This month we take a look at the global currency markets and how you can profit from them – starting with a small amount of capital and avoiding one of the biggest mistakes new FX traders make.
Foreign Exchange – or the FX market, as it is commonly known – is one of the biggest marketplaces in the world. Here, no trading floor exists; banks, brokers, companies, and governments simply trade between themselves through high-tech computer networks, such as those offered by Reuters and Bloomberg.
It’s hard to comprehend the colossal amount of money traded here on a daily basis. The total figure is around $5.3 trillion USD per day, as reported in a 2013 survey by the Bank for International Settlements (BIS) in Basel, Switzerland. Approximately 10% is fuelled by companies trading overseas, which need to convert currencies for routine commerce, such as import/export businesses; the rest is pure speculation and investment.
The currency market offers nearly 24 hours of seamless trading – starting on Sunday at 9p.m. GMT, which is early morning in Asia, and carrying on all the way until Friday evening in New York, or 10 p.m. GMT. Regardless of which country you are in, you can trade in the FX market, and prices are always quoted by Binary.com
Thanks to binary options it is now possible to trade the FX market even with a small starting account and with strictly limited risk. Unlike financial spread betting or other margined trading products the outcomes are known ahead of time. You can decide your exact risk, for example £50, and you cannot lose a penny more, your profit is also known from the outset.
With Binary.com you can profit from up, down and even sideways movements in currencies all from one easy to use platform.
The biggest mistake most FX traders make and how to avoid it
I have now been trading for 31 years. Previously, when working for banks, I had access to thousands of accounts so I could see what winning and losing traders did. The factor that financially kills most FX traders is the volatility and over using leverage. In many cases they have the right position however they have over margined and are using a small stop so they need to be correct right away and a contra move. Market noise causes them to be closed out of their position. Had they been able to carry on with the trade, it would have been profitable.
If you’re using a binary option in most cases you do not need to worry about the volatility as along at the end point the trade meets the correct parameters.
An example of an FX trade with Binary.com
You believe GBP/USD will go lower over the next 7 days. The market price is 1.2700. You place a lower trade with Binary.com expiring in 7 days time at 1.2700. The next few days the opposite happens and the price goes up to 1.2880. For many with margined FX products this would cause them to be stopped out and the trade would close out with a loss. With a binary option it has no stop so it’s still open. A few days after the GBP/USD does fall to 1.2690 and the trade wins.
As you can see this is a powerful also unlike spread betting or margined FX trading where you can only profit from up or down moves binary options allow you to profit from a sideways move also known as a trading range. This gives you a third way to profit.
The final word
This is just a brief overview, but I am sure you can see the potential of using Binary.com to trade FX.
I have produced a complementary guide to trading FX with Binary.com which you can download here and is packed with information and tips. You can also obtain a virtual account and try trades risk free.
Vince Stanzione is a self-made Multi-Millionaire financial trader and entrepreneur with over 30 years’ experience. Find out more at www.finbets.com