The forex market, also known as the FX market or Currency market, is a market where a trillion dollars are traded on a daily basis. But can all traders make living from trading the forex market? Are binary options a better alternative?
Forex trading is not for the fainthearted. Despite being extreme exciting and flexible in time and location, it takes a lot of time and courage to read the charts to try to predict the movement of the exchange rate. Technical analysis, fundamental analysis, these two take a lot of practice and it might take a year to understand how they work.
Profitable forex trading usually is a day jobs work and requires a lot of seed capital. Fortunately many forex brokers offer to trade the market with leverages of 1:10 for beginner traders up to 1:1000 for experienced traders.
Forex trading alternative
As an alternative to forex and stock trading, binary options have been around since 30 years now, mostly in closed markets. Since 2008 the binary options are available to the big public. Thanks to the three-step trading system every beginner is able to learn to trade the (forex) market with ease.
The first step is to choose an underlying asset, for example EUR/USD. Next the expiry time has to be selected, ranging from 30 seconds to one year. Entering an amount you wish to invest is the final step.
Critics sometimes call binary options a gambling system, but this is not entirely true. Just like traditional options trading, forex trading or trading stocks and shares, the trades has to do some research on the asset before opening a position! The types of analysis I mentioned before are suitable for trading binary options, but when you choose a short expiry time like 15 minutes or 1 hour then Trend Analysis (or trend trading) is your friend.
Trend trading means that the trader is watching the charts closely to discover a up-trend or a down trend and open a position when a trend is discovered. When the rate of the asset shows an up-trend, then the trader is advised to open a call position, the down trend suggests a put position.
In order to make a profit in forex trading a trader has to invest a lot of money to see some pips flowing his/her way. A pip is a single movement of the rate and in forex this means the difference between $1,3500 and $1,3501. In binary options trading, one pip movement is enough to end up in the money! After all, the rate in our example moved up one pip and if you would have opened a call position with a standard binary option that would have made you 85% payout (or profit) on average. Forex day trading usually doesn’t give the trader more than 5% profit.
Binary options trading takes a lot less work and needs little money. Trading the binary options starts with a deposit of $250 and opening a position starts at $5. Forex trading is assumed to be lucrative when you start trading with at least $20,000 in combination with trading with leverage of 1:100.
As an alternative to forex and stock trading, binary options trading requires a relative small investment, offers high payouts and the trader doesn’t have to pay commissions to the broker. Still, every form of trading the financial market brings a risk of losing the money you have invested. Trading with your mind and don’t gamble with your money.
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