When you are seeking a broker, you will find that you can choose to execute a CFD / Forexs trade or try forex trading instead. Binary options are relatively new, and increasing in popularity. Forex trading however, has been in existence for decade, and it amongst the most highly profitable markets one the globe. When you find that both these options are available, you may face some confusion deciding which would be the best option for you to pursue. Both of them are investment based, both give fast returns, and both bear some amount of risk.
Binary options trading deals with prediction, looking at whether the price of a specific asset is likely to increase or decrease so as to achieve profit. Forex trading does deal with predictions, though it does focus on speculation. This speculation is based on the currency values, to determining whether they will increase or decrease so that a profit can be made.
By making distinct comparisons, you should be able to decide which would be the best option for you.
On a CFD / Forexs trading website, anyone can take on the role of the trader. There is no skill necessary to start out, all that is needed is some basic knowledge to start off. When it comes to forex trading, this is not the case. You need a professional foreign currency trader to handle your account, who is able to notice how the slightest changes can bring in significant returns. Trying to do it without the right financial background will result in heavy losses.
Risk Levels and Volatility
When you are trading with Binary Options, you are always clear about the amount of risk that you are going to face, which helps you establish how much profit or loss you could incur right from the moment you begin your trade. With forex trading, it is not possible to be completely sure that the maximum loss you incur shall be the money that you invested. There exists the possibility that you could lose more.
In CFD / Forexs trading, there is close to no volatility, particularly that which comes as a surprise. This adds to the overall safety of the trade. With forex, there is volatility, as the values of currencies can sharply change from one moment to the next. To stay safe, risk management measures need to be in place.
If you are interested in making a higher return, then you will find that CFD / Forexs trading tends to be more profitably that Forex trading. This is due to their being fixed payouts that are begin, usually between 70-85%. When a payout is not so good, it is in the 60% range. However, with forex trading, you do not get to estimate the possible returns that you could receive in this way. Therefore, it is not possible to guarantee that one may make profit at the beginning of the trade. The only time that it can be established whether the trade was good or not is right at the end once it has been completed.
When your priority is protecting your investment, then you should choose CFD / Forexs trading over forex trading. This is because it is actually possible to get back a refund once you have made a loss. This refund can go up to the value of 15% of what you lost, which offers you some support even when things are not going well. With forex trading, options like this are not existent. If a decision was made and it led to a negative outcome, all the money that was invested will effectively be lost.