An increasing number of people are beginning to feel attracted towards the idea of trading in certain financial markets. The internet has made trading accessible to anyone who has a laptop or PC and an internet connection. If you find the idea of trading exciting or as a way of carving out financial independence, then all you need to do to start is find yourself a reputable broker.
The two most popular markers for new traders are binary options and forex.
An ‘option’ is a contract that you make with a broker regarding a commodity. You do not actually purchase any of the commodity itself – the broker with pay you based on the contract. A ‘binary option’ is so called as there can only be two results – you are right, or you are wrong. The contract will basically state ‘I am investing a sum with a broker that will be doubled as my return (less the broker’s fee) if the price of a commodity rises/falls within an agreed timeframe’.
An example of this – you invest $100 in the price of USD rising against GBP within four hours. If you are right your investment is doubled minus the fee (typically ten percent). If you are wrong, your investment is lost.
Forex (or foreign exchanges) is where you convert from one currency to another, in the hope that the price of the currency will rise in comparison to the one you have converted from, or to other currencies.
Forex trading is more complex than binary options trading as you are making the purchase of the currency using your own money. You will also need to specify how much of the currency you are willing to buy, what price (whether the price of the currency you bought rises or falls) you will sell at and when you will sell. With binary options you can only double your investment, but with forex trading you can make big gains, but also big losses. Financial events such as a sudden currency crash can occur, impacting your trading account balance. The concept of option exists in forex trading as well. Opposed to binary options industry, forex traders can use regular (a.k.a. “vanilla”) options that have the same profit potential as spot forex trading, but the risk is limited to the premium associated with the contract. Check out this fx options trading platform from Avatrade.
Binary options and forex signals
Knowing what best to do when you first become a trader is virtually impossible unless you have undertaken a substantial amount of investigation into how financial markets work, and how successful traders make their millions. Four out of every five new traders will quit within their first month of trading as they find the trading market too daunting, or complicated.
For those prepared to stick at it, help is at hand in the form of two trading technologies: binary options and forex signals.
A signal, in this regard, is an indicator sent by an experienced trader or a computer algorithm that suggests you ought to ‘get in on’ a particular trade. Think of a signal provider as your own personal trading advisor.
Binary options signals are usually sent via SMS. This is because a trader will need to act upon a binary options trade quickly, before market conditions change. Binary options are dictated by tight time frames. Such signals are usually created via complex, market-watching algorithms.
Forex signals are typically sent via email. The timeframe is not so important, and there’s a lot more to consider before placing a trade. If you did come into a forex trade too late, you may only lose a little profit. Such signals are usually created by experienced traders rather than software.
You can follows signals manually, or by using what is known as an ‘Expert Assistant’, or EA. An EA is a piece of software that connects the signals to your broker account, meaning that the signals are conducted automatically.
There are paid signal providers and free signal providers. Of the two, paid services are frequently the more beneficial. Free signals are generally created via software.
A typical signals provider is Snipe TheTrade, reviewed here on Invezz. The firm offers both forex and binary options signals at a cost of $99 a month. There is a five day free trial period, so you can get a taste of the signals before you hand over any payments. Snipe The Trade’s signals have a confirmed win rate of over seventy percent, and their trading list is available for you to evaluate.
If you are new to trading, then signals are an excellent way to become accustomed to the mostly complex world of online trading in financial markets. You’ll gain experience and valuable insight, plus – hopefully – a significantly swollen trading account.