Spot Forex or Binary Options?
Probably we all remember the first time we were introduced to Forex trading. Unbelievable – it was immediately clear, opportunities were abounding on planet Earth. For some it is probably Spot Forex and not Binary Options. Others don’t hear about Binary Options for a considerable period of time, and are happy to stay in Spot Forex. The lucky ones got to know about both from the start and had the pleasure of choosing between them.
Soon, in my opinion, you’ll find out that starting with Binary Options trading is better, compared to Spot Forex-for various reasons which we shall examine.
First though, what is spot forex?
Spot Forex trading refers to the contracts bought and sold based on the immediate prevailing market price of a Forex pair. These prices are settled in cash on the spot, based on current prices, and trading Forex pairs are often referred to as the cash market. With Spot Forex, traders earn or lose money based on the movement of the chosen pair over the period of time that they are in the trade.
A major similarity of Binary Options and Spot Forex is the opportunity provided to potential investors to make huge gains with relatively little capital while minimizing their risk of losses.
The key differences between these two investment vehicles are:
- The wide variety of asset classes available to Binary Option traders that may not be available to Forex traders because of excessive volatility.
- The full disclosure of risk on the part of the Binary Options trader because Binary Options are fixed at the close to ‘all or nothing’ levels. In Binary Options, a trader simply wins or loses their trade.
Binary Options are simple trade choices that traders place predicting the price position of a financial instrument after a set time. All parameters are set, the range of the price, the profit and the loss. The few technical tools needed to learn make it easier for green traders to start earning from the financial markets immediately. It’s not so easy with Spot Forex.
At first glance, the financial markets are complex for the beginner. With Spot Forex, there is a lot to learn, including technical tools and fundamental analysis. With Binary Options, you start running on day one with great simple buy/call or sell/put orders and easy signals. You have fixed risks and known outcomes, with no need for other tools to prevent ‘extended losses,’ and with a minimum $200 USD, you can be very profitable soon.
Of course, later you will need to learn about the financial markets and their drivers, to pick out profitable trades all by yourself. For instance, looking at a stock, you have to determine if its price is rising or falling before entering a trade. The advantage is that you need learn less.
Here is why you should take to Binary Options First
- Opportunity for a winning trade every minute or every hour
This is subject to tight risk controls, but new traders can earn a set amount of money within set time frames in a highly trending market. In Spot Forex, it is not possible to predict and make the same amounts of money consistently.
- User Friendly tools for profit
A newbie will immediately see the unique advantage that Binary Options give traders to trade nearly any instrument by placing a CALL or a PUT.
- No downloads required
Binary Options can be traded right out of the browser with no regular updates needed or compatibility issues to deal with and this gives traders the flexibility to trade from anywhere as long as they can access the Internet or mobile.
- Lower risk
The fixed risks with every trade removes ‘the emotion’ from trading, and lets the trader know the limits of their losses.
- $200 dollars can make you money
With a low investment, traders can profit from various financial instruments quickly and consistently. A highly volatile financial instrument may not allow a trader to use the same investment with Spot Forex, even if there is obvious potential for profit.
Soon you will hear some say that Binary Options trading is gambling, and here’s why. New traders in financial markets would usually guess the direction of a chart and place their orders. Since they knew so little about technical indicators, they would end up losing their trades. With this approach and the attending results, as an outsider, you would probably refer to Binary Options as gambling. To minimize the risk, chart reading knowledge becomes essential, as well as the need for new traders to study their craft well.
For traders moving into Binary Options from say, the tried and tested waters of Spot Forex, just a few words can explain their new found occupation. ‘Thank your lucky stars, you stuck in there.’ With experienced traders, reading the charts is easier, picking trades and knowing when to avoid trading is a learned skill, and this leads to higher chances of success – suddenly trading Binary Options becomes a science and not just a risky game.
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