Written by: PaxForex analytics dept - Friday, 27 June 2014 0 comments
Trading forex or binary options is the comparison on what we are going to take an objective look. In order not to be sorry about your decision you have to conduct a comparative analysis of these both trading types. Preliminary training and education are essential for any kind of trade because the amount of profit is directly influenced by the level of the trader’s knowledge and experience.
For the new traders forex trading and binary options are two of the most popular trading options that are available. There are different benefits of both types of investments and it is important to gather as much information as possible before deciding which to begin trading. One of the key differences between forex and binary options trading is the element of risk.
When trading forex you are speculating that the value of one currency will increase or decrease compared to another in an attempt to make a profit. When trading binary options you only have to predict if the price of an asset, for example a currency pair or stock, will increase or decrease from its current price over a certain period of
time. With trading forex you never know what’s the maximum profit you can make on a trade; with trading binary options you know exactly how much profit you can make before you enter a trade.
In Forex trading you can use margin which is provide it from you broker and sometimes it can be up to 1:200 or 1:500. Margin allows you to increase your investment capital so you can make a larger trade and make a larger profit if your trade is an earning one. In trading binary options margin is not used, but you can still make a large return on your investment (up to 80% or sometimes 400%) so binary options are still very attractive for traders.
The conclusion is the following: binary options are more profitable and less difficult to be mastered by beginners. At the same time they are pretty risky so from this point of view forex trading is preferable. At forex your earnings are going to be somewhat lower, but you are not going to lose everything at once, with the right approach, of course.