What is the binary option? Difference between binary options and Forex
Binary Options is a type of investment on a financial product that uses foreign exchange similar to Forex trading.
Binary Option can be as simple as roulette casino but you should be careful because it is a high risk financial product.
What is Binary Option?
Binary Options is a financial product that predicts one of two “up" or “down" price options and is a financial product that determines interest rates or losses corresponding to the subsequent price change.
- Binary Option Trading Process
Choose the investment product (eg EUR/USD, …), decide on investment capital
Choose “Sell" or “Buy"
After a certain period of time, you will make a profit if you make the right prediction and make a loss if you make the wrong one
You can trade with the three steps above, the profit in the case of correct prediction is only 1.3 ~ 1.8% (30 ~ 80%) but in the case of false prediction the whole amount of investment will return to 0.
Up to this point I guess you’ve had an idea, if you make a false prediction, the loss will not come back to you unless you make a profit in 3 or 4 consecutive times.
The more you trade the more you will lose out
The probability of choosing one of the two options “sell" or “buy" is 50% but the profit for the correc prediction is 1.3 ~ 1.8 times, so the probability of loss in trading is high.
Therefore, the probability of earning a final profit is 15 ~ 40%, the probability of the loss becomes 60 ~ 80%.
There are many fraudulent Binary Option Brokers?
Binary Option Brokerage Companies use programs to quote misleading ratesfake rate to let customers lose money or face some problems such as not being able to withdraw money despite the increased profits.
In any case the probability of a loss is always higher, so it is probably better not to invest in binary options.
Difference between Forex and Binary Options
Forex and binary options are financial products that perform foreign exchange transactions but the trading mechanism of each is different.
- Compare based on once off transaction
| Binary Option | Forex | |
|---|---|---|
| Investment amount | Certain amount | Free from $ 0.1 |
| Trading method | Only allows you to select one of the two options “buy or sell” | can buy and sell simultaneously |
| Profits | 1.3 ~ 1.8 times | Free to close Infinite profits |
| Loss | All investment capital returns to 0 | Free to close Loss is limited |
One time investment of Binary Option is a certain amount of money according to the ticket mode such as the $ 100 ticket. For Forex the investment amount is decided freely within the range of leverage and balance account of $ 0.1 ~.
Similarly with trading method Binary Option only allows you to select one of the two options “buy or sell” , where with Forex you can buy and sell simultaneously.
Regarding profit and loss mechanism, it is easier for Forex to make a profit
- Binary Option
Profit： 1.3 ~ 1.8 times
Loss： All investment capital returns to 0
- Forex
Profit： Free to close
Loss： Free to close
Investment capital（Ticket）
Paymen rate
Chart
Currency（EUR/USD,…）
Buy sell button
Chart
Currency
Volume（lot）
Buy and sell button
The difference between keeping Forex and the Binary Option is profit and loss.
When earning a profit using a binary option, the profit of the most is determined with 1.3 ~ 1.8 times of capital and the investment capital will return to zero if you lose.
In the case of profit or loss in Forex, because you can trade with the volume of your choice so you can minimize the loss and increase unlimited profits.
Difference in trading screen
Trading screen of Binary Option
The Binary Option Trading screen is divided and displayed in five sections below, even beginners can understand it pretty easily.
Forex trading screen
Most brokers use the same Forex trading tool “MT4 (MetaTrader4" or MT5 (MetaTrader5)).
It is a highly functional trading platform that analyzes specific charts, which you can use to trade when you’re out, as there are also iOS and Android versions in addition to the PC version.
The Forex trading screen is also very simple if you’ve already remembered it.
Also, at “TERMINAL" located at the bottom of the trading screen, things like account balance or margin are displayed.
Reference article： Try Forex Trading with a free account to practice
Global traders mainly trade Forex
Investors or funds of the global financial Institutions absolutely do not trade Binary Options because they understand the problem of losses.
Stock,Forex, bonds, CFDs, futures and so on are often seen on news or the internet as financial products that investors around the world often invest in.
Professional teams do not trade with their feeling in the sense but they measure risk with their correct analysis.
Without the technical knowledge of finance, individual investors can still make a profit by just trading with the right knowledge.
Reference article： How to make money by analyzing moving averages