Binary Options Offer Newcomers a Cleaner and Easier Way to Trade Forex

Trading the world’s currency pairs has become increasingly popular over the past decade, but there is a dirty little secret that brokers are loath to share with newcomers to the craft. Yes, they tell us that high risk is involved. These disclaimers are required by law, but they do not tell you that casualty rates amongst beginners is nearly two out of three.

Why such a high casualty rate? Impatience and inexperience are the general culprits. Trading forex is complex. There is much to learn. You must be adept with a keyboard and have analytical skills to beat the band. Brokers, however, are not sitting on their hands. They have invested a great deal of resources in education, training and support, and no one would ever venture into these shark infested waters without first spending hours practicing on a free demo system with virtual cash and real time quotes.

Despite these efforts, early fatalities remain high, but a new way of trading for profit with currencies has entered the scene that promises to brush away much of the anguish related to many emotional aspects of forex trading, money and risk management techniques, and the endless hours necessary to understand strategy development and technical analysis. Yes, you still need to invest time practicing, but the new field of binary options has made everything much cleaner and easier, especially for newcomers.

What are the difference between binary options and traditional retail forex trading? First, with binary options, you only have two decisions to make – how much to wager and what value will the currency pair have at the end of a specified expiration period. No more toiling over when to enter the market. No more guessing when to exit the market and then dealing with the emotional distress incumbent with exercising that decision. (To read more on currency trading, click here).

Binary option trading platforms are very simplified. You see the pricing history of your chosen asset class and the expiration point, typically within the next hour. The payoff reward ratio is also displayed, and many brokers offer a small percentage refund if you are incorrect in your prediction. Most all platforms also display what percentages of current traders believe the market will go up or down, based on their existing positions.

All you have to do is enter an amount, decide if the market will go up or down, and press execute. Your risk is known before you execute. You will typically get a 75% reward, if you guess correctly, and, sometimes, as much as a 15% refund, if you are incorrect. There is no possibility of a margin call. There is no need to place Stop-Loss orders or protect your downside. Every parameter is fixed at the outset. You can spend your time studying associated charts and commentary to make your choice of a “Call” or a “Put”, i.e. up or down in binary option language.

The binary option genre requires a different type of operating platform and back-office operation, the reason why you may need a different broker for this activity. Access online is all that is needed, too, and since the platform is proprietary, there is no need for a complicated download. Once you get the hang of it, there are many other features that may interest you that will expand your trading experience and offer more ways to profit, but all in due time. (To read more, click here).

For a 75% payout and a 15% rebate, the odds for binary options are roughly the same as for retail forex trading. Choose your broker wisely and experiment with this new way to trade currencies. You might like it!

By Tom Cleveland