Binary options trading and forex trading are the two most important financial markets in the world. Forex trading is a one of the largest financial markets. These two types of financial markets are quite different but often they are mistaken for each other. This is due to the fact that their profit earning potential depends on the ups and downs in the price movement of assets. However there are both similarities and differences between these two financial markets.
Binary contracts or options are agreements with have defined risks and fixed return. The binary options trader usually bets on an underlying assets price like stock, commodity or any type of currency. The bets are wagered upon the price movements of the underlying assets at a given date in future. If his prediction turns out to be true he stands to gain from the contract, if otherwise he gets nothing.
Forex trading involves the buying or selling of currencies with a view to make profits from the fluctuations in the exchange rates.
Both these types of trading market can be accessed through online medium. It allows the traders to do their business via the internet. This medium of trading is becoming quite popular these days. Both these markets allow traders to start with small amounts of investment. Another similarity is that the gains from these two types of trading are speculative in nature. The traders of both types of trading gain from the trade only if their guesses turn out to be right.
Talking about the differences between these two types of trading, the main difference is from the risk and reward perspective. In Binary options trading, there is no variability of risk or the profit earning potential. The traders get a fixed amount if his prediction turns out to be true. Where as in case of forex trading there is higher variability of risk and profits are unknown. Traders not only predict the direction of the currency rate but also they are required to predict the high and low of the asset price.
Binary options trading and forex trading have different timelines. The forex market is a 24 hours market with different close times. Binary options trade operates of specific timelines. Each option will have a start time and end time.
More detailed explanation of forex and CFD trading is available of the Top 10 binary demo website. It recommends the leading brokers in the market and also list out the pros and cons of each recommendation they make.