Written by: Sophie May
Binary options and forex have several similarities. Indeed forex traders who decide to start trading binary options normally find it a very natural and easy move.
Online 24/7
Both forex and binary options are traded online through brokers who provide trading platforms. The elimination of an actual exchange means that these financial contracts are accessible to the public and not solely to investment houses. Through the internet, investors can trade at their own convenience during market hours. In the case of foreign currency markets, this means that trading takes place 24 hours a day, because local exchanges are open at different times around the world. The trading day begins in Sydney, passes through Tokyo and London, and finishes in New York at the same time as markets reopen in Sydney.
Education
The accessibility of forex and binary options has attracted many new players to the markets, alongside more experienced investors. Good brokerages know how important it is for new traders to educate themselves in order to successfully make money and they readily offer demo accounts. Always be sure to familiarize yourself with the platform, study the assets you hope to trade, and practice with the demo before you trade with your hard-earned money.
Psychology
It is always vital to trade with a calm and rational head. Before any forex or binary trading session, it is important for traders to define their boundaries and stick to them. When you lose a trade it can be tempting to risk more money in order to make back what you lost, but this can lead beginners down a slippery road. By deciding in advance how much of your capital you are willing to trade with, you will have a psychological advantage and make more logical decisions.
Strategy
Traders should aim to appreciate the connections between different assets. It is simple to learn the relationships between various currency pairs, and apply similar strategies to both binary options and forex. For example, the USD/CHF, which pits the American dollar against the Swiss Franc, is often the mirror opposite in price action to the EUR/USD and so can be used as a hedge.