The difference between Binary options and Forex.

In the last few years, binary options have become more and more popular. A lot of investors have become interested in binary options because they’re comparably safer and easier to understand than Forex Trading. But what are the exact differences between binary options and Forex Trading? This article gives you the low down. The first difference between binary options and Forex trading is in what they actually are. With binary options, you will just have to predict whether an asset will go up or down in price. For example, if you expect a price to go up within a certain time frame, you just put a call option on the asset. You then check back with the asset after the set time frame, and if it actually went up, you reel in a profit. Forex trading is different because you will actually have to predict the actual future price of the asset. You’ll only reel in the profit if the asset will go up or down to the price you predicted. Secondly, Forex trading uses margin. You use a lever to make your potential profit, whereas you do not use a margin with binary options. The upside of the absence of a margin is that there is not margin call. Thirdly, with binary options you actually know your profit upfront. This is also possible with Forex trading, because you can limit which profit you want with limit/stop orders. Finally, Forex trading closes on a certain profit or loss. This makes it very solid in terms of what you can expect regarding your investment. Binary options are different because it...

Basic Forex Principles Explained!

The Forex market is the largest market and is also the most liquid market. It has certain principles that you should follow. The thing is that getting started, or even pursuing a career in Forex trading isn’t easy. There are countless elements that you need to acquire knowledge of, because if you don’t, then the one thing that you will acquire is that of pure failure! All in all, to be able to trade successfully in the Forex market, you must consider the following aspects: Significance of Forex Trends Forex trends typically tend to provide investors and dealers with the most necessary aspect of trade, which is information. The high and lows of the market are precisely and accurately found from trend lines and thus, trends act as a present and future guide for investors. Trends help to calculate support and resistance levels that act as pivotal points for deciding purchase and sale times of currency. With the help of trend lines, investors can understand their entry and exit points in the Forex market. The most valuable information that the trend lines provide are the unwarned movements in the market depicted by their sharp turns in the pattern. Different Types of Forex Trend lines There are different forms of trend lines that are used in terms of carrying out a basic Forex market analysis. All the types always follow the basic trend guidelines that assume that a trend cannot be inferred from two points and the beginning and end of a trend line cannot be chosen upon ones convenience. A simple line drawn between the first data point and...

The Potential for Increased Profits in a Declining Market

The US economy is posed for what many expect to be a significant downturn and very possible return to recession due to political discord. While the fiscal cliff was averted in the end of 2012 there appears to be little political movement to avert $85 Billion in spending cuts posed to take place beginning March 1st. This reduction in government spending combined in a loss of consumer confidence is predicted to cause a recessionary period in the US economy that may echo globally. With an accompanying lowering of US stock prices followed by expected lower market indexes globally traditional stock profit strategies will be rare. Steady decline in stock prices combined with reduced earnings for dividends leave little room for short term positions being productive in stocks through conventional stock market investing. Short term positions in currency exchange and commodities markets will provide opportunities for profits. This will result from both typical currency fluctuations as well as more money being moved into these markets. In currency and commodity markets equally, profits can be made so long as fluctuation is taking place and irrelevant to the actual direction of that fluctuation. The perceived expectation of a general decline in the value of the USD against major currencies as spending cuts dampen the US economy should be tempered by expectations of similar slowing or recessionary growth in other economies echoing the US outlook. This combined with tacit approval of many financial markets of reduced spending may work to strengthen USD. Further slowing in the UK economy pushing the impetus for reduction of AAA rating could also push the value of the...

The Influence of Inflation on the Forex Market

Inflation rates of countries can influence the markets to a significant extent, which is why Forex traders should take into account inflation rates of countries when trading currencies, since rates of inflation can affect the values of currencies. There are many different fundamental indicators that currency traders should keep track of and inflation is one of them. A country’s inflation rate is the rate at which its good and services increase over a certain period of time. Rates of inflation of countries can greatly affect the prices of their currencies. High rates of inflation are generally seen to be undesirable and they tend to cause currencies to fall in value. A high rate of inflation is seen to be bad for not only a country and its economy, but also for its currency. Low rates of inflation are thought to be more desirable than high ones, though rates of inflation that maintain themselves fairly well and only change minimally are the most desirable. Lower inflation can be good, but very low inflation can signal a lack of aggregate demand in an economy for example, which is not good. Unstable and volatile inflation rates can cause the currencies of countries to change similarly in their prices, so you should be aware of this. This can cause Forex traders to lose out, but remember that you can also make lots of profits with unstable and volatile markets – more risk means more reward. It really depends on what currencies you are looking at, when you are studying inflation rates. Different countries will have different inflationary pressures. The governments of different countries...

The Sensitivity of the Forex Market in Relation to Fundamentals

Fundamental analysis is all about studying and keeping up-to-date with all of the latest news releases and key economic data. Forex traders will focus more on economic indicators, which are also known as fundamental indicators, when conducting fundamental analysis. There are many different economic indicators, though the main ones are: interest rates, gross domestic product (GDP), trade balances, employment and inflation. A common misconception made by currency traders when carrying out fundamental analysis, is that the fundamental indicators must change in order to move the Forex market. However, the market for currencies is so sensitive to fundamentals, that it can move without any of the economic indicators actually changing. Remember, the currency market is all about mass psychology and the minds of the traders and investors in it collectively. Trends are developing through longer-term buying and selling pressures. This means that whatever Forex traders think collectively, the FX market will move accordingly. Any hint of a change in one of the fundamental indicators, in one of the main ones especially, can cause a lot of movement in the Forex market purely because of the traders in it. Of course actual changes can cause much greater market movements and larger changes in the prices of currency pairs. Do bear in mind though, that no fundamental indicator has to change in order to spark some currency market movement. Remember, the markets move even before important news releases are released, because of anticipatory buying and selling. When carrying out your fundamental analysis, ensure that you are aware that the market for currencies can be very sensitive and try to stay up-to-date with...

Diversifying Your Sources of News in Forex Trading

Fundamental analysis is all about both political and economic news and announcements. So, the news if of course very important, because it’s exactly what you analyse when conducting fundamental analysis. This is why your sources of news are also very important, because one news source might tell you something different to another. There are many sources of news today and many of them are biased in one way or another. This is why in order to see past the biased information, you must diversify your sources of news so that you can make more accurate judgements to base your investment decisions on. If you rely on only one single source of news, you will more than likely get misled and lose out, as you will interpret news releases badly and ineffectively. There are many traders and investors in the Forex market, so in order to make the best investment decisions possible, you need to think like the rest of the market. In order to think like all of the other Forex traders in the market for currencies, you need to diversify your sources of news so that you can get the bigger picture and know what others are thinking. Most Forex traders will get their news online. The internet is an extremely convenient way of accessing the news on a regular basis. It is also completely free. There are other ways in which you can stay up-to-date with all of the latest news releases though. Another way in which you can get access to the news is by watching television, however many TV channels are biased so you must take...