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A comparison of forex trading vs trading options - global-view.com
Forget savings, loans and new accounts, the biggest money maker in banking is forex. In the past, you needed to be part of an exclusive club and come from wealth to get involved. Fast forward to now, and there are several platforms which enable you to trade forex. Therefore, the only things separating traders from wealth is skill and perseverance- this is rather exciting.
Digital options has also burst onto the scene because it is easier to get started and simpler to understand. In digital options you decide whether a stock, currency or commodity will rise or fall in value within a given time. If you are right you make a profit; however, if you are wrong, all of your initial investment is lost.
Most digital options platforms have minimum deposits as low as $10. Some will even offer you free credit if you deposit a certain amount. Therefore, it is inexpensive to get started. If you are highly skilled and keep reinvesting profits, you can quickly hit the 5 and 6 figure mark. The low cost, high potential returns aspect of digital options has made it incredibly popular.
On the other hand, forex has a similar trading mechanism; however, it has safety built in. For instance, if you buy sterling and it drops in value, you won’t lose all the initial investment. You will lose money in direct proportion to how much the currency you bought has fallen in value. However, in digital options, you either win or lose. Moreover, forex trading enables you to automate trading partially. You can automatically buy a currency when it rises past a value you set. You can also automatically sell currency if it drops past a fixed value. This is called a stop loss.
With big risks, come huge rewards. You can make an 80% return on each digital options trade, and are free to trade as often as you like. Therefore, elite traders can make more in an hour than most people make in a month.
Digital options has its’ share of critics. In fact, it is banned in the EU and heavily regulated in the United States. This is because it has become the Mecca for fraudsters. However, there are some legitimate platforms out there, here are some things to look out for:
1) No one has a “guaranteed” way to make returns trading digital options. There are a range of useful techniques but you will need to create your own strategy. Anyone who tells you that they can make you an options millionaire is a liar.
2) Trade what you are willing to lose. Approximately 80& of people who trade digital options make losses. Therefore, it isn’t wise to trade money you need for rent, bills etc. Despite your best efforts, there is a high chance that you will lose it all. When I started to trade digital options, I used practice accounts for months. This enabled me to take the time to create a strategy. The patience paid off because my accuracy rate is currently 80%.
3) Riches won’t happen overnight. If you aren’t willing to work every day and have a growth mindset, trading isn’t for you.
What causes currencies and commodities to rise or fall in value?
The global financial system is complex. Every economy, currency and industry is linked together like a spider’s web. For instance, a rise in oil prices will have a knock on effect on industries which need oil. Oil is used by virtually every industry. Energy powers modern day civilisation. This is why business news reporters place such an emphasis on oil prices.
Top forex and digital options traders study the factors affecting their chosen currency pairs. Instead of spreading themselves thin they focus. For instance, a good digital options trader might only focus on 3 currency pairs. This enables them to make data-backed decisions.
Forex and digital options have a lot in common. Unlike other forms of investing, you don’t need to manage inventory, employees or customer complaints. You are interacting with money directly. Excellent traders seem to make money from nothing. They can make in a day what most people make in a year slaving away. Trading is such a powerful skill to have.
Mentality
You can spend months sharpening your skills and improving your knowledge. However, how do you react when things don’t go the way you predicted? The financial world can be unpredictable. Therefore, you might hit a point when trades aren’t going your way. How would you deal with that situation?
Most people would chase their losses by investing more money. However, knowing when to trade is just as important as knowing how to. A good strategy is to avoid volatility and trade when the prices are more stable.
In difficult times most traders throw strategy out of the window. As a result, they make rash decisions and big losses.
Tennis players are thought to play each point and forget about whether they won or lost the previous one. Top traders do precisely the same thing. They trade based on the data in front of them. With distractions such as social media, this level of ‘tunnel vision’ isn’t easy to achieve.
To conclude, I hope you found this post insightful. Digital options is one of the riskiest forms of trading. However, it also comes with high rewards. Forex is significantly ‘safer’, but you sacrifice return on investment. It would be best if you chose based on the level of risk you prefer.
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