In forex or foreign currency exchange, investors trade currencies, selling one currency against another. To do this, you need a currency pair like Euro versus U.S Dollar. Forex is popular in binary options trading because it is simple, straightforward and often lucrative.
Indeed, when it comes to binary options trading, currencies like Euro versus U.S Dollar and U.S. Dollar versus Japanese Yen represent excellent opportunities for both new and seasoned traders to benefit from market movements. Trading with currencies is straightforward but it does require an analysis of different Forex pairs so you can pick the best ones to trade on your own account. With over 200 countries in the world, it takes some time and effort to work out a handful number of currency pairs that will give the best results.
The four “major” currency pairs
When trading in Forex pairs, it is not uncommon for investors to feel overwhelmed by the sheer number of tradable assets. Unsurprisingly, the strongest and most widely traded currency is the US dollar owing to the size of the US economy. For instance, Euro versus U.S Dollar is the most traded currency pair worldwide. The financial asset is affected by how the collective economies of Europe perform against the States. Other currency pairs traded in the binary options market include Euro versus Japanese Yen, U.S. Dollar versus Canadian Dollar and U.S. Dollar versus Russian Ruble among dozens others. The best currency pairs to trade with include:
- Euro versus U.S Dollar
- Great British Pound versus U.S Dollar
- U.S. Dollar versus Japanese Yen
- And U.S. dollar versus Swiss Franc
These four major currency pairs have a lot of expert analytical data available on them. To trade successfully in this arena, understanding the strengths and weaknesses of the currencies and how they compare against each other is absolutely essential.
How does trading in currency pairs work?
So far we’ve established that foreign exchange is the practice of buying and selling different currencies against each other and making money through it. For example, if a trader opts to trade EUR against USD, it’s probably because he or she thinks that the EUR’s value is going to go up against USD.
In any currency pair, the first currency is the commodity and the second currency is the money. So, in the example above, Euro is the commodity and USD is the money. This means that when an investor trades in EUR/USD, he or she is paying USD to buy Euro, making a profit when the EUR’s value goes up against USD.
In Forex binary options, the outcome is either a payout at a predetermined value or $0 depending on whether the price of the asset underlying the binary option is trading above or below the strike price by expiration. Forex binary options have a number of advantages over trading Forex in the traditional way including limited risk, lower collateral and the fact that binary options can be used in flat markets as well.
Trading Currencies with BinaryOnline
Trading Forex with BinaryOnline is a simple 4-step process:
- Log into your BinaryOnline account and choose a trading tool
- Locate currencies and choose the asset you want to trade in
- Set an expiry time and choose your investment amount
- Make your Forex market prediction by purchasing the Call or Put option