Forex binary option trading is a very specific type of currency trade; it differs from traditional Forex because trades take place over a pre-defined period, which could be as little as 10 minutes or one hour. This form of currency trading has become very popular in recent years because it offers high returns with quick turn-around times, and the exposure to risk is easier to manage when compared to traditional FX trading.
How to trade Forex Binary Options:
The process for trading Forex options is very straightforward, you simply predict if a currency will finish higher or lower than its counterpart. E.G, you might speculate that the US dollar will finish higher than the British pound, or vice versa. If you think that a given currency will finish higher you place what is known as a “Call Option” if you think it will finish lower you place a “Put option”, if your prediction is correct you make a profit.
The beauty of trading currencies through options is that you know what your profit will be before you commence trading, you also know what you stand to lose should your prediction be incorrect – and you only every lose what you invested nothing more.
US dollar and British pound options:
If you are interested in trading and investing in Forex options then the best place to start is probably with the US dollar and British pound.
Often referred to as “cable” the exchange rate between to US Dollar and the British Pound Sterling is one of the fundamental cornerstones of the Forex market and there are huge sums of money invested and traded on this particular currency pair every day. The unbridled popularity of this particular currency pair is hardly surprising, given that the UK and the US are two of the biggest and most powerful economies in the world today.
Trade Dollar / Pound options successfully:
As we all know, Great Britain and the US have a very special and delicate relationship. The same can be also said for the exchange rate between their currencies. The more experienced traders out there will know how vital it is to stay tuned to news and events within the two countries because the key to trading these currency pairs successfully or any other currency pair for that matter is knowledge.
If you are trading US dollars / British pounds, then you should actively seek out news on employment reports, financial calendars, manufacturing reports, political events, and even weather events as these are all the factors that will influence the strength of one currency against the other.
How to get started:
There are many online platforms and brokers that will allow you trade Forex options, most will require a deposit before you can start trading and the amount of the deposit will vary depending on the broker or platform you choose. Once you are signed-up you will be provided with all the tools are resources that are need to trade, however, if you want to be successful in your trading and see are return on your investment you have to go out and find all the relevant news information that pertains to the currencies you are trading.