Forex vs Binary options – 1. Basics
|What’s available for trading?||Currencies, traded in pairs: EUR/USD, GBP/USD, EUR/CHF, GBP/JPY, AUD/USD and many other.||You can trade currencies as well as variety of other instruments: stocks, indices, commodities etc.|
|How to trade?||You trade by finding a trend and then buying or selling a currency pair.
(For example: if you believe that EUR/USD pair is going to rise, because your market analysis shows that EUR is getting stronger comparing to USD, you’ll be looking to Buy EUR/USD with the expectation that the trend will go up and you make profits).
|You trade by placing bets. You place bets for the currency (or any other instrument) to be above or below the current price level within a certain time limit.
(For example: you can bet that the price for EUR/USD will be above 1.3000 in 15 minutes time. You then wait 15 minutes, and if you’re right – you win, if you’re wrong – you lose.)
|How to make money?||The currency pair must eventually trend (move) in your direction.
(E.g. if you placed a Buy order for EUR/USD: in order for you to profit EUR/USD must go up.
If you placed a Sell order for EUR/USD: in order for you to profit EUR/USD must go down).
|The currency pair (or other instrument) must reach the targeted price or surpass it AND it should happen within the time limit of your bet.|
|How to lose money?||The currency pair must move against you.
(E.g. if you bought EUR/USD, in order for you to lose EUR/USD must go down.
If you sold EUR/USD, in order for you to lose, EUR/USD must go up).
|The currency pair (or other instrument) must either not reach the targeted price OR fail to do so withing the required time limit OR both.|
|What’s required to hold a trade?||You must have enough capital on your account at all times. That is because when a trend temporarily moves against you, you should be able to keep your trade running without interruptions by showing enough capital in your account to offset temporary dips.||Nothing else. As soon as you entered a trade there is no additional requirements for maintaining a sufficient capital.|
|How long can you hold to a trade?||As long as you want to.||Your trade closes when your Bet expires. You will choose the time of expiration in advance: from 1 minute, 15 minutes, 1 hour, 1 day to 1 week.|