Last Updated on 1 April 2023 by Nicholas Lim
Forex pairs are one of several asset options available to you when trading in Singapore. Risk is a part of all forms of investing, whether you are participating in the traditional stock markets or trading digital options. That said, risk levels do vary from instrument to instrument and trade to trade. So, which carries more risk? Standard Forex trading or binary options Forex trading?
Unfortunately, this question doesn’t allow for a definitive answer. There are just too many variables. However, there are several indicators which can help you arrive at a conclusion. It is not uncommon for investors to steer clear of Forex trading because of the risk associated with it. Not only does it cost more to get started, the profits and losses vary. Neither of these are true of binary options trading. Fees and/or commissions are yet another consideration. These may be collected by standard Forex brokers, but are not a part of the digital options world.
When trading Forex within a binary options platform, the profit and loss amounts are fixed and determined in advance of each contract purchase. This is yet another difference between this form of trading and traditional Forex. Here, profits and loss can vary and are not known upfront. You’ll also note that a higher amount of price movement will be required in order to earn substantial amounts of profit. Where in digital options, even the slightest amount of movement can produce large profits.
Risk Assessment
Both the FX trader and binary options trader will need to make use of analysis. In both forms of investment you’ll want to be able to identify value shifts in advance if at all possible. There are stark differences, however, such as the time frame for these shifts. Digital options trades are bound by time via expiry periods. This means that a value shift need only occur as predicted within a specific period of time. The open investment will close at a specific time, at which point the trader will have either earned money or lost the amount of investment (minus refund, if any). In both forms of investing, analysis is going to impact risk. Those who excel at it are going to earn more and lose less.
Wondering about signals? These can be used in both traditional Forex and binary options Forex. In Singapore, when derived from a good source, signals can reduce the risk in both forms of investing. These do come at a cost and are not entirely necessary. However, there really is no denying the power of teaming up with a high quality signal provider which is able to deliver accurate signals at a rate of 70% or higher.
You’ll need to draw your own conclusions in relation to how much risk you are willing to accept. You’ll have more control over this matter when trading binary options FX than traditional. This is due to the fact that you have completely control over selecting each of the trade parameters. You choose the set-ups, you make the selections, and you can choose to abandon a “bad trade” and go in search of something better.
Conclusion
You aren’t going to be able to find any form if investing that does not carry with it some amount of risk. The good news is that with certain forms of investing, such as binary options trading, you’re going to have plenty of say over how much risk you take on. Sure, there will still be some losses from time to time. However, you always have the power to improve your success rate.