Trade Forex with Binary Options

Many people have heard about forex trading and the risks associated with these trades mostly due to market volatility and activity. This has scared some people away from trading but did you know that you could trade forex binary options which are much less risky and often have even higher payouts? Binary option trades are less risky because the trader knows how much he stands to gain or lose at the beginning of every trade. The average payout rate for a binary options trade is 65-85% for an option ending in the money and 0% if it is out of the money.

In this article we will introduce you to forex binary options and explain how you can make the most of every trade.

Profitable Trades

When you trade a forex binary option the underlying asset will be a currency pair. Some common pairs are the USD/EUR, USD/JPY and GBP/EUR but a good broker will offer many more to choose from. These options come with a variety of expiry times ranging from an hour to a day to a week. Just like any other binary options trade, you will need to predict if the currency will be higher or lower than its strike price at the expiry time.

The Benefits of Trading Forex Binary Options

When you trade forex binary options, many brokers will allow you to trade variations so you can maximize your trades. If you correctly predict the direction the currency moves in then you can earn returns as high as 85%. Unlike the regular forex market, forex binary options brokers often offer a return of up to 15% even on bad trades. This is a huge advantage and can really save new traders from losing all of their capital.

Making the Most of Your Trade

Once you choose the currency pair you want to use as the underlying asset for your binary options trade, you’ll need to decide if the value will increase or decrease. After doing your research, choose a Call option if you believe the price will be higher than the strike price or a Put option if you believe the price will be lower. If your prediction is correct then it ended “in the money but if your prediction was incorrect then the option will end “out of the money. With a binary option trade, the value only needs to increase a fraction of a PIP for you to receive a payout rate of between 65-85% depending on your trade contract.

A Hedging Tool

Forex binary options can be used as an effective hedging tool instead of having to place a stop-loss when a news event affects the market. Using a trade as a hedging tool allows the trader to shift the risk from below to above the strike price. There is a good chance you can cover any losses when you purchase a long-term option that includes a stop-loss plus a Put option. Using this strategy can not only make up for a potential loss but can also turn into a winning trade.

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