Forex and Binary Option Difference – Nowadays, investment is rampant whether it is in stock investment or forex trading which is indeed being talked about in various walks of life.
But now there is another name that is quite unfamiliar to the general public, namely binary options. Both are indeed equally related to forex trading (foreign exchange) but of course there are differences between the two instruments.
Although different, forex and binary options do offer high profits, but still have a fairly high risk as well.
If we look deeper, there are quite striking differences between the two, many people also ask which is better, forex or binary options?
To answer this, let’s discuss both to compare the differences between forex and binary options and which is better in the article below.
Understanding Forex and Binary Options
Before we discuss what are the differences between forex and binary options, it would be better if we first get to know the two investment instruments, as for an explanation of the understanding of both is as follows:
What is Forex?
Forex stands for foreign exchange which means foreign exchange, where the exchange is a foreign currency that is traded to get the difference as a profit.
So there is a term in forex that describes the activity “sell when it’s expensive, buy when it’s cheap” the term really describes this one activity, because the difference between the currencies you trade is the profit you get.
For example, a trader buys the United States dollar (USD) against the rupiah (IDR) at 10,000 rupiah and sells it back at 15,000 rupiah, you will get a profit of 5,000 rupiah in forex.
What is Binary Option?
Binary option is a trading system that covers stock assets to forex where you are required to choose between two options between yes or no related to the estimated price of the asset within a period of time.
If you have chosen between yes or no options, you will be given the option to enter the amount of investment capital. Then, if the price movement of an asset is in accordance with what you choose, then the trader will get a profit of up to 90% of the capital entered.
Conversely, if your option choice does not match the expected price movement of an asset, then you will lose the capital you entered earlier.
Difference between Forex and Binary Option
From the definition alone we already know the basic differences between the two that have been explained above. However, there are several other forex and binary option differences, including the following:
1. Risk
In terms of risk, both of course have accompanying risks whether it’s forex trading or binary options. But there are differences in terms of risk, where in forex you cannot be sure how much value you can get in losses or profits.
Whereas in binary options, you can determine the nominal amount that you can enter before you guess “yes” or “no”.
So that in binary you have a measurable risk because you can control the funds that you will input.
2. How to Make a Profit
As explained earlier, forex trading benefits from the difference in currencies that you sell or buy from currency pairs.
Whereas in binary options you benefit from the choice of “yes” or “no” based on whether or not the movement in the price value within a certain period.
3. Difficulty Level
In terms of difficulty, it can be said that binary options have an easier level of difficulty when compared to forex trading.
In binary options you only need to do a few simple steps before doing the trading process, after that you only need to choose between yes or no to make a trade.
Different in forex trading, you are required to have market analysis skills whether it is technical or fundamental or even both to be able to analyze the market precisely and accurately.
In addition, you must also master risk management and various other parameters to minimize losses and maximize profits.
4. Legality in Indonesia
Another difference between forex and binary options is in terms of legality in Indonesia. In Indonesia itself, binary options are illegal activities regulated in law number 10 of 2011 article 1 number 8 concerning Commodity Futures Trading.
While forex trading is an activity that can be done in Indonesia and regulated in law number 10 of 2011 concerning Commodity Futures Trading as a legal activity and can be done.
Notes: Therefore it is very rare for legal trading applications and has a certificate from BAPPEBTI that offers binary option services in their applications.
5. Duration of Trading
The last difference between forex and binary options is in terms of the duration or time required, where binary options only require a short time that only takes 5 to 15 minutes in one decision.
While in forex trading, traders have the freedom to trade depending on the playing style of a trader.
Better Forex or Binary Option?
In forex you are required to understand various concepts and mastery of in-depth analysis on technical and fundamental analysis to analyze the market and price movements.
Whereas in binary options you only need to guess the price direction movement where you only have to choose “yes” or “no” without being required to master technical or fundamental analysis.
Moreover, forex is an activity that is legal to do and Indonesia and binary option is an illegal activity to do in our beloved Indonesian country.
In fact, not a few also mention that binary options are more inclined to activities that resemble gambling activities compared to investment.
Close
That’s the explanation of the differences between forex and binary options and which one is better that has been answered and explained in full above. Of course, after you read the article above you can conclude which one is better for you.