If you are searching for reasons not to use stops in your Forex trading or if you want to safeguard your currency positions, you can try using Forex Binary options. Below, we will explore some methods of trading the foreign currency markets using binary options, which have gained popularity in the last year or so.
Binary options are often referred to as fixed or digital return options. They are a simple yet fascinating way to trade financial markets by predicting whether the price of a currency will finish below or above the current price level over a specific time period, such as one day. Forex Binary Options, like all binary options, have only two outcomes – they can finish in the money (if the price reaches or surpasses your expected level) or finish out of the money (if the price does not reach or pass your expected level). Binary options are not limited to trading currencies since you can trade them in the stock, index, and commodity markets.
Forex and Forex Binary Options trading share several similarities, such as trading online whenever the markets are open. However, they differ significantly in terms of risk management. While Forex trading involves considerable risk, trading currency using an option is much less risky. You know the maximum loss you can incur in Fixed Risk Forex Binary Options trading, and you also know what profit you will make when your option expires in the money.
In Forex trading, you choose whether a particular currency will appreciate or depreciate against another currency, i.e., buy or sell. In currency options trading, however, you need only predict whether the price will increase or decrease in a specific time frame. You can trade binary Forex options in any suitable time frame. Some brokers allow you to trade variations of binary options that overcome the usual Forex trading challenge, where the price stops your trade out and then moves directly to the target price.
Options enable you to make excellent returns within short time frames, depending on the options and assets you are trading. Returns of over 71% within 15 minutes are achievable by predicting the movement of the price of a currency pair. Unlike regular Forex trading, your profit is not impacted by the price movement amount. Even a minimal pip higher or lower will result in an in-the-money trade.
If you have acquired the basics of Forex trading, the best way to learn trading Forex options is to take a course on binary options basics. You should let the market guide you by trading Forex options in the live market. Finding an excellent and reliable options broker is vital. Options can also act as stops when using trading techniques such as the grid strategy.
Why not try trading Forex using Binary options? You may be pleasantly surprised.