Options Offer Newcomers a Cleaner and Easier Way to Trade
Trading the world’s currency pairs has become increasingly
popular over the past decade, but there is a dirty little
secret that brokers are loath to share with newcomers to
the craft. Yes, they tell us that high risk is involved.
These disclaimers are required by law, but they do not tell
you that casualty rates amongst beginners is nearly two
out of three.
Why such a high casualty rate? Impatience and inexperience
are the general culprits. Trading forex is complex. There
is much to learn. You must be adept with a keyboard and
have analytical skills to beat the band. Brokers, however,
are not sitting on their hands. They have invested a great
deal of resources in education, training and support, and
no one would ever venture into these shark infested waters
without first spending hours practicing on a free demo system
with virtual cash and real time quotes.
Despite these efforts, early fatalities remain high, but
a new way of trading for profit with currencies has entered
the scene that promises to brush away much of the anguish
related to many emotional aspects of forex trading, money
and risk management techniques, and the endless hours necessary
to understand strategy development and technical analysis.
Yes, you still need to invest time practicing, but the new
field of binary options has made everything much cleaner
and easier, especially for newcomers.
What are the difference between binary options and traditional
retail forex trading? First, with binary options, you only
have two decisions to make – how much to wager and
what value will the currency pair have at the end of a specified
expiration period. No more toiling over when to enter the
market. No more guessing when to exit the market and then
dealing with the emotional distress incumbent with exercising
that decision. (To read more on currency trading, click
Binary option trading platforms are very simplified. You
see the pricing history of your chosen asset class and the
expiration point, typically within the next hour. The payoff
reward ratio is also displayed, and many brokers offer a
small percentage refund if you are incorrect in your prediction.
Most all platforms also display what percentages of current
traders believe the market will go up or down, based on
their existing positions.
All you have to do is enter an amount, decide if the market
will go up or down, and press execute. Your risk is known
before you execute. You will typically get a 75% reward,
if you guess correctly, and, sometimes, as much as a 15%
refund, if you are incorrect. There is no possibility of
a margin call. There is no need to place Stop-Loss orders
or protect your downside. Every parameter is fixed at the
outset. You can spend your time studying associated charts
and commentary to make your choice of a “Call”
or a “Put”, i.e. up or down in binary option
The binary option genre requires a different type of operating
platform and back-office operation, the reason why you may
need a different broker for this activity. Access online
is all that is needed, too, and since the platform is proprietary,
there is no need for a complicated download. Once you get
the hang of it, there are many other features that may interest
you that will expand your trading experience and offer more
ways to profit, but all in due time. (To read more, click
For a 75% payout and a 15% rebate, the odds for binary
options are roughly the same as for retail forex trading.
Choose your broker wisely and experiment with this new way
to trade currencies. You might like it!
By Tom Cleveland