Forex binary options are slowly but surely starting to gain in popularity amongst traditional forex traders. Why you ask?
Because forex binary options present several advantages to traders that simply can not be duplicated in traditional forex trading. Let’s take a look:
Expiration Benefits of Forex Binary Options
Forex binary options typically expire every hour. While this may not seem like a big advantage to some, a disciplined trader can truly appreciate this benefit.
Instead of placing stop-loss orders and/or waiting for the position to reach a certain level before exiting, forex binary options either incur a gain or loss every hour.
No need to worry about 2 hour or daily performance, one hour gets you in and out.
Risk Management Benefits of Forex Binary Options
The moment you place a forex binary options trade you immediately know the maximum potential gain and maximum potential loss of the trade.
Even if you combine a few forex binary options trades together, it is very easy to determine how much capital you are placing at risk and the potential reward for this risk.
This is a huge advantage over traditional forex trading which doesn’t inherently have a risk management component and requires careful monitoring in order to efficiently and effectively manage risk.
Actually traditional forex trading in some ways is exactly the opposite of forex binary options trading from a risk management perspective, in the sense that extreme leverage increases the risk of a position blowing up your whole portfolio!
Binary Options + Forex Trading = Win-Win Scenario
Smart forex traders recognize the benefits including forex binary options in their portfolio can have on overall performance. So what you are seeing is a growing number of traders using forex binary options to hedge their positions.
Instead of panicking when a forex position starts to move against you, consider placing an appropriately sized forex binary options trade in the new direction of the underlying.
Because of the large return characteristics inherent in binary options in many instances an appropriately hedged forex position can yield a profit no matter what direction the underlying moves once the forex binary options position is established.
This is the new paradigm shift in forex trading. You are exposing yourself to too much risk and possibly even limiting your profit potential if you are not including forex binary options in your trading activities.
So find a solid binary options trading platform and start implementing a disciplined hedging strategy today that can save you money.