Several years lately Binary Options (BO) has become increasingly popular. In addition to the high return is generated, BO also trading is relatively simple and easy. If we're trading forex on BO, what difference does it make by trading in spot forex we do? On the spot forex (FX) we make speculations against the ups and downs of the value of a currency pair at a certain price level. Suppose the value of the EUR/USD pair currently reside at 1.3500 and you predict soon will rise up to 1.3600. Then you decide to buy 1 lot of EUR/USD at price levels and wait until the target price that You think may have been reached.
On BO you just estimate the change in the value of the EUR/USD is up to a certain time without specifying pesifik in the magnitude of the value of the currency pair. For example EUR/USD 1.3500 are at the moment and you estimate 1 hour later the value will go up. Then you decide to enter the Call option and wait up to 1 hour later. If the prediction turns out to be true, you'll gain a profit of between 65% and 80% of the funds invested, depending on the terms of your broker. For certain types of commodities there are brokers who give profit by up to 400%. (Read also: Ways of Trading Binary Options).
Then what other differences compared to the FX?
- Margin
FX: you must put the amount as the magnitude of the margin depends on the leverage you choose. When you experience the floating loss and margin you are at a certain level, you will be hit by a margin call that means it must add funds or could not continue trading.
Bo: Margin trading in BO is not required, and you will never be hit by a margin call. You can profit between 65% to 80%, or the funds you invest Your estimates are lost if it turns out that Miss the mark.
- Profit and loss
FX: If the less closely can you suffer losses much, even funds you invest can drained, though you can manage profit and loss.
BO: before entry you have to know the magnitude of the loss that you will experience and the amount of profit which would be obtained by you after the deadline expiration time.
- Types of orders
FX order Types: most importantly of course buy and sell, in addition to the limit, stop, OCO (One Cancels Other), and the trailing stop. The combination is a buy stop, sell stop, buy limit and sell limit.
Bo: currently there are 4 types of orders for transactions, namely: Cash Asset or Nothing, or Nothing, Touch and No Touch and Double Touch and Double No-Touch. (See also: types of Transaction Types, Binary Options).
- Trading volume or size
Unit of measure: FX trading is the lot which is the unit of the number of contracts (contract size), or volume. 1 lot = US $ 100,000 contract size quantity. There are several types of trading sizes depending on the account type. Micro lots with a unit of 0.01 lot, mini with a unit of 0.1 lot and regular or standard account with unit 1 lot. Each with a minimal capital investment (depending on the conditions of the broker).
Bo: there is no unit of measure is specified, only the trading limits minimum and maximum investment fund per trade. There is a minimum funds for US $ 5.00 per trade, and there is a maximum of more than $ 5,000.
- Additional charges
FX: no extra charge in the form of bid and ask price spreads, rollover fees or swap when stay and Commission per trade (depending the broker).
BO: no additional fees of any kind.
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