Forex trading is an established institutional and consumer mechanism for hedging, wealth creation and recreation. Consumers around the world are making their full-time incomes trading with a variety of strategies, from short-term scalping to heavily leveraged long-term strategies.
The new wave of binary options trading platforms, like 24option, offer a new investment vehicle for those that understand the markets. So is binary options trading a good alternative to forex trading? Let’s take a look at some of the benefits and drawbacks of live binary options below.
Big Profit Potential
Binary option trading platforms can offer huge profits. Sometimes there are 300% returns on investment to be had. Binary options frequently offer 85% returns. If you are confident that you are able to predict the activity of a stock, currency, commodity or index then there are real profits to be had.
Suitable for ranging markets
Forex markets can be very low trading volume when markets are ranging and there is no clear direction. Even when volume and volatility are low there are profits to be had with binary options though. With binary options you can predict that an asset will stay within a certain range, will touch a high point or low point, or will not touch a high or a low point. There are different timescales you can choose, and depending on the perceived likelihood of an event you can make profit. With binary options you can therefore trade whatever the market situation.
Simple trades
Binary option platforms make it very easy to trade. All you really need to do is choose your asset, and decide upon your prediction. It can be literally three clicks to make a trade, or one click as some platforms advertise. This can be really useful for short-term trades, but can have its drawbacks. For example, people can end up trading without the required analysis to make effective predictions.
Trading is about getting to the bottom of information whether you are trading forex or binary options. There are different mechanisms to achieve this, but all should incorporate a mix of fundamental and technical analysis in a similar way. The mechanism that you use to trade with, just as the assets, should be based on where you have your edge. If you perform consistently well on 60 second options then you should spend some of your time in that activity; perhaps with predominantly technical analysis with an eye on the fundamentals. If forex day trading leads to better profits then that is where you should be. It is always best to check out your strategies and performance by back testing or using trial software. It can be expensive finding out where your edge is.
Consider psychology
It is easy to be successful in trading and balanced of mind when everything is going well. You need to think about who you are and how your trading will change on a bad run. You need to be your own psychotherapist. It may be that some 60 second binary option trades every day help you to keep your discipline in other areas of your trading portfolio. As long as you are entering trades for the right reasons, and following a strategy, it can be good to have a mixed trade investment portfolio. The markets are driven by emotion not logic, so you need to understand that and stay in control.
The question might not be whether binary options is a good alternative to forex, but rather whether the two will complement each other well in your overall investment strategy.
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