Binary options trading has long existed over-the-counter, only experiencing a massive growth spurt in the last few years. Now, approximately 90 companies including those who white label their products offer some sort of binary options trading service. One of the great things about binary options trading is that you always know the exact maximum gain or loss in advance.
The trader controls the premium at risk to enter the binary option trade, and that is the only amount that can absolutely be lost. Even if you have an idea of how a market might behave within a certain time frame, you may not have the best option available to you to play your idea. With spot forex, you are able to enter limit orders for any price or execute a market order at any time during open market hours.
In terms of exiting open trades, some binary options brokers allow you to close options trades early, but usually only after a predetermined amount of time has pass after the option trade has opened and before it closes. And as mentioned before, the value that is returned to the trader is based on whether the market is in-the-money or out-of-the-money and of course, with a piece going to the broker.
In spot forex, you can close your trade at any time except on weekends with most brokers. Depending on your risk and trade management preferences, either trading instrument can be good or bad depending on how much time you want to spend in front of your trading platform, how active you want to be, or what you expect the market may do. In binary options trading, there are no additional transaction costs other than what is normally factored into the final payout. In spot forex, the transaction cost comes in the form of a spread, a commission, or both.
While currency pairs are the most common assets you can trade, with some binary options brokers, you may also have the opportunity to trade your ideas on a limited number of individual stocks, stock indices, and even commodities.
Surprise volatility is not usually an issue in binary options trading. Any trade you take can weather the volatility caused by certain events. In spot forex, however, sharp swings can affect the value of a position greatly and very quickly, which makes the additional task of setting up proper risk management processes very important.
There are no limit orders to keep track of, or to close or adjust. Learn how to separate the majors and the minors. A lot of people don't do well simply because they major in minor things. Partner Center Find a Broker.More...