Binary Options Forex Trading

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Binary Options Forex Trading How Binary Options and Forex Trading is Similar How They Differ? Forex Trading Mysteries Free Binary Option Robot

The binary options and option signals have emerged as the alternative to the forex trading. They are simpler and yet effective way of trading relative to the spot forex trading. The biggest advantage of the binary options trading is that the maximum possible loss per trade and the rewards for the trade is known well in advance to the traders. Best places to start trading is with reliable broker such as IQ Option and with proven trading robot like Option Robot. Selecting the best binary options brokers proper broker and best binary option robot is the most you can do to avoid any trouble. Start NOW!

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Let’s Understand The Binary Options First

In simple words, they are options whose possible outcomes are only two (binary). The possible outcomes for the trader can be either zero or the payouts. In the simplest binary trading, the settlement of the binary contract depends on whether the prices of an underlying have closed below or above the strike price.

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The binary options can be used for several situations like will the USD will strengthen today against GBP or not? Will the Google end up higher or lower? Or on the back of falling GDP numbers, whether the Gold prices will move higher or not?

For instance, there is uncertainty in the global markets and your estimation suggests that the gold should rise from the current market price. If you buy a gold contract at $ 1200 an ounce hoping to move higher at expiry. If you have invested $ 200 in the gold contract and it expires at $1201 then you stand to gain the payout (Generally, 80% of the invested amount) and if the gold prices do not move and stays at $1200 at expiry or goes below that than you stand to lose your initial investment amount of $ 100.

Selecting The Best Currency Pair For Trading

By now, you must have got the idea that the binary options can use currency as an underlying asset. The binary options trading makes it simpler for trader’s compared to the forex trading due to fixed risk-reward ratio. The binary options trading offers several benefits over the direct forex trading.

  • It allows you to access the largest financial trading world in the simplest yet effective way.
  • The currency pair options in the binary trading offer sufficient liquidity.
  • It also allows you to take positions in several currency pairs that too 24 by 7.
  • The binary options brokers provide information regarding the payouts on the winning options right at the beginning of the trade.
  • The risk attached to each of the binary trade is known in advance.

The idea behind the blending of the forex market and the d binary option is to give you an access to the largest financial trading market along with utilizing your trading techniques to exploit the market potential with known risk-reward.

binary options forex trading, select the right currencies which to trade

The next question which comes to our mind is how to select the best currency trading pair? To answer this question is not an easy task because the underlying currency pair has its own traits at the same time the trader who is trading the currency pairs have their own distinct characteristics.

Ultimately, the final selection about trading in the currency pairs is with you and you should select a pair which blends with your preferences. Besides the liquidity in the pair, the time of the trading also has an impact on the selections. For instance, if someone wants to trade in the Asian timing then he must stick to the USD/JPY even though the EUR/USD is the most popular and highly liquid counter.

List of Currency Pairs With Their Pros

EUR/USD

This currency pair dominates the entire forex market in terms of liquidity and number of contracts traded. The highest liquidity ensures that while executing trade you don’t have to worry about any sort of slippages as the trade will be executed instantaneously.

It being the most liquid counter, it has the least amount of volatility associated with it. This makes it the most preferred currency pair for the beginner or new trader. The EUR/USD pair has very low spread and makes it an ideal pair for the scalper. We request our readers who are new to the binary arena that they should trade in EUR/USD till the time they get enough confidence to trade in volatile pairs and assets.

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USD/JPY

Another currency pair which has a very high order flow and provides immense liquidity. This currency pair is also very suitable for the Asian traders as the most of the order flow happens during the Asian trading timing, however, this currency pair lacks the action sometimes.

USD/CHF

The USD/CHF is also a liquid counter but has the same problem as the USD/JPY. This pair also has lots of days wherein the counter just refused to move in either direction.

AUD/USD

The liquidity in the counter is far less when compared to the above-mentioned pairs. Hence, sometimes it has very surprising and abrupt moves in a single direction as well as reversals.

The AUD/USD is also known as the commodity pairs as its prices show high correlation to the gold prices. The Australia being the largest gold producer, the AUD/USD movement is highly influenced by the movement in the world gold prices.

USD/CAD

Another currency pair with less liquidity and high volatility. The USD/CAD sometimes behaves abruptly and unpredictably. The movement in the prices shows very high correlation to the crude prices. The CANADA being one of the highest crude exporting countries, the world crude oil prices have a direct impact on the currency pair.

So, while trading the USD/CAD and AUD/USD, the trader should also keep an eye on the gold and crude prices so that they don’t get caught on the wrong foot.

GBP/JPY

This is also one of those counters which have a low liquidity compared to the EUR/USD. The GBP/JPY is one of the highly volatile currency pairs and it moves abruptly whenever there is a data release from the Central Bank of Japan. We recommend that new traders should completely avoid this pair and should stick to the USD/EUR until they have gained enough experience. However, the seasoned players can position themselves in this pair if they deemed fit.

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GBP/USD

The last but not the least is the GBP/USD currency pair. This currency pair is a liquid currency pair but has higher volatility compared to the EUR/USD currency pair. Though it has a higher volatility, it’s volatility is very less when compared to the USD/JPY currency pair. This makes it a perfect candidate for the beginners who wants to experience the volatility along with the liquidity. It also makes the most preferred choice of currency pair after EUR/USD for the binary options trading.

Finally

The binary options trading not only offers simplicity and fixed risk-reward, it also offers a plethora of choices when it comes to trading with currency pairs. Our recommendation to the naïve traders is that they should start their trading with EUR/USD and then move to GBP/USD, while, the professional traders can select any of the currency pairs which suits them the most.

The ultimate aim is to find the most suitable and profitable currency pairs which go with your characteristic. Before making the final selection, the trader must test each and every pair at least once so that he has an idea about each and every pair. While testing these pairs, the trade should invest only a small amount in each of the trade and once they find their befitting currency pair they should stick to it.

Another final tip to all our readers is to go through each and every blog written here to get educate and learn more about the binary options trading, binary options brokers, binary options signals services, and automated trading software. Or if you are already familiar with those topics just try the option robot now!

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Author: Michael Allen

Michael Allen is the main author at www.binaryoptionrobotinfo.com. He holds a PhD in Economics and has worked in investment banking for 24 years.

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Michael Allen

Michael Allen is the main author at www.binaryoptionrobotinfo.com. He holds a PhD in Economics and has worked in investment banking for 24 years.

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