Forex Binary Options – The Simple Alternative to Forex Trading

If you have grown tired of losing sleep chasing the currency markets but losing money anyway as a retail Forex trader, there is a simple alternative to Forex trading – the Forex binary options or Forex binaries for short.

A typical Forex binary option contract will only cost you $20 but will give you a payout of $100 per contract. It is as simple as betting for (buying) or betting against (selling) a particular currency pair contract. If you bet for (bought) a particular currency pair contract and the price of which went up by the end of the week (if it is a weekly binary), then you win $100. However, if the price by the end of the week ended lower, then you lose the difference between your buying price and selling price. Similarly, if you bet against a currency pair contract and the price goes down by the end of the week you gain $100. If the price goes up then you gain nothing and lose only what you paid for the contract. No over loss what so ever. It is as simple as that. The best part is you rid yourself the hassle of analyzing every single fundamental that goes through the wire plus you sanitize yourself from the worries of losing more than you wanted to lose.

There are no margin calls or problems of being booted out of your position. You can only get timed out if you fail to close the contract by the end of the contract period which can be an hour, a day, a week or whatever.
You need not wrestle with the problem of slippage, widening spreads, and other sneaky problems scrupulous brokers can think of to rob you of your hard earned money. There are only two possible outcomes – either you end up ‘in the money’ which means the price ended in your favor; or, ‘nothing’ which means the price ended against your position. That is why it is also called an ‘all or nothing’ binary option. All you need to do is predict whether the price is going to end up or down by the end of the contract period. The risks and rewards are certain and highly manageable.

You may even use Forex binary options to hedge your position in the spot market. For example, if you are selling a currency pair in the spot market, then you should buy the binary option for the same currency pair. If you lose in the spot market then at least you will be able to recoup some of your losses with your winnings in the binary options. In short, you now have a mechanism to cushion the effects of an adverse price movement. You can even use it instead of a trading stop in times when you feel the adverse price movement is only temporary.

Forex binaries are relatively new and there are but a handful of brokers offering them. It is however a very promising trading instrument you should consider including in your trading arsenal.