Forex trading with binary options

Forex trading has been part of the financial investment industry for many decades,while in the past few years traders have shown an ongoing interest in a new type of investment: binary options.This comparatively new type of investment has been around since 2008 and continues to arouse the interest of both conservative and more adventurous investors.

Binary options trading is all about predicting whether the price of a financial asset willrise or fall within a specified trading time. Traders can invest their money in any financial asset, from stocks, commodities, indices and up to currency-pairs which are also known as Forex options. In this type of Forex trading traders can gain high profits with an average profit of 81% within a matter of minutes. All the trader has to do is to predict the right direction of the traded currency, much easier than traditional Forex trading and less risky.

Similar to traditional Forex trading, binary currency pair trading is all about one currency’s price in comparison to its pair. Let’s take the case of USD Vs JPY as a case study: let’s say we are interested in buying a Forex binary option on the USD/JPY.  We have analyzed the market and come to the conclusion that that the USD will rise in comparison to the JPY. We are novice traders and are willing to risk $100 and therefore will buy a Call option on the USD/JPY for only $100. USD/JPY is now trading at 104.999.We chose to invest in a classic binary option which expires in 15 minutes and will pay us a profit of 80% if our prediction is correct i.e. if the price of our USD/JPY is anything above 104.99 we will end in-the-money turning our $100 investment into $180.On the other hand, if our prediction fails and the price is anything below 104.999 we will end out-of-the-money leaving us with a loss of $100. Traders can increase their profits, and protect them by using sophisticated trading strategies and by purchasing multiple options.

Binary options are heaven for Forex traders as they have many different trading strategies which are completely designed to help Forex traders. Binary options trading is all about having predefined trading parameters; fixed outcome, predefined risk, expiry times and more. The predefined parameters allows traders to better control their investments as they are always aware of the risk profit ratio of their investment. This allows traders to plan their investments in advance, always leaving part of their capital on the side prepared to any scenario of a losing trade.

Binary options trading strategies are based on basic financial understanding, market analysis and technical analysis. It’s always good to have luck on your side but it is not recommended to depend on it as a key factor to your success.

Examples of popular Forex binary options strategies:

Long shot Forex strategy

This strategy is designed to work on long trading intervals meaning options with rather long expiry times. Traders who use this strategy are prepared to risk a small amount in order to make extremely high profits. Trading the long term can produce high profits of more than 300% on a trader’s initial investment. It’s riskier but can produce very high profits.

Time vault Forex strategy

Traders who use this strategy will be purchasing a Forex option which is already in-the-money, for example a Call option on USD/JPY at 104.999 when it is already traded at 106.455 so it is already making money and looks like it has a good chance of staying above 104.999 up to its expiry time. It’s a safer strategy and therefore requires a higher investment and offers a lower profit. I would say this sums up the binary principal: more risk = higher potential profit and vice versa.