Binary Education: The Difference Between Forex & Binary Options.

So What's the Difference Between Binary & Forex?

Forex: Speculating whether the price of an asset will appreciate or depreciate compared to another, with no particular amount risked, and no specified timeframe or expiry. The trade is closed by the trader.

Binary Options: Speculating whether the price of an asset will appreciate or depreciate from its current price, with a particular amount risked, during a certain timeframe which ends at expiry of the trade.

Risk and Reward

In Forex, you never know exactly how much capital is truly at stake, or how much you could lose. You also don’t know how much you can make. In Forex, the maximum amount loss made in a trade could be the amount of your entire trading account.

In binary options, the amount of capital risked, the potential loss, the time of expiry and the payout are all predetermined and clearly displayed before any investment is even made.

No Leverage/Margin Needed

In Forex, you can use leverage your trades up to as much as 1:500. This enables you to make more money, but also puts you in a much riskier position. In binary options, you can still make up to 85% of your investment in a single trade, with no need for leverage.

In Forex, the trader must close the trade. An unsuccessful trade can go on indefinitely and can go from bad to worse. Also, much money is lost due to traders forgetting about their open trades, lacking the ability to follow them, or not being able to get to their PCs. In binary options, you decide at the beginning of each trade how long that option will live, and the trade closes automatically at the expiry time.

Amount of Capital

When comparing Forex and binary options, this difference is striking. In Forex, a small account is about $5000, and this capital can be lost in one single trade. In binary options, a trader can start with as low as $100 or even $10 per trade, and still make significant profits.