Binary options is the trading method growing in popularity, due to the simplicity of the concept and many opportunities it provides. While other markets allow you to trade only one specific group of assets, binary options offer you four large groups: stocks, commodities, indices and currency pairs. In this article we will focus on the last group and explain some of the benefits of trading currencies as a binary trader.
The essentials of currency trading
If you are new to this type of trading and to this group of assets, the first thing to know is that currencies are always traded in pairs. This is simply because you cannot measure the value of a currency in terms of the same currency, you need to compare it to another one. Therefore, you will always see currencies offered in the form of pairs, and ne currency is measured in terms of another one. For example, in EUR/USD you measure the price of 1 Euro in terms of American Dollars, and 1 Euro is around 1.20 American Dollars. This is the relation you will use as a binary trader and make predictions whether the price of USD will rise or fall in relation with this value.
All brokers and binary robots offer currency pairs for trading. It is not important if you trade this asset manually or use an automated trading system like Brith Method. Either way, you will be able to trade currencies. Either way, you should be able to make correct predictions and analyze the market, and technical analysis is very useful for binary traders who choose to trade currencies.
Currencies differ from other assets because of the factors that influence their price. With stocks or commodities, it is all about supply and demand. With currencies, however, there are many other factors which determine the prices: the strength of the country’s economy, inflation, political situation and so on. What’s more, financial situation which influences one country can often influence the other. If the economy weakens in the USA, it is likely to affect the European economy as well, and thus influence both USD and EUR.
In stable economic and political situation, trading currencies is easy because the prices in a single pair go in different directions. However, if there are some unfavorable events in the economies of the countries, the prices may go in the same direction, so it can be difficult to determine the outcome of the trade.
Advantages of currency trading
As mentioned above, currency trading is relatively easy and secure when the situation is stable. This means that you can easily spot the trend and decide how to trade a certain pair. This can bring you many successful trades and help you gain profit.
Another advantage is that currencies can be traded all week, since they are traded in the whole world and include currencies of many different countries. Therefore, you can trade despite the time difference, because there will always be a market that is open, no matter the time of day.