Fundamentally, Binary has only ever two outcomes - that’s where the name comes from. The main mechanics behind this type of trading can be called a ‘yes or no’ proposition. Depending on whether your initial prediction was true or not, you win or lose. Rewards, time frames for orders, and risks are all fixed in binary options.
If a given prediction is correct, one gains back the initial funds plus profit.
Forex has no set restrictions on how much money someone can earn or lose finalising a trading order. There are instruments to impact this uncertainty, though. One such mechanism is called a Stop Loss. It averts traders from suffering a loss beyond a certain amount. A trader can use the same principle for order in profit, which has attained a pre-ordained value limit.
Binary options as financial products have an expiry date (those ‘fixed time frames’ mentioned above), while Forex does not. But in both instances, you speculate on whether a given asset will go down or up.
Forex grants its traders the application of individual profit targets combined with the Stop Loss orders mentioned above. Both are unavailable for binary options. In the latter, the trader needs to win the majority of trading bets to have a successful, profitable long-term track record.
Some general parallels between Forex and binary options do exist, as well. Both can be traded with small initial capital. The traded assets themselves are a common ground, too. Much, if not all, financial products traded via binary options are also available on the Foreign Exchange market, like currencies or precious metals.
However, the Forex market is defined by a more significant fluctuation than binary options since it can be approached unrestrained by fixed expiry dates or profits. This aspect represents a broader range for profit, as well as for risk.
As with any meaningful financial engagement, awareness, research and education play crucial roles in mid-to-long-term success. Whichever broker on the market is offering the most comprehensive and intensive educational program, heightening the level of financial literacy of its clients, is the one to go with. Besides, your choice of a trading instrument depends solemnly on your own strategy and expectations. For most binary options traders, trading is considered a hobby or even a bad addiction - the lack of general possibilities for analysis make this type of trading extremely risky. On the contrary, the vast possibilities for analysis and strategy allow Forex to be a more reliable type of trading instrument.
Make sure you plan everything beforehand and consider all pros and cons - that’s the best way to make a decision you will not regret.
