Several years lately Binary Options (BO) is increasingly popular. In addition to the high returns generated, BO trading is also relatively simple and easy. If we BO trading in forex, what's the difference with trading the forex spot we used to do? In the spot forex (FX), we do gamble to fluctuations in the value of a currency pair at a certain price level. Suppose the value of the EUR / USD is currently at 1.3500 and you predict will soon rise up to 1.3600. Then you decide to buy 1 lot of EUR / USD at the price level and wait until the target price that you expect reached.
In the BO you just estimate changes in the value of EUR / USD is up to a certain time without pesifik determine the value of the currency pair. For example, EUR / USD is currently at 1.3500 and 1 hour later you estimate the value will go up. Then you decide to enter the Call option and wait up to 1 hour later. If the prediction was correct, you will earn a profit of between 65% to 80% of the funds invested, depending on the terms of your broker. For certain types of commodities there are brokers that provide up to 400% profit. So what other differences compared to the FX?
Margin
FX: You need to put some funds as margin which depends on the leverage you choose. When you experience a floating loss and your margins are at a certain level, you will be exposed to margin calls, which means having to add funds or can not continue trading.
BO: Margin trading is not required in the BO, and you will never be exposed to a margin call. You can profit between 65% to 80%, or funds lost if you invest your estimate was missed.
Profit and loss
FX: If not careful you can lose a lot, even the funds that you invest can be drained, even though you can manage profit and loss.
BO: Before entry you have to know the amount of loss that you will experience and the amount of profit that you will gain after deadline expiration time.
Types of order
FX: This type of order is the most important of course, buy and sell, in addition to the limit, stop, OCO (One Cancels Other), and trailing stop. The combination is a buy stop, sell stop, buy limit and sell limit.
BO: until now there are four types of orders to transactions, namely: Cash or Nothing, Asset or Nothing, Touch and Touch and Double No Touch and Double No-Touch.
Size or trading volume
FX: The unit of measure is the trading lot is a unit of the amount of the contract (contract size), or volume. 1 lot = US $ 100.000 quantity contract size. There are several types of trading size depends on the type of account. Micro lots with 0.01 lot units, mini lots with 0.1 lot and regular units or standard account with units of 1 lot. Each with a minimum of capital investment (depending on the provisions of the broker).
BO: No unit of measure of trading, the limit is only determined minimum and maximum investment per trade. For there is a minimum funding of US $ 5.00 per trade, and there is a maximum of more than US $ 5000.
Surcharge
FX: There are additional costs such as bid and ask spreads, the cost of rollover or swap when you stay and commissions per trade (depending on the broker).
BO: There is no additional cost.
Source: www.forexcrunch.com: vs Forex Binary Options, by: Peter Traychev
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