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Forex vs Binary options - 1. Basics




Forex vs Binary options - 1. Basics


FOREX

BINARY OPTIONS

What's available for trading? Currencies, traded in pairs: EUR/USD, GBP/USD, EUR/CHF, GBP/JPY, AUD/USD and many other. You can trade currencies as well as variety of other instruments: stocks, indices, commodities etc.
How to trade? You trade by finding a trend and then buying or selling a currency pair.
(For example: if you believe that EUR/USD pair is going to rise, because your market analysis shows that EUR is getting stronger comparing to USD, you'll be looking to Buy EUR/USD with the expectation that the trend will go up and you make profits).
You trade by placing bets. You place bets for the currency (or any other instrument) to be above or below the current price level within a certain time limit.
(For example: you can bet that the price for EUR/USD will be above 1.3000 in 15 minutes time. You then wait 15 minutes, and if you're right - you win, if you're wrong - you lose.)
How to make money? The currency pair must eventually trend (move) in your direction.
(E.g. if you placed a Buy order for EUR/USD: in order for you to profit EUR/USD must go up.
If you placed a Sell order for EUR/USD: in order for you to profit EUR/USD must go down).
The currency pair (or other instrument) must reach the targeted price or surpass it AND it should happen within the time limit of your bet.
How to lose money? The currency pair must move against you.
(E.g. if you bought EUR/USD, in order for you to lose EUR/USD must go down.
If you sold EUR/USD, in order for you to lose, EUR/USD must go up).
The currency pair (or other instrument) must either not reach the targeted price OR fail to do so withing the required time limit OR both.
What's required to hold a trade? You must have enough capital on your account at all times. That is because when a trend temporarily moves against you, you should be able to keep your trade running without interruptions by showing enough capital in your account to offset temporary dips. Nothing else. As soon as you entered a trade there is no additional requirements for maintaining a sufficient capital.
How long can you hold to a trade? As long as you want to. Your trade closes when your Bet expires. You will choose the time of expiration in advance: from 1 minute, 15 minutes, 1 hour, 1 day to 1 week.

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