Again, our topic of conversation is Forex and this time it will be specifically the difference of Forex and Binary Options.
Certainly there is a lot of content in relation to Binary Options on the one hand and Forex on the other, in this article we will have the precise details of the characteristics of each of these and also that we can find a difference of Forex and Binary Options, if they are related, what they are, etc ... All possible explanations regarding these topics come next in the content of this article.
What are the Binary Options defined?
It is a financial product that has an asset or support, this being a currency pair, index or share, at the time of purchase the potential profit can be determined, this means that a trader chooses the future price prediction of an underlying asset, which is higher or lower, where the trader chooses the price, receiving the name of strike price or strike price, has a term for its prediction, if it is true it wins and if it does not lose, we will now look for what relationship You will have with Forex.
How is the operation of Binary Options?
Before moving on to the difference of Forex and Binary Options, we are taking some basic concepts about it, in Binary Options we have that it is possible to place different bets by the owner and these are the following:
- - Binary options are High / Low and As for the underlying active price, this happens when this binary option is terminated.
- - The binary options One touch and in this the price will arrive once or at no time at the end.
- - The Zone or Boundary binary options are about the price that the underlying asset in the price will have or not.
- - At the time of obtaining a potential gain to the advantages of the increase of the underlying asset, the Call options will be used and having fallen in the quotes, so that the buyer can have a potential profit, the Put options will be used.
Bets can be compared with Binary Options and the owner can:
- - At the time of purchase of the option, defined capital may be earned, if the forecast is met from the underlying asset.
- - The capital invested will be lost if the forecast is not fulfilled.
What is the difference of Forex and Binary Options?
We have that Forex consists of a spot market, where the purchase and sale contracts will be executed at the moment, where the trader at that time for the price that is in the market, the difference of Forex and Binary Options, is that the traders do not will pay the price for the asset, it is only based on the investment of the underlying asset the Binary Options.
Binary options are not a market, at no time do they move the underlying prices and are betting contracts, an example we have that the invested currency pair is the bet option but they are not the owners ever, which allows them to not influence positive and negative in the market, in this way the investor will make the prediction of the existing movement in how the shares will be moving in the market, the bet being the rise or fall of the shares, currencies are a binary option as this will be the bet to Forex difference.
We have that another difference of Forex and Binary Options is in the realization of the calculations of the profit and in the loss of an operation, for Forex we see that when buying and selling, the market price will simply be paid, the price paid at the end of the operation by subtracting the price with which it began, the calculated gains and losses will be obtained and will be the number of pips, multiplying the value that each pip has by that obtained, giving the concrete result if it is won or lost in the Forex transaction.
A fixed percentage of what was invested will be the calculation made in the Binary Options, the importance is in the final exercise price, in that if it is greater or less, regardless of the market when a binary option is opened it is possible to determine how much you can earn and lose, this amount remains constant and that from the moment the purchase was made and so we see the difference of Forex and Binary Options.
When investigating we find another difference in Forex and Binary Options that is important, in the Forex market we have open operations indefinitely, instead binary options have an expiration date which was previously established, which is of a term Short and will not be executed before or after this date, as for the risks there is a difference of Forex and Binary Options, we have that in Forex some more flexibility is possible when operating with money with the monetary and risk management, allowing results positive net with a percentage of operations earned below 50 percent, but in the case of binary options the percentage of successes must be at least 80 percent if you want to end with positive net results.
Example of the difference of Forex and Binary Options
We have an estimate by an investor where the price of a current Eur / Usd currency pair will be above in the next hour, where we will assume that the benefit in options in the Money is 70 percent and that of loss in Out Of Money options is 90 percent, now the investor's decision is to invest $ 500, if the Eur / Usd market is above the current market level in one hour, Binary Forex will pay 70 percent return, being this option called Call in Forex, now the success will mean to the investment the payment of $ 140 and $ 200 of the investment of the beginning, giving in total $ 340, if at the time the market is below the current one, the binary option will return 10 percent of the amount invested by the operator, returning $ 50 to the investor meaning loss of $ 150. In this way we are reaching the end of the explanation, which was focused on Forex and the specific details of the differences of Forex and Binary Options, to our readers we hope that with this content they will understand more about the subject and that they will find it useful treaty.
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