As you may know and, as many times mentioned, binary options and forex are two different things. Yet, despite some clear differences you can find a few elements the two have in common. These allow us to migrate from the trading of binary options to forex. How to achieve it? And what are the risks? Read on to find out!
From binary options to forex
In theory, migrating from binary options to forex is easier than vice versa. As a trader of binary options you must analyse markets and have an idea of which direction the market will move in. Trading orders used in forex are very simple because you can either buy or sell (there are no more options except you speculate whether to place your order instantly or once some specific conditions are met e.g. limit order).
In most cases, it is easy to swap strategies used for binary options trading into a forex strategy. For instance, you can use trend lines and formations normally used in binary options.
The CALL option in binary options would in forex translate into buying a given asset. (.. to be later sold once you feel that the profit is worth it) However, if you don’t reach the profit level you must close the position soon.
In the PUT option, the procedure is the exact opposite; you must sell.
From forex to binary options
While a forex trader only knows BUY or SELL, binary options offer more types of trading. Some of the basic types of binary options include: high-low (price going up or down), one touch (speculating on touch), no touch (market not reaching the price level) and ladder (price remaining within a range or beyond).
As a forex trader, you must get rid of your black-and-white thinking and exploit all trading opportunities. Understanding trading all types of binary options is nothing difficult. What may be difficult, however, is to choose the right one.
A typical forex trader is used to closing trades whenever he or she feels comfortable, or with a fixed take-profit. After you have migrated to binary options, you will lose this advantage.
Binary options and forex: trading differences
We have focused on this issue many times before. The trading systems are quite different. Binary options trading is somewhat safer, because you set a maximum loss before opening a trade. Seeing from the opposite side, your gains are limited.
When trading on forex markets you will not see such limitations, which requires more discipline from the trader. The types of trading orders are different but the market is the same. It’s always the same market regardless of what currency pair and what instrument you trade – you trade the same things and see the same things. Having this in mind, the majority of trading strategies can be easily turned from forex into binary options and vice versa.
You may oppose that on forex, by using stop-loss and take-profit you can make your forex trading a kind of binary options trading i.e. with a risk (100% X) and a potential gain (90% X) without any time limits. Yes, you’re right. But I know many traders who move their stop-loss hoping that one day the trend must revert or, on the contrary, close their trades before reaching the take-profit level. I know what I am talking about. I was no different…