In this article, you will be able to find information on how to differentiate the Binary Options market with Forex so you can choose which one is more suited to the needs you have as a trader.
What are binary options?
Binary options are a financial product in the virtual market with which you can trade through assets or also called currency pairs, indices, or stocks. The way to generate extra profits is by betting the direction in which the currency you are using is heading and the expiration time you choose to achieve a successful transaction.
Binary Options Features
Now, you will be able to find all the features that highlight binary options signals, so you can can learn to distinguish each one of them just by looking at the chart in the broker you use.
- Call: If you believe that your transaction will be directed towards registration, you will have to press the button that will appear in the broker that you are using. Remember that you should use the term Call only for binary options.
- Put: When you think that the signal you want to bet on will go down, you must press the Put option on your broker. You should also remember that just like Call, Put is a term that you will only have to use when referring to binary options.
- Expiration time: When you are trading in binary options, the expiration times that you should use can be from 1 minute to 1 hour maximum. This is because the binary market specializes in trading with short expiry times, and this is one of the easiest ways to distinguish a binary signal from a Forex signal.
- SR: It can also be called Entry Price, and this will mean the exact price with which you will start trading. For you to understand this procedure in a more exact way, you should put a line at the point you want to start trading and when the candle touches your indicated SR you can indicate the direction you think your signal will go.
- Time Frame: This means the time in which you will analyze the market so that each of your signals are more accurate and you can obtain better results. This is because if you analyze the market more calmly you will be able to decipher where the trend is heading.
- Instant signals: You will have to call the signals that have an expiration time of less than 5 minutes as instant signals and this is due, since the expiration time that you will use is too short.
What are Forex signals?
The signals that are generated in the Forex market ushered in a new era of innovation naturally throughout the financial industry. A Forex signal has as its main idea trading virtually, and this type of trading is aimed at expert traders, since it entails more knowledge and experience to analyze each of the opportunities that the market will offer us. I recommend that if you are a beginner trader you start trading binary options because it will help you get used to how the market works.
Characteristics of a Forex signal
Now, I will show you each of the terms that you will have to use with other traders to refer to Forex market signals and so you can distinguish that they are totally different from binary options trading.
- Buy: When you are talking to other traders you should use the word Buy which will mean that you think that your signal will be directed upwards. Constantly remember that you can only use this term for Forex signals because if you use Call, you will be referring to a binary options signal.
- Sell: When you want to refer that your signal will go down, you should use the name Sell, since it is designed only when you are talking about Forex signals.
- Take Profit: When the candlestick touches the line that separates the Take Profit from the Stop Loss and if it heads in the direction you indicated, this means that you will make a profit when the candlestick ends. You will know that you won your trade when the candle touches the box where your Take Profit ends.
- Stop Loss: This will mean that you are losing your signal, since your candle will go to the opposite side that you indicated. You will know that you will have lost your transaction when the candle touches the box in which you indicated your Stop Loss, and this will stop you from losing more money than you invested.
- Pending: If your signal still does not enter the chart where the exact settings of your Take Profit and Stop Loss are found, this term is used only for Forex signals.
- Running: When your candle has already entered the graph that we indicated before but has not yet touched the Take Profit or the Stop Loss, it will be called a running signal because it has not yet been defined whether it will be a winning or losing signal.
- RRR: It also has the name Risk/Benefit, and this will indicate the percentage of your capital with which you will trade so that you obtain a greater profit or loss in each of your transactions.
- Expiration times: The expiration times that you will use in the Forex market will be greater than 1 hour, with a maximum of 4 hours to carry out your transaction. If your time is less than what I indicate, it means that you are using binary signals.
As you could see, there are many characteristics that differentiate a binary market signal from the Forex market, and this happens because analyzing a Forex signal requires more procedure and much more knowledge when analyzing the market trend. For that reason, I recommend you that if you are a beginner trader, start with binary options, over time, you can learn how to operate in forex.