Binary Options in simple words
Binary options are really interesting, easy to use and less risk than open market trade. If a person is familiar with forex trading, he can understand the risk factor of forex market. There are some differences between classic forex trading and binary options.
– Forex trading gives you leverage up to 1:2000
– Binary Options doesn’t have any leverage space.
– In forex trading, you use meta traders and other software to trade in market.
– In binary options, web trader is available to open trades.
– Classic Forex trading has floating spread between buy and sell.
– Binary Options has fixed spread between buy and sell.
– In Forex trading we use stop loss to secure our account wipe out.
– Binary options doesn’t have that risk, that’s why they don’t use stop loss.
– Forex trading has running profits and loss, there isn’t any condition to close trade before it hits target.
– In Binary options, there isn’t any option like this. You can’t close your trade before time. If trader try to do it, then he will see some conditions, if allowed.
These are some conditions that I have highlighted here. Not all the brokers are legit and not all the brokers are scams. A trader and investor must read all the terms and conditions before start investment in those brokers. There are several things that traders don’t read and at the time of withdrawal or in certain conditions, they know those clauses. It is highly recommended to read them carefully before they invest their amount with any broker. It is also a fact that investment with binary brokers is easy to do, but withdrawal is difficult.
Terms and Conditions of Binary Brokers
Why am I saying this? This is because the terms and conditions of the brokers. Sometimes traders get bonuses and due to those bonuses, traders aren’t allowed to withdraw their money. They will be able to withdraw their money after trade of certain lots. This is not easy to do for new traders. It is highly recommended to open a demo account with the broker to test their trading platforms and binary options. The same condition apply for both, Forex trading and binary trading.
Now, let me tell you about binary options. What are they and how to trade. Binary options are actually trading method. But if we call it betting then it won’t be wrong. Trader open a trader is also called as bet in binary option. In binary options a trader can limit his loss and profits. There are several limits available with binary brokers. Traders can open buy or sell orders just like classic trading, but here you will tell the broker that the price will rise or fall in stipulated time period. If the price rise according to your prediction then you win. If the price fall and you opened order for rise then you will lose, but the limited amount of that order.
Binary Brokers in Simple words
Let me explain in more simple words. If we think that market will rise within 5 minutes up to 30 points or 50 points, then trader will open buy trade. Within 5 minutes the market must cross the boundary, if not, then trader will lose that amount. It means that if the market is closer to boundary and time finished, then trader will not get profits. This is the system they are running in Binary options. We can’t say it trading, it is actually betting, but with the help of forex market.
I hope that most of my readers will understand now, what is binary options and how to trade with them. If you have any question, ask in comment or join us on Facebook.
Read More: Forex Brokers information