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

Binary Option Trading Process
  1. Choose the investment product (eg EUR/USD, …), decide on investment capital

  2. Choose “Sell” or “Buy”

  3. 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

Probability

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 OptionForex
Investment amountCertain amountFree from $ 0.1
Trading methodOnly allows you to select one of the two options “buy or sell”can buy and sell simultaneously
Profits1.3 ~ 1.8 timesFree to close
Infinite profits
LossAll investment capital returns to 0Free 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

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.

Binary option

  1. Investment capital(Ticket)

  2. Paymen rate

  3. Chart

  4. Currency(EUR/USD,…)

  5. Buy sell button

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.

Binary option

  1. Chart

  2. Currency

  3. Volume(lot)

  4. Buy and sell button

Also, at “TERMINAL” located at the bottom of the trading screen, things like account balance or margin are displayed.

Binary option

Reference article: Try Forex Trading with a free account to practice

Global traders mainly trade Forex

Trading room

Investors or funds of the global financial Institutions absolutely do not trade Binary Options because they understand the problem of losses.

Trading room

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.

Trading room

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