Forex trading is a rapidly growing trading platform around the world. Thousands of people start Forex trading daily. Another option that most new Forex traders consider is Binary options. If you want an in-depth comparison between these two platforms, then this article presents the similarities and differences for our readers comprehensively.
The foreign exchange market or Forex trading is one of the fastest and most liquid markets globally. It is a trading platform where traders estimate the prices of two currency pairs relative to each other, such as USD/GBP. The prices of the currencies can be affected by several factors, such as supply/demand and global economic factors.
Binary options are a relatively simpler way of trading. In binary options, a person invests a certain amount of money in a currency or a commodity for a fixed period. The period of investment and amount of investment is predetermined. The trader estimates whether the price of a commodity would go up or down. If the trader is correct, he/she benefits from the trade; otherwise, they incur a loss.
Hers is comprehensive comparison between two trading platforms.
Accessibility is the most important feature when we are comparing two platforms. Forex trading platform is probably the most accessible and easy-to-use platform. Traders can access it around the clock from anywhere globally, five days a week. Traders need an account with a broker and an internet connection, and they can easily get set up.
Binary options are not available and accessible 24/5. It is only open for trade based on the market hours of the underlying assets. For instance, if a trader is investing in gold, then he/she would have to wait for the gold market to open.
The forex market is the most volatile trading market. The trader has to consider several factors that can fluctuate the prices of the trading pairs. Hence, the trader can end up losing their money.
Binary options are safer than Forex trading in terms of risk. The trader can set up the amount of investment and profit beforehand. Hence, regardless of the loss he experiences, his investment capital is not completely at risk.
Profitability is the most interesting factor for traders. Forex trading has higher return rates in terms of profit. In Forex trading, the broker can leverage the investment, even up to 500 times. This means that the trader can profit 500 times their initial investment. (There is also an increased amount of loss followed by the leverage)
Binary options do not have the option of leverage. The maximum profit a person can earn from the binary option is 95%. However, there is less amount of risk associated with binary options.
After reading our full review, if you are still worried about choosing between these trading options, let us sum it up. The forex market is more profitable, volatile, and riskier. It requires a huge amount of research before stepping into the environment. On the other hand, binary options are less riskier and less profitable but simpler. If you are a beginner, you might be interested in this article, how does forex trading work in south africa.