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Forex Trading Vs Binary Options Trading

Forex and binary options are two of the most popular investment opportunities available today. A new trader would typically face a problem when he or she has to choose between these two options. Although stock and futures are also accessible to these investors, those methods are too capital-intensive to a beginner. That's why a new trader should have a good knowledge of the differences between forex and binary options. This read offers information on the major similarities and differences between forex and binary options trading.

There are many similarities between these two trading options. The first similarity is both these options are newbie friendly. A newbie can easily enter these markets and make profits with some experience in the industry. Both options are available online. Hence, a trader can trade at anytime in the day or night. In fact, both these options allow the trader to trade around the clock during the week. Both trading options allow the trader to begin with a low investment. This amount can be less than $100 most of the time. Both these options allow the trader to make money depending on which way the currency or assets move. They are tradable on short-term time frames. These are the major similarities between forex and binary options trading.

Now for the major differences between the two trading options. Binary options is a more newbie friendly trading method compared to forex trading. In fact, the risk of the newbie trader is quite lower with binary options than forex. The risk and profit potential are both fixed at the start of binary options trading. On the other hand, forex is a more variable trading platform. It can be good or bad on how the trader execute his/her tasks. That's why binary options trading is more suitable to a newbie trader compared to forex.

Binary options also give you the opportunity to let auto-trader software trade for you.

The trader doesn't know the ultimate risk or profit potential until the trade is completed when it comes to forex. But this can be advantageous to an experienced trader since the profit potential is much higher compared to binary options. That's why it is important to choose between these two trading options depending on the skill levels of the trader. A complete beginner would do fine with binary options while an experienced trade can make it good with forex. This read offers a comprehensive overview of the similarities and differences between forex and binary options trading.

Trading Forex Strategy

Trading Forex Strategy

Forex trading is the buying and selling of currencies. The forex market is speculative in nature. As such, there is a probability of losing. The use of forex trade strategies will minimize the chances of betting or choosing the wrong currencies which might result in a loss. Hence, there is a need to lay out a solid plan to guide your actions. As the old adage goes âif you fail to plan, you plan to failâ. Therefore, the following strategy will help you make an informed decision when trading forex. The trading forex strategy is broken down into six steps.

First, it is vital to plan how you will conduct the trade. Planning involves deciding on the currencies you will trade in, and the amount of time you plan to hold on to currency. Whereas some currency pairs are very volatile thereby changing a lot, other pairs are steadier or stable. Stable pairs change slowly. By taking this into consideration, you will be in a better position to choose the best currency pairs that fall within your allowed risk level. 

Secondly, it is vital to know about the changes or happenings in the forex market. By following the forex markets, you will be able to speculate on the standing of the forex market; where it is, where it is going, and the factors influencing the currency shifts. 

Third, employ risk management strategy. This strategy helps the trader to set his limits in relation to losses. The activation of stop orders in the forex account enables the system to automatically stop trading when a set loss limit is reached. This strategy is very crucial to forex trading since it helps the trader to avoid further losses. Setting stop orders is also significant to the trader since it eliminates the concept of emotional reaction. A trader might decide to continue trading even when he has gone over his/her loss limits. Moreover, the stop orders are the backbone of a successful trading strategy. 

Fourth, choose the most suitable approach in analyzing the foreign market. Although there are two primary forex market approaches (fundamental analysis, and technical analysis), most traders prefer technical analysis since it is less cumbersome compared to fundamental analysis. Technical analysis basically follows currency trends. Also, it is easier to speculate on currencies based on their past trends. 

Fifth, have some basic knowledge about fundamental analysis. Fundamental analysis factors such as the political environments have a significant influence on the forex market. 

Lastly, maintain trading discipline. This can be achieved through the setting up of trade limits.