The Profitability Factor Binary Options vs Forex Trading

Best Binary Options Brokers 2020:
  • Binarium
    Binarium

    Top Binary Options Broker 2020!
    Best Choice For Beginners and Middle-Leveled Traders!
    Free Demo Account!
    Free Trading Education!
    Big Sign-Up Bonus!

  • Binomo
    Binomo

    Trustful Broker. Recommended Only For Experienced Traders!

The Profitability Factor

Simply put, the profitability factor of a trade is the ratio of how much money can be made versus how much money is lost in that trade. Even though this concept is used to basically describe trading systems, we will adapt this a little to compare the profit factor in the binary options market versus other conventional markets such as the forex market.

When deciding on what financial market to invest in, the profitability factor is definitely one of the key points that must be taken into consideration. After all, the whole essence of investing in the financial markets is to make money, and the more money that can be made from an investment, the better. For instance, if you could put $1200 in one market and make $300, but if there is another market that can take $800 to make $300, the latter would obviously be more profitable because an increase in the invested amount would deliver more returns assuming the same level of profitability is achieved.

This is where the appeal of the binary options market lies. Using some of the trade types such as the Call/Put options with short expiry times that start at 60 seconds or 15 minutes, it is possible to achieve a level of compounded returns that gives this market a higher probability factor than the other financial markets. Let us take the forex market and the binary options market as markets that can be compared on the basis of the profitability factor.

Theoretically, can someone with $500 in the forex market make $5,000? In theory, he can do this if he is able to make 250 pips from 2 trades, staking all his money in the trades. But in practice, we know that this is not possible. There are leverage and margin requirements to consider, and staking all your money in one or two trades in order to hit it big is not going to work in the forex market. Generally, it is accepted that traders must not risk more than at most 5% of their accounts in the market at any one time, so a trader with $500 in the forex market is going to need at least 50 to 100 profitable trades to make $5,000 out of his money. This is surely going to take quite some time to achieve, as the profits in forex are purely a function of how many pips the trader can achieve in a trade. If the trader makes only one pip in his favour, all he goes home with is the financial equivalent of one pip.

Now let us examine the case of a trader with $500, seeking to make $5,000 in the binary options market. One key point to consider is that profitability in the binary options market is not a function of how many pips the asset has moved in the trader’s favour. Unlike in the forex market where a pip in a mini-lot trade is equivalent to $1, a pip in the binary options market in the trader’s favour is equivalent to the entire payout for that trade. Consider this. A trader looking for a quick scalp, stakes $100 in a trade in the forex market, and makes five pips profit. He goes home with $105 (profit + capital). Another trader stakes $100 in the binary options market for a trade with a payout of 80%. The asset ends the trade with one pip in his favour, and he walks away with a payout of $180 (profit + capital), $75 more than the forex trader. By the time 10 of such trades have been taken on an intraday basis, the forex scalper goes home with just $25 profit while the binary options trader would have gone home with $800 profit. This is a profitability factor of X32 in favour of the binary options trader for every day both traders are in the market, assuming profit-making frequency remains constant. With such astounding figures, we really wonder why retail traders are flocking to the forex market in droves when they really ought to be trading the binary options market.

Another point we can use to illustrate the profitability factor in the binary options market is the fact that a trade like the Call/Put trade can be concluded in as quick as 15 minutes. Unless you are a master scalper, it is hard to make any real money in forex in just 15 minutes, unless you are probably trading the news. Trading the news is not a piece of cake and many more will lose money than make money on it, so a forex trader cannot really count on that as a source of making money in 15 minutes in the market. But for binary options traders, this is how the market is structured. You can actually trade 15-minute trades several times a day on several different assets for great results.

It’s clear, therefore, that the profitability factor of the binary options market outstrips that of the forex market by a mile. Not only is this the case, but a trader with little money in the forex market will find it really hard to get going because the same effort required to trade a $500 account is the same required to trade a $10,000 account. In contrast, a binary options trader can take the little money that he has and make it go a long way.

Binary options traders must be adequately prepared to wring out maximum profitability from the binary options market by setting themselves in position to receive proper training and by using an assemblage of tools that will make their job worthwhile, check out our binary options blogs by professional traders to learn what to do.

Cryptocurrency Trading and Binary Options

Cryptocurrencies have rapidly crashed, not only in the course of a person’s life but in the sphere of the financial market and investment activities. In spite of the initial skepticism regarding cryptocurrencies and Blockchain, these innovative currencies have become one of the most attractive investment opportunities to quickly turn a profit. However, many private investors don’t allow themselves to invest in this resource, first and foremost, due to the high cost of cryptocurrency. Due to this, we recommend that you consider specific trading alternatives, which enable you to earn a good profit off investments in cryptocurrencies. In particular, we will outline the simple methods for dealing with cryptocurrency rates and acquainted you, in detail, with the principle for trading cryptocurrency binary options.

How can you profit off of cryptocurrencies?

Before you begin trading on the binary market, we suggest investigating the types of approaches accessible to the average private investor speculating on cryptocurrency market? This not only enables you to select the most suitable and attractive trading method for investing, but it also allows you to gather information on the profitability of different methods for investment in the cryptocurrency market. Let’s begin with the most legal, regulated services:

At the end of 2020, American financial regulars decided to release futures and options contracts on the main trading platforms, the CME and the CBOE. However, these financial market speculatory tools are accessible only to a limited number of large system investors. Private cryptocurrency traders are enthusiastic about this fact, which is evidenced by the price of the leading cryptocurrencies. For working with this selection of trading tools, you need access to a large capital and citizenship in either an EU member state or the USA. Private investors rarely consider these resources as primary tools of investment for this very reason.

Best Binary Options Brokers 2020:
  • Binarium
    Binarium

    Top Binary Options Broker 2020!
    Best Choice For Beginners and Middle-Leveled Traders!
    Free Demo Account!
    Free Trading Education!
    Big Sign-Up Bonus!

  • Binomo
    Binomo

    Trustful Broker. Recommended Only For Experienced Traders!

Digital wallets and exchanges are a more accessible option for investing in cryptocurrencies for private investors. Here, everything runs on the basic principle of currency trading, buy low, sell high. The investor’s profit is the difference between the asset price when bought versus the price when sold. Although the relatively simple function of the approach’s algorithm to trading, today, not all investors can take advantage of these resources. The issue is, that the activity of cryptocurrency traders lead to a dramatic increase in rate growth of electronic currencies. For example, Bitcoin hit a high of $20,000 per coin in 2020. Only a limited number of traders can afford the means necessary to invest in a cryptocurrency asset. The matter only becomes more disenchanting for the average online trader, after taking a closer look at the risks involved.

In addition to this, trades placed on the exchanges are accompanied with extremely high associated costs, such as commissions placing trades, exchange spreads, and withdrawal charges. In sum, this figure can reach up to 12% of the total investment capital. That kind of loss is a hard one to take, no?

This classic tool enables trading cryptocurrency assets online, which is undoubtedly attractive to online investors. Nonetheless, even though conducting operations on Forex is simple and relatively accessible, this approach has its own drawbacks for investors. The problem is, that here a longer holding period is necessary to earn a profit. Contracts, based on profitability figures, are dependent on the level of asset price change. In addition to that, on Forex more complicated approaching for market analysis are necessary.

As you see, today, the basic selection available of cryptocurrency investment tools is reasonably wide. We, in turn, would like to go into more detail regarding the most effective and profitable tool, binary options, which enable you to profit off a low-risk, high process liquidity, and financially accessible cryptocurrency trading regime.

How do you trade cryptocurrency binary options?

Let’s begin imminently with an explanation of binary options and how to trade them on the market, which enables you to grasp the basic essence of the trading process when using this tool.

So, binary options are a form of exchange contract, in which classical regimes for earning profit on the financial market don’t apply. With these contracts, there is no direct purchase of an asset, instead, there is a time-limited rate position on the direction of price movement held on an asset. To put it simply, the market participant doesn’t close a purchase or sale of the base asset, but uses its price rate for future directional price fluctuation:

The main task is for the trader to close the trade during the right specific market movement, in the correct binary options movement time frame.

It is worth noting this financial tool’s high level of profitability, 85% is the average (the data on tool’s liquidity was taken from the broker Binomo), which can reach as high as 90%.

If it is the right forecast for the rate, the market participant can make up to 90% returns, however, if the market is forecasted in the wrong movement direction, they can lose 100% of the total rate. With that kind of trading speed, the trader themselves regulates based on the selected duration of the binary option (expiration), which can fluctuate in a range of 60 seconds to 24 hours.

How do you trade effectively with binary options?

With this base knowledge on trading with binary options unraveled, let’s move on to the practical application. So, what can you understand from the binary options trading algorithm in action is, that this tool has a specific mathematical negative expectation profit indicator. The difference between profit and loss when trading with binary options is an average of 15% for cryptocurrency assets, with this specific indicator it can be upwards of 88%!! Therefore, excess losing positions can lead to a loss in investment. In order to change this situation and indicator statistic, it’s vital to adopt a trading strategy for forecasting. These systems have the ability to compute statistics, which produce profitable positions up to 90% of the time. It is worth noting that no strategy produces results 100% of the time!

So, trading strategies for the binary options market have varied formats and approaches. The majority of them are structured based on economic and legal regulations on market activity. However, this strategy format is not suited for inexperienced traders, because highly specialized knowledge is necessary for them, as well as for trading cryptocurrencies. The reason for this is quite simple, electronic currencies are a decentralized tool without a central issuing body. Therefore, the resource price, in this case, doesn’t subscribe to basic economic laws, instead, it’s built on simple indicators, made up of the total means invested in the asset, the popularity among traders. To put it simply, cryptocurrencies are only worth what investors are prepared to pay at any given moment!

The solution for investors out of this problem is indicator strategies, which analyze the market and produce forecasts applicable to automatic market indicator recognition programs. These systems evaluate current cryptocurrency technical indicators and provide vital trading information for opening positions on the market.

The list of indicators, available on the market, includes several hundred, therefore using them isn’t difficult. Frequently, professional traders use simple mono indicator strategies or combination systems with a short list of analysis tools. For example, the oscillator lines of the simple MACD indicate the trend movement direction growth, enabling you to achieve very accurate cryptocurrency trading indicators:

The trading statistics for this simple strategy have indicators that produce successful results 85-90% of the time. Therefore, even a small loss won’t influence the market participant’s final trading result.

The classic resistance/support trading strategy is a great example for trading cryptocurrencies. This regime more accurately reflects the mood of investors on the market for electronic currencies, that enables you to open short-term rate contracts on more attractive terms. In this case, we recommend using a trading regime in the price fluctuation channel. For that, it is enough to set up the trend levels, which become the borders of the cryptocurrency price fluctuation channel. The rate formation signals, in this case, form the moment price rebounds from the border of the channel to the opposite level:

Taking into account the peculiarities of cryptocurrency asset exchange rate formation, that approach to market analysis and forecast generation is more effective for earning a minimum and stable profit.

You can become acquainted with a wider selection of effective trading systems on the our site at the EDUCATION section

Of course, trading systems can produce results, however, without specific knowledge of the trading process, an understanding of finance, and the electronic currency market, it will be reasonably difficult to grasp the intricacies of binary trading and achieve successful, and more importantly stable, results. For that reason, it’s vital to find time to expand both your practical and theoretical skills. The educational process can pass quickly with your broker’s professional educational materials, which are available with open access.

Once you’ve gained a complete understanding of all technical and theoretical principles for working with binary options, you can maximize the profitability, result stability, and effective trading operations of the main trading market indicators.

While analyzing binary trends, it is worth noting, that trading with this tool not only differs thanks to its simple technical process but also its accessibility to private traders. To use this tool, you need a minimal $10 capital, and the cost per contract is only $1. Despite the small size of the investment required, involved in the process, it’s worth considering the fairly strong profit indicators, all thanks to the profitability of short-term contracts, up to 90%, and also the regulated market position expiration period. Therefore, the dynamic capital growth is now a bit higher in comparison with classic speculative methods for the financial market.

As you see, today, binary options are the most accessible and easy method for making a profit on the market of cryptocurrencies. Here, investors receive attractive financial terms for trading, an accurate indicator of the procedural effectiveness, a very simple regime for earning profit, and also a relatively low capital risk indicator. In situations when the market is overbought, binary trading is one of the main approaches to working with cryptocurrencies as an investing resource.

“General Risk Warning: Binary options trading carry a high level of risk and can result in the loss of all your funds.”

Best Binary Options Brokers 2020:
  • Binarium
    Binarium

    Top Binary Options Broker 2020!
    Best Choice For Beginners and Middle-Leveled Traders!
    Free Demo Account!
    Free Trading Education!
    Big Sign-Up Bonus!

  • Binomo
    Binomo

    Trustful Broker. Recommended Only For Experienced Traders!

Like this post? Please share to your friends:
Binary Options: How To Start Trading
Leave a Reply

;-) :| :x :twisted: :smile: :shock: :sad: :roll: :razz: :oops: :o :mrgreen: :lol: :idea: :grin: :evil: :cry: :cool: :arrow: :???: :?: :!: