Summary of last articles

In this article, summary of the last 5 articles wrote about Trading Forex Using Margins or Binary Options will be done.

Preface

Trading Forex using margins have a lot of advantages and limitations, the same, Trading Forex using binary options, but for traders like us existence of multiple trading options is not luxury, it should be beneficial for us, we should use margins when its benefits exceeded the benefits of binary options, also, we should use binary options when its benefits exceeded the benefits of trading using margins.

Advantages of Trading Forex using margins:
  • Ultimate profits, you can make profits without any limitations.
  • Your sell or buy instrument may continue as long as you can.
  • You can close your buy or sell transaction at any time.
Disadvantages of Trading Forex using margins:
  • Using high margins may cause quick and big losses for you, sometimes, change of margins due to weekends or due to financial crisis may make your trading complicated and may cause unexpected losses for you.
  • Sometimes, you may not be able to make a trade at the time and price you need, sometimes, spread may widen due to market conditions and liquidity.
  • Ultimate losses, even you put stop loss before making a trade.
Advantages of Trading Forex using binary options:
  • Fixed losses, you know the money you will loss if the price went against your transaction.
  • Fixed profits, you will not care where to put profit target or you will not change it with or without a reason.
  • Fixed time, you choose the time of transaction.
Disadvantages of Trading Forex using binary options:
  • You will not be able to close the transaction in the time you need.
  • You cannot minimize your loss.
  • You cannot increase your profits.
How to choose the right decision :

After describing both advantages and disadvantages for Trading Forex using margins or binary options, our minds should ask these important questions:
  • Should I trade Forex using margins solely ?
  • Should I traded binary options solely ?
But intelligent traders who want to benefit from anything new to improve trading, reduce risk and control physiology should ask the most important question which it:
  • Where to trade Forex using margins or binary options ? what is the time suitable for using them ?.
  • or,which is better before strong news ?.
Situation 1 : trading strong news:

Trading using margins id often risky trade because from strong fall or rise, you may not be able to close the trade, also physiology often stands against you during news, as the direction may be your favor but your fear may make you close the trade early or to close it in not appropriate time when you lose the gained profits.

so during strong data , using binary option is more suitable, as you make plan for your trade before really entering the market, you know your expected profit and your expected loss (good risk management plan) as you will not be able to change your stop loss, data will not wipe your account, your physiology will not be able to break your trading plan.

Situation 2 Different interest rate decisions and its impact:

After FED or any central bank decision, pairs against US dollar fall or rise sharply at the first minute but then may reverse sharply and close above opening time of decision, often FED meeting statement need some time to be understood by investors, so often we see choppy movement after such release before making dominant direction.in this situations, using binary options is more logical as you choose fixed profits and losses and protect your account from any major move.

Situation 3 Direct central banks interventions:

Talking about Central Banks intervention always make us remember Swiss intervention last January, especially at 15/01/2015 when Central Swiss bank removed the 1.2000 cap of EUR/CHF, such data made one of the strongest historical movement, as example USD/CHF fell sharply towards 0.7500 from 1.0200, which means 2700 pips down, it means that the pair lost more than 25% of its values in one day, it was horrible day not only for traders, investors but also for banks, brokers and market makers.
also, Japanese central bank intervened more than once in lat 2014 till now by announcing more liquidity to weaken JPY in order to boost inflation to reach 2% as target for bank.
Margin trading is full of risk and the thing which should save your account which is stop loss is not working in all times, it is true that you can make more profits but trading margins but not forget that you can wipe your account also by using margins, for me, during strong news binary options can save your account more than trading margins.

Situation 4: Different Forex trading hours:

It is noticed that there is no volatility and low range trading at the first hours of Sydney time, then high volatility and strong movement at overlap time of Tokyo and Sydney and this specified for USD/JPY as JPY often make strong move during Japanese time, then, Energy of volatility increased with London opening and increase more much at the overlap time of New York and London, finally, Forex calmed again at the last hours of New York time before opening of Sydney and Tokyo, this the general rule of time.
Higher volatility increase risk and also increase profits for trading using margins, also it is the same using binary options as more volatility mean clear direction, then your deal will be in money or out money but, otherwise, lower volatility decrease risk but is killer for trading using binary options as it increases the chances to make a deal finish at the money, which means does not cover spread of call or put option.

Conclusion:

Forex market is full risky and as traders we should benefit from any financial tool to ease risk environment surrounding Forex market, someone may see binary options as gambling, years ago, someone also saw Forex using margins as gambling, different financial tools should be used separated or combined to apply strict risk management in order to maximize profits and minimize losses which is the goal of every trader or investor.
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