Those who want to improve their personal finances by trying their hand in trading are usually faced with a question of what would be the best form of trading for them.
Considering the options available, it is not hard to see why a decision might be a hard one.
From the moment it appeared on the global market, binary options trading drew a lot of attention from all around the world, South Africa included.
For the first time people from all walks of life gained entrance to the world of financial trading which had been, for a long period of time, reserved for a particular group of individuals or firms.
To highlight differences between binary options and other ways of trading, we have decided to present what are major advantages of binary options over Forex.
Major Advantages of Binary Options Trading
In the next few paragraphs we will present advantages of trading binary options over Forex and how this might benefit interested South African traders.
Control over Losses
Major advantage which most traders, in South Africa and around the world, find to be a very appealing aspect of binary options trading over Forex is the fact that they know how much they stand to gain, and, more importantly how much they could lose as well.
So, limited and defined loss enables traders to know from the very start the maximum loss which can happen when they buy a binary option.
While it is possible to use Stop Loss with Forex trading, but that feature demands high discipline from the trader which is sometimes hard to achieve since traders sometimes feel the need to remove this feature if they feel the market is going in the desired direction.
This can lead to more losses then initially expected.
On the other hand, those South African traders who opt to do binary options trading have a fixed loss without possibility to lose more.
Also, volatility of market does not effect binary options as long as the trade achieves “in the money” status by the time the expiry date is reached.
With Forex trading the story is different since high market volatility can lead to complete loss of funds.
Yet another point in favour when it comes to major advantages of binary options over Forex is in the trading speed. Specifically, in the fact that binary options treading allows for extremely short expiry times which can, in fact, be as short as mere 30 seconds.
This is not an option in Forex trading since the market is unlikely to move in a matter of minutes, not to mention seconds.
Since binary options payouts move between 75% all the way up to 90% traders can end up with a fine profit in a matter of minutes.
When traders select to trade in binary options, their aim is to finish a trade “in the money “ position while with Forex trading the goal is for the price level to reach a certain mark but that can end up being some distance from the present market price.
That, in turn, means that a bigger movement in price is necessary to make the same or similar profit as in binary options trading.
Basically, it is easier for traders to make an educated guess (based on the available market info) whether the price will go up or down in comparison to the current price.
On the other hand when trading in Forex it might be a bit more difficult to predict to just what degree a price might go up or fall.
Any sort of business venture has its advantages and disadvantages and that is something all traders have to take into consideration.
However, major advantages of binary options trading over Forex for those South Africans who opt to use it are, aside from the above mentioned, also the time and knowledge necessary.
The nature of binary options trading does not require that traders be stuck behind a computer screen day in and day out in order to have a successful trade.
Traders can simply place a trade and then wait for the expiry time knowing that the loss, if it happens, is the same as the price of the option.
South Africans can also forgo the constant following of market news which is a necessity in Forex trading if profit is to be made.
However, it would not be wise to disregard the power of knowledge as, the more traders know the better they can be in predicting what will happen with a price which can lead to higher profits.
Regardless of the trading journey South African traders might select, investing some time in studying the market, data connected to either binary options or Forex as well as training themselves to react rationally instead of emotionally, will aid in bringing about the desired result.