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  1. #1
    Veteran Member Ammeo's Avatar

    Understanding Currency Binary For Beginners !!!

    Currency binaries represent a rather young trading strategy, and not all currency exchange rates are currently being traded. The majority of positions are for the EUR/USD, GBP/USD and USD/YEN based on their very liquid forex markets.

    For example, assume that the exchange rate for the EUR/USD is currently 1.25; an investor who buys a currency binary at a strike exchange rate of 1.30 is betting that the exchange rate will be 1.30 or greater on the expiration date. If this occurs, the investor will receive a set payoff amount, no matter how far above 1.30 the exchange rate settles. If the exchange rate at expiration is less than 1.30, the long investor receives nothing.

  2. #2
    Specialist Member RCox's Avatar
    One of the factors that should be considered when trading these most common pairs is that the added liquidity tends to create smoother price moves and reduced volatility when compared to some of the more exotic choices that are available. This is because there is a much larger number of active buyers and sellers on both sides, and since there is generally someone willing to buy or sell at every price increment, you will generally not see price gaps that can take the market by surprise. For this reason, there are many traders that stick to these pairs exclusively, as they feel price movements are easier to forecast.

  3. #3
    Veteran Member Ammeo's Avatar
    Yeah i mostly trade Majors and Crossovers myself bt exotic can be traded sometimes..i sometimes do trade exotics for longer run trades (1 day to 1 week)...

  4. #4
    Specialist Member RCox's Avatar
    Currency trading is one of the more popular entries into the binary options markets, as many traders start first with forex and then look for other choices once this type of trading becomes more familiar. This shows how daytrading has changed in recent years, with the advent of online brokers and the growing popularity of specific forms of trading. It is kind of surprising that the more traditionally popular forms of trading (stocks and commodities) was not the main beneficiary of these changes. Apparently these brokers dropped the ball earlier in the decade.

  5. #5
    Legendry Member Michael Hodges's Avatar
    Quote Originally Posted by RCox View Post
    Currency trading is one of the more popular entries into the binary options markets, as many traders start first with forex and then look for other choices once this type of trading becomes more familiar. This shows how daytrading has changed in recent years, with the advent of online brokers and the growing popularity of specific forms of trading. It is kind of surprising that the more traditionally popular forms of trading (stocks and commodities) was not the main beneficiary of these changes. Apparently these brokers dropped the ball earlier in the decade.
    No doubt, if the mainstream stock and options brokers had offered a more binary like trading platform they undoubtedly would have benefitted from it. However, it would probably have been heavily regulated (much like the forex markets) and eventually have driven traders to the binary world. What I now see is traders beginning with binaries because they are easier to trade and then switching to standard options once they are comfortable with technical analysis.

  6. #6
    Master Member vinayakm's Avatar
    Quote Originally Posted by Michael Hodges View Post
    No doubt, if the mainstream stock and options brokers had offered a more binary like trading platform they undoubtedly would have benefitted from it. However, it would probably have been heavily regulated (much like the forex markets) and eventually have driven traders to the binary world. What I now see is traders beginning with binaries because they are easier to trade and then switching to standard options once they are comfortable with technical analysis.
    Bogdan already went through this Ammeo in a pretty comprehensive post. I am sure its been covered in other posts either by Richard or Michael also, but its good you brought it up again. Great insights by Richard and Michael here!

  7. #7
    Veteran Member uj.forex's Avatar
    I tell you what, most of us are used to of major pairs including Eur/usd, gbp/usd, aud/usd..... I started trading these major base currencies against Yen, just because of their volatility and excellent move.... even the consolidation phase is good enough to yield us sufficient pips... oh yeah, make sure that you have sufficient balance to trade these pairs especially gbp/jpy... negative floating might show up sometimes as the pairs are tooooo volatile...

  8. #8
    Veteran Member Ammeo's Avatar
    Personally speaking someone shd not directly jump into binaries ..he shd do somee spot forex before it....in spot forex there is an option to limit losses and also tthe opportunity to study chart trends and how news and other financial activies affects the market...after having a good idea of all the ins and out of forex he shd jump into binaries....just my personal opinion...

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