Page 1 of 5 123 ... LastLast
Results 1 to 10 of 46
  1. #1
    Junior Member

    Forex vs Binary Options? !!!

    Hey guys,

    I got myself a Forex demo account today and it feels like it's much easier and has a better risk/reward ratio (depending on your trade) so I wonder...

    Does anyone here have experience with Forex trading?
    Why did you switch to binary trading?

    How would you compare those two trading systems?

    Greetings,
    Stefan

  2. #2
    Legendry Member Michael Hodges's Avatar
    In one word.. risk. With binary you are only risking the loss of the trade, however much you put down on the initial transaction. With forex risk is unlimited, if the trade move against you the draw down can continue exponentially until your account is wiped out. Plus, with binary the trade only has to end in the money by 1 pip for it to close in the money, with forex you have to get at least several pips in order to make comparable profits.

  3. Thanks Lelyz9, fxcode thanked this post
  4. #3
    Junior Member
    Well, there is also something like "risk management" in forex trading, you can set a stop loss at a particular level and when the market goes against you the position is automatically closed.

    With binary options you only have to be 1 pip in the money but you also only win the same amount plus you have to tell the time.
    With forex you can win more than you risk and you can see when the price starts coming up and then close your position.

    With a good risk/reward ratio you will make more money when you win than you'll loose otherwise.
    In other words you don't even need to be correct 60% of the time, you only need a good risk/reward ratio to be profitable.

    For people who never heard about the risk/reward ratio, this explains it in one picture: http://forex-strategies-revealed.com...s/riskrew1.png

  5. Thanks fxcode thanked this post
  6. #4
    Senior Member Lelyz9's Avatar
    What I heard from forex people, it's the wipe out things that they scared the most. The stop loss couldn't function and in one night all could be gone because of the sudden news. Many had the minus balance and it's a proof the automatic stop loss couldn't be count on in such situation. It's very scary that made me so reluctant to go into Forex, the unlimited risk.

  7. Thanks fxcode thanked this post
  8. #5
    Master Member SeasaltMcFish's Avatar
    Trading Forex can be profitable too. Also, there are brokers that offer a guaranteed stop loss, so that doesn't have to be a problem.

    My biggest problem with Forex, is to manage trades/buy-in. I have a tendency to close a trade with small winnings and let them run with big losses. That problem doesn't occur with BO. Tried to change that bad habit, but it simply doesn't work for me.

    Binary Options is more like 'Fire and Forget' and that suits me much better (hated it to find out there's some early closure options in BO too).

  9. #6
    Rookie Member JohnP's Avatar

    Forex vs Binary Options? !!!

    Well, there is also something like "risk management" in forex trading, you can set a stop loss at a particular level and when the market goes against you the position is automatically closed.
    You know stp loss hunting and when market moves rapidly that stop losses get ignored and it happens very often

    With binary options you only have to be 1 pip in the money but you also only win the same amount plus you have to tell the time.
    With forex you can win more than you risk and you can see when the price starts coming up and then close your position.
    You can close trades in binary early and many platforms have adopted it. But the time factor is true it an issue to contend with

    With a good risk/reward ratio you will make more money when you win than you'll loose otherwise.
    In other words you don't even need to be correct 60% of the time, you only need a good risk/reward ratio to be profitable.
    this is also true for binary but also you never risk losing more than what you invest in forex that is a very real possibility.

  10. #7
    Junior Member
    Thank you guys!

    Wow, yeah, becoming broke over night is really scarry.

  11. #8
    Moderator Kolyo's Avatar
    JohnP made very good points here!

    Comparing binary options with spot forex is not relevant, they are too different in the way the market is approached. Yes, the underlining assets are the same, but we are searching here other type of opportunities. I can say that making profit factor greater than 1 is just as difficult as trading binary options on profit. In forex trading it is very hard to stop your subconscious attempts to take small profits and allow larger losses in hope they will recover. In BO in comparison there is no such problem any more. The P/L is predefined and the only thing you have to consider is the moment you initiate the trade and time frame for expiry, also you don’t have swap costs and other ways to give up your profit in long term trading. Other way it is much cheaper to trade long term BO, than keeping a spot position. The only problem is to predict the best time frame for your analysis, but this is also not a problem as you started with a specific chart. For example if you are looking at H1 or H4 charts it is best to go for end of day or 24 hours or weekly options. If you are watching closely 1 min charts than your expiry have to be something between 15 min and 30 min. You can make your own rules for that, but this is the method you know where to go
    "The goal of a successful trader is to make the best trades. Money is secondary." - Alexander Elder

  12. #9
    Rookie Member TomWorn's Avatar
    I would say Forex is better but more risky as you need to make sure placing your stops on each and every trade while binary will expire anyway in a the pre chosen expiration time and you wont lose more than what you invested.
    Last edited by TomWorn; 03-22-2016 at 11:11 AM.

  13. #10
    Legendry Member willyw's Avatar
    Quote Originally Posted by Lelyz9 View Post
    What I heard from forex people, it's the wipe out things that they scared the most. The stop loss couldn't function and in one night all could be gone because of the sudden news. Many had the minus balance and it's a proof the automatic stop loss couldn't be count on in such situation. It's very scary that made me so reluctant to go into Forex, the unlimited risk.
    Lelyz, you are totally wrong. Stop loss orders can be placed after you have executed a new trade as well as take profit orders. In volatile and fast markets stop loss will be filled with a slippage. Please do a research yourself on what is slippage. Unless you don't excercise stop loss and in adverse market conditions then your account will wipe off. Only stubborn traders don't place stop loss orders will be wiped off. I think your information comes from undisciplined traders.
    I have been trading forex full time and I also trades BO
    Last edited by willyw; 03-29-2016 at 04:08 AM.

Posting Permissions

  • You may not post new threads
  • You may not post replies
  • You may not post attachments
  • You may not edit your posts
  •  
3