Is Binary Options Trading Riskier Than Forex Trading?

It does not matter what type of trading you are discussing, there is always a certain amount of risk attached. At one point or another, you will find yourself losing money on specific trades.

Sometimes, the number of wins will outnumber the losses, leading to a profit. Nonetheless, you will still lose out on at least a small portion of money. Since this risk is inevitable, many traders find themselves comparing the different types of trading.

Therefore, the question remains, is binary options trading riskier than forex trading. Let’s take a closer look at this:

The Main Debate

When considering binary options trading risk, there is one point that is continuously brought up. This is that with this form of trading, there is a chance for you to lose all of your investment. If the trade expires with an out of the money position, you will have to forfeit all of your initial investment.

 

 

Only under certain circumstances will you be able to recoup a small part of your losses. With forex trading, however, the trade ends at your discretion. As such, it is possible to sell your currency pairs at a time when it is most suitable to you. Therefore, this is why binary options is considered to be such a risk among traders.

Other Factors to Consider

As you can imagine, however, it is not as cut and dry as that. This is not the only way to analyze and determine risk. When considering other aspects, you may find that forex trading carries just as much risk, if not more, as binary options trading.

One of the main points of contention with forex trading is that you can actually lose more than you initially invested in the trade. This is particularly due to leverage risks. With forex, leverage necessitates a small investment known as a margin.

This will allow you to access larger trades in foreign currencies. However, price fluctuations can cause this margin to get higher. If you are stuck in a really volatile market situation, you may find yourself losing even more than you initially invested.

With binary options trading, however, there is only a fixed amount that you can lose. You will only ever have to give up what you initially deposited, nothing more than that. Therefore, you are actually able to minimize the risk that you are taking on.

The Final Verdict

This is not a question that can be answered outright. It is largely dependent on the trader, the broker, and the current market situation. Although binary options trading is not without its hazards, these can easily be overcome.

Through various strategies and alternate routes offered by brokers, you will often be able to make back at least some money. As a result, there is not nearly as much danger as many people would presume.

When this is combined with the fact that binary options trading often as a higher return of investment than forex trading, you could say that the two are evenly matched.

In case you were trying to figure out whether binary options trading is riskier than forex trading, you now have your answer.

Page Updated: 14 February, 2017