There can be no doubting the fact that Binary Options is one of the easiest ways to start trading. Everything is in place to make it easy to get into for even those people who have perhaps never considered trading previously. Account opening is quick and easy and the deposits required are low.
All you have to do is open an account and decide whether a financial asset will move higher or lower over the time period specified to bank your profit.
This simplicity of trading is however often frowned upon by more sophisticated traders. Many make the assumption that binary options is no more than a starter platform. This view is reinforced by the fact that it is aimed squarely at the retail trading market.
Those who consider themselves more sophisticated investors prefer to spot trade the financial markets, often using Forex, spread betting, or CFD’s and derivative based platforms. These are seen as the ‘big brother’ to binary options and the ultimate aspiration for the trader looking to make serious profits.
The Lure and ‘Pitfalls’ of Forex
As a result of these assumptions, Forex trading may be be seen as the ultimate destination for a new binary options trader. However it is important to understand the distinctions between these two forms of trading and why making a switch may not necessarily be the best idea.
You may have heard of the expression of viewing your glass ‘half full’ or half empty. Well the novice trader may see the fast moves on this market as offering a great opportunity. However the experienced trader will be aware that these moves can also quickly drain his account. This is something that the binary trader moving to Forex isn’t prepared for. This can be a steep learning curve and one that can easily cost you a lot of money if you don’t get to grips with the risks fast.
When trading with binary options you are only ever wagering a fixed outcome against your broker. However when trading on Forex you are trading in the markets for real. This means that every tick up and down in the price on your screen will instantly affect your profit and loss. You can quickly drain away all of the money in your account!
To become a good Forex trader you need a different set of skills to be able to cope. Not only do you need to be well versed in technical analysis, you also need a greater awareness of how fundamental factors affect price movements. Perhaps most importantly of all, you will need to develop the right mentally for this type of trading. This includes coming up with strategies to help you get into the right mind-set.
Should You Switch?
If you start gaining success from trading Binary Options the temptation to switch to trading Forex will no doubt become great. Some traders will start with binaries as a way to get into Forex trading and become seduced by the lure of the increased recognition that comes with attaining success on Forex. Whatever the trigger that prompts a desire to move away from binary options, it is important to consider the bottom line; your profitability.
Achieving success on Forex is immeasurably harder for most people than making money with binary options. Therefore before making the switch consider what you may be giving up.
If you are already making good profits then there is little incentive to change. Switching to Forex for the sake of it offers no real advantages, particularly if you are already banking good returns each month. Ultimately the objective of a trader is to make money. If you are doing this already then don’t rock the boat.
Of course if you are looking for a new challenge then trading currencies on the foreign exchange markets could be right for you. However don’t assume that success with binary options will instantly make you into a good currency trader. While you may be lucky and possess the skills needed, it is more likely that you will face a long road ahead.
If you do decide to get into Forex, be prepared to spend more time educating yourself about the markets. Don’t expect success straight way either. Whereas binary options are quick to pick up, Forex can take a long time to get into. Who knows, you may not ever achieve success at all. One thing is for sure. If you can’t make any money trading binary options then your chances of making money from Forex will no doubt prove even harder.
If you are already a top binary options trader then stick to your craft. Be happy to have found a way to make money and don’t be tempted to change your trading style. After all, trading is about making money first and foremost, not entertainment and you do want to make money right?