What's the difference between traditional foreign exchange and binary options?

What's the difference between traditional foreign exchange and binary options?

The essential difference between (1)

In binary options, in fact, we don't trade assets, but in foreign exchange, the transactions we establish are buying and selling currencies.

Binary options trading means that investors only need to analyze the price fluctuation of an asset and predict its possible trend in a certain period of time in the future.

For example, if you buy a euro/dollar currency pair, the expiration time is one hour, which means that you predict that the euro will rise against the dollar, and the expiration time of one hour is the time you give the euro to rise. If the euro/dollar really rises after 1 hour, then the option is an in-price option and you make a profit. On the contrary, if it is an out-of-price option, you will lose money.

(2) Basic differences

I. Fixed income

Compared with the traditional foreign exchange trading, binary options's trading will only have two outcomes, either a profit of 85% or a loss of some funds. But in general, the risk-return ratio of each asset is different, and the return is generally between 80% and 95%.

Second, fixed losses.

Compared with the traditional foreign exchange, when trading in binary options, the loss of the transaction order will never exceed the investment amount limited by itself. This is because the ratio of risk and return has been set before trading, so binary options does not need to set a stop loss.

Third, there is no leverage.

Compared with the traditional foreign exchange, binary options can make a profit without leverage, so the loss of the list will never exceed a dime of the investment funds. This means that if a trader has a trading order with a stop-loss currency pair, colleagues can also use the leverage-free binary options to hedge.

No matter what kind of investment, investors should make market analysis and fundamental analysis. Fundamental analysis refers to the overall analysis of national policies and industries. The national economic policy is the macro guidance of the general direction and determines the basic direction of the industry, but the national policy will be basically stable in a certain period of time, so speculators must focus on market analysis. There are many factors that determine the direction of binary options market, including the laws of the market. The company's financial situation, operating conditions, etc., which requires speculators to understand and pay attention to the invested assets in order to obtain more market information.