. This happens to be the biggest marketplace on the planet so far, with over USD 6 trillion being traded regularly. Trading will take place in pairs, while a trader will be comparing the value differentials between 2 currencies like the Euro and the US dollar. There is a high variability when it comes to forex trading. Apart from deciding the direction in which a currency will move, it is also imperative for the traders to guess how high or low it will be going.

There is no limit on the profits or losses made in Forex trading. There isn’t any specified time for expiry when it comes to the forex trades. As compared to trading binary options, forex trading is less diverse in nature. It is possible to do forex trading 24 hours a day, 5 days a week. There is a potential for high levels of leverage.

Difference between Forex and Binary Options

The main differences between forex and binary options are:

• Forex is a real trading asset; binary options are a fictive asset.
• Forex can be traded with no limit on the profits or losses; binary options trading is limited by time.
• Forex offers leverage; binary options do not.
• Forex trade duration can be unlimited; binary options have expiring time.

Nevertheless, if you cannot predict correctly, you’ll be losing the entire amount of investment made by you in Binary Options.

Are binary options the same as forex? 

Binary options are not the same as forex because binary options are not real financial assets such as forex, bonds, stocks, commodities, futures, etc. It is used in theoretical asset pricing, and binary options are prone to fraud in their applications and hence banned by regulators in many jurisdictions as a form of gambling.

Are you ready to take bigger risks?

Any trading involves a certain degree of risk and might not be suitable for all types of investors. That’s something you learn right away, but the degree of risk differs depending on your risk management strategies.

When applied to Forex, a non-aggressive trading strategy can help you rationally portion your investments and cover a certain percentage of your losses. However, when it comes to binary options, there are no such options as Stop Loss. You either get your profit or lose your investment entirely.

Some traders consider binary options more rewarding and less time-consuming. However, many more experts believe that this approach makes trading more of a game of guess than analysing the market and building an effective strategy, especially when it comes to shorter expirations.

Conclusion

Binary options offer fixed risks and fixed rewards, but they are not real financial assets such as forex, bonds, stocks, commodities, futures, etc. Forex trading is better than binary options trading because it provides higher returns and smaller drawdowns. If you’re looking for a real financial trading system Forex trading is more profitable than binary options. Open account in  Winstone prime and start trading forex