Recently, I see that more and more traders are starting to switch from Forex to binary options. This is understandable, because it is easier to trade binary options, and profitability, of course, is also higher. In general, I myself gave up Forex in favor of binary options 6 years ago. But since the topic is so relevant now, let's figure out which is better – Forex or binary options, comparing the pros and cons of both types of earnings.Forex and binary options: a brief comparisonGet and sign up: profitabilitySo, let's start our comparison with such an important point as profitability. When trading binary options, the profit ranges from 75 to 95% of the invested investments. In Forex, the profit is unlimited. However, in order to get a high percentage of earnings on Forex, you will have to correctly predict large price fluctuations, whereas only 1 point is enough on binary options. I think there is no need to explain that binary options trading is more profitable in the long run.Read more: What are binary options?Is risk a noble cause? What is the difference between Forex and binary options?The next difference between binary options and forex is the risks themselves. Forex trading involves constant manual work with risks due to the correct placement of orders for opening and closing transactions (stop losses and take profits). On the one hand, this is convenient, since it is always possible to rearrange orders and wait for the very moment when it will be possible to make a profit or breakeven… But on the other hand, as a rule, a Forex trader needs to have an impressive deposit in order to withstand long drawdowns. In addition, the trader is constantly experiencing psychological pressure (whether he closed the deal on time, whether he placed orders correctly, etc.). It is also important to say that traders who do not have large deposits are forced to use the broker's leverage, which multiplies not only the profits received, but also, of course, losses.Binary options brokers relieve traders of psychological responsibility for placing orders. It is enough for a trader to decide on:the size of the bet (as a rule, its size ranges from $5 to $25),the end time of the transaction.Thus, all work with risks consists in trading with a minimum percentage of the deposit. So, in fact, Forex differs from binary options only by a risk management system. It is not enough for a forex trader to open a deal in the right direction, he also needs to calculate how many points the chart will pass and where to put a stop loss / take profit correctly.Read more: What is Forex in simple wordsAnalysis is the mainThe same tools are used for analysis and forecasting in both types of trading: indicators, news, volumes, price patterns, etc. It turns out that, other things being equal, it is easier to do analysis for binary options, since it is enough to correctly predict only the direction of the price. In Forex, in addition to the direction, as I wrote above, you need to determine the approximate number of points in order to correctly place orders to close transactions.Time is moneyThis point can be interpreted in two ways. For someone, it is important how much time trading takes in total, for someone this moment is not fundamental. In any case, it is clear that Forex takes much more time than binary options. After all, you need to constantly work with orders to influence the outcome of the transaction.Number of assetsThe most popular assets on binary options and Forex are currency pairs and precious metals (in particular, EUR/USD and Gold). However, if the choice is limited for a Forex trader, then a binary options trader has alternative options. This:stocks,indexes,futures,the so-called "pairs" (the ratio of shares of one company to shares of another, for example: google/apple).Thus, a larger number of potentially profitable trades will be available to you on binary options.Read more: What is a spread in trading Forex and stocksOnce again about money: commissions and spreadsActually, the difference between Forex and binary options is also the trading conditions themselves. Forex traders must necessarily pay the broker the spread from each open transaction. What is a spread? The spread is the difference between the purchase price of an asset (bid) and the sale price of an asset (ask) (roughly speaking, the same difference can be seen at any currency exchange point). At the same time, traders do not pay any commissions to the binary options broker, either from investments or profits.Lend a shoulder to a friend: leverageA very important point, in my opinion. Applies only to Forex, but nevertheless it is important to pronounce it. The minimum lot (financial contract) on Forex is $100,000. Naturally, an ordinary person cannot start trading with such amounts. In this regard, the Forex broker is ready to provide its clients with leverage. For example, with a deposit of $1,000, the broker is ready to "add" $99,000 to the trader so that he can enter the market. However, the broker will not risk his money, instead he will limit the maximum amount of losses on the account to 1% (the same $ 1000). What does this lead to? To the fact that traders often start trading large lots and quickly lose money.What to choose, forex or binary options?So, binary options or still Forex? My answer to this question will not be objective, because I made my choice a long time ago. For those who have not yet decided, I can give one piece of advice – decide for yourself which type of trading is most suitable for you. It is difficult to predict in advance which method or strategy will bring the greatest profit, but one thing I can say for sure - binary options today provide the lowest entry barriers to the world of trading, making it simple and accessible to everyone. And a large number of binary options brokers allows everyone to find the most convenient platform for themselves. By the way, some brokers have forex simulators built into the platform.Well, I suggest that all novice traders read the article about the main mistakes that beginners make in trading.Read more: Forex or Binary Options? The difference between Binary Options and ...
EUR/USD: inflation in Germany declined in MarchThe currency pair EUR/USD is under the influence of contradictory sentiment, testing the level of 1.0900 and the local peak of February 3. Earlier EUR showed a significant strengthening of positions amid market concerns about the banking crisis in Europe and the USA.The previous day March statistics on consumer prices showed the success of the measures taken by the European Central Bank, which plans to hold another interest rate hike in 2023. Thus, Germany significantly slowed down the dynamics of inflation in the annual rate to 7.4% from the previous 8.7%, slightly exceeding the forecast of 7.3%, and in the monthly value it strengthened by 0.8%, continuing the February dynamics. The slowdown was also reflected in the harmonized figure, down to 7.8% from 9.3%, while the market was expecting a decrease of 7.5%. The published data reinforces confidence among European financial officials that the hawkish vector should be continued. Against this backdrop, an important speech was made by Isabelle Schnebel, a member of the ECB board, who said that the core inflation of the European Alliance, despite falling energy costs, and its decline is able to fully meet the preliminary forecasts. In turn, harmonized inflation in Germany fell to its lowest threshold since last April, indicating the formation of a strong downtrend. Investors also noted the positive consumer price data in Spain, where the dynamics of the harmonized index showed a sharp drop to 3.1% from 6.0%, beating expectations of a slowdown to 4.0%. Inflation statistics showed a low from August 2021.Resistance levels: 1.0900, 1.0957, 1.1000, 1.1051.Support levels: 1.0850, 1.0800, 1.0758, 1.0700.USD/CAD: US Dollar remains at a local lowDuring the morning trading instrument USD / CAD demonstrates multidirectional dynamics, located at the minimum threshold for February 21 in the area of 1.3530.During the current week, the U.S. dollar has developed a confident downtrend due to growing concerns of market participants, because threats of further crisis in the U.S. banking sector have decreased. Investors are fixing profits on some long-term contracts, refraining from acceleration of market activity, wishing to see the February personal income and expenditures data on Friday. At the same time, traders assessed the GDP growth for Q4 last year, which recorded a growth of 2.6% against the previous forecast of 2.7%, and the primary growth of 2.9%. The employment market disappointed economists as the number of initial claims for government grants in the seven days on March 24 rose to 198,000 from 191,000, missing the estimate of only 196,000, while secondary claims for the week of March 17 rose to 1.689 million from 1.685 million, with analysts expecting a rise to 1.697 million.Resistance levels: 1.3550, 1.3600, 1.3650, 1.3700.Support levels: 1.3500, 1.3450, 1.3400, 1.3350.AUD/USD: moderate dominance of the "bulls" in the pairThe trading instrument AUD/USD retains a slight strengthening of positions, which will help the asset meet the end of the week with a slight increase. The currency pair is at 0.6720 and keeps getting stronger, having updated the local high of March 23.The pair maintains a weak bullish momentum because of the dominance of the positive market outlook. Experts are going to evaluate the U.S. macroeconomic data block announced the day before on the dynamics of the personal income and expenditures. Earlier the statistics on the adjusted data on the US GDP for Q4 of the last year was published. The final estimate of the country's economic performance in Q4 increased to 2.6% against the previous 2.7%. Investors were left disappointed by another increase in unemployment benefit applications for the week of March 24 to 198.0K from 191.0K, with the market expecting 2.0K less. Repeat applications for government grants in the week of March 17 increased to 1.689 million from 1.685 in the past, with experts expecting a number of 1.697 million.Resistance levels: 0.6750, 0.6800, 0.6853, 0.6900.Support levels: 0.6700, 0.6650, 0.6624, 0.6600.NZD/USD: GDP of New Zealand is decliningThe currency pair NZD/USD is showing a weak trend around 0.6283, because the latest New Zealand macro statistics released showed declining economic data.Thus, the level of approved applications for the beginning of construction works fell by 9.0% in February to January's decline of 5.2%, reaching an annual rate of 2,972 new residential properties, down 29.0% from the same period last year. Business confidence from the ANZ Banking Group of New Zealand and Australia for March remained flat at -43.4 points, contrary to economists' expectations of an improvement to -40.0 points.Resistance levels: 0.6310 and 0.6450.Support levels: 0.6240, 0.6100.YouTube ...
FOREX Fundamental analysis for EURUSD on March 30The dynamics of foreign exchange assets in the forex market depends on many factors. This is the difference in rates of monetary policy, economic indicators, and various risks - financial and geopolitical. But there is one more important trading criterion - volatility of currency pairs. The breadth of quotes fluctuations of this or that asset allows you to earn in currency trading on the forex market. Volatility has lately been supporting the dollar, sending EURUSD into a downward correction.BofA analysts note that expectations of a Fed interest rate hike to 5.25% have lifted volatility in the major currency risk to three-month highs. But volatility peaked last fall. At that time, the dollar index was the undisputed leader among other forex indices.EURUSD dynamics and volatility of the main currency pairOf course, much of the demand for the greenback stems from the habit of investors to buy the dollar at any alarming signals. In 2022 it was the dollar that was the main defensive asset at Forex. But now that the epicenter of the banking crisis has become the United States, investors began to look at other protective assets, gold, the yen, the franc and...... the euro.The BofA believes that increased volatility in currency pairs could return when U.S. inflation is high. This is a logical explanation, as the Fed still considers the fight against inflationary pressure to be its main task. Now the regulator's monetary policy has been interfered with by fears of spreading banking problems and the futures market is lowering the maximum rate to 4.9%. However, if the situation in the banking sector stabilizes, it is unlikely that the Fed will move to a wait-and-see attitude, risking the loss of all gains from previous restrictions.The dynamics of the expected rate peaks of the Fed and the ECBOf course it is not rational to expect a 6% rate from the Fed, but 5.5% is a realistic target which has been discussed many times at FOMC meetings. In any case, the ECB's potential for a 75-100 basis point rate hike creates support for the single currency. But this is in the medium and long term. In the short term, volatility growth favorable to the greenback cannot be ruled out.In addition, let's not forget the basic rule of forex trading - "buy on rumor, sell on fact". Markets are excited about the prospects of European inflation growth up to 5.7%, but the statistics release might turn out to be a disappointment for the "bulls" in EUR. On the technical side - if the EUR/USD buyers are unable to get a grip on 1.082, it will be possible to sell the pair in the short ...
EURUSD: upward trend is expected in the pairPair EURUSD is relatively stable at 1.0835 and the local maximum of March 23. Euro is waiting for the next stimulus to strengthen the current "bullish" momentum.Experts hastened to reconsider their estimates of the crisis development in the bank sector of the USA and Europe, noting the successful and timely actions of the Fed and the Treasury Department, since the situation has stabilized. At the beginning of the week, the information was confirmed that the US bank First Citizens BancShares Inc. would acquire the controlling interest on the credit portfolio of the Silicon Valley Bank (SVB) that stopped its activity the day before, and that would lead to the reduction of the load on the insurance sector. Meanwhile, the Federal Deposit Insurance Corporation will not avoid a huge loss of at least 20.0 billion dollars. At the same time, the chairman of the Central Bank of Spain and the ECB official Pablo Hernandez de Kos fears that the global turmoil in the banking sector has caused uncertainty in the market, against which the regular increase in the price of funding for credit institutions in Spain and the growing reserve stock is likely to follow.Resistance levels: 1.0850, 1.0900, 1.0957, 1.1000.Support levels: 1.0800, 1.0758, 1.0700, 1.0640.NZDUSD: Short term sideways trendThe trading instrument NZDUSD is developing a moderate strengthening, reaching the area of 0.6260, developing "bullish" sentiment in the pair, formed since the beginning of the week due to lower panic moods in the market on the prospects of a potential crisis in the banking sector in Europe and the United States.Investors are waiting for the New Zealand macroeconomic statistics release on Thursday, March 30. Thus, traders' interest is aroused by the previously announced dynamics of approved construction applications in February: expectations are for a moderate strengthening of the value by 0.5%, having earlier decreased by 1.5% in January. RBNZ March business optimism data is expected, but experts forecast a sharp fall to -47.5 points from -43.3 points. Business activity, according to the National Bank of New Zealand, will decrease to -12.5% from -9.2%.Resistance levels: 0.6300, 0.6350, 0.6400 and 0.6450.Support levels: 0.6250, 0.6200, 0.6155, 0.6100.USDTRY: Turkey's manufacturing sector continues to strengthenThe USDTRY currency pair continues to hold within the narrow 18.7000-19.3000 upward corridor ahead of the planned presidential election scheduled for May 14.Thanks to the personal efforts of the Turkish president the national currency and monetary parameters remained stable, which rules out volatility of the lira in the short term. Earlier in the publication were statistics on March manufacturing sector confidence, reflecting an increase to 105.2 points from 102.4 points, marking the third month in a row of upward correction from 97.5 points since December 2022. Tomorrow, March 30, the Turkish Statistical Institute (Türkstat) will present economic confidence in the index, which is predicted to rise to 100.0 points from February's 99.10 points.Resistance levels: 19.1400, 19.3000.Support levels: 19.0660, 18.9000.Silver analysisThe value of the precious metal is quoted above the 23.00 threshold, preparing to test the 24.50 target due to the fluctuations in the U.S. dollar.Precious metals remain in high demand among investors amid the development of the crisis in the financial sector, which came in the U.S. after the liquidation of Silicon Valley Bank and Signature Bank, and then hit European financial institutions. Currently in a difficult situation is the German bank Deutsche Bank AG, whose shares plummeted by 14% at once, contrary to the announced long-term redemption of part of the subordinated securities of the second degree. Trading participants hastily save their capitals, transferring them into "safe" instruments, which by classics are considered as metallic assets, to minimize risks, while leading central banks continue to assure about the stable situation of the banking sector. Gold has risen by 7.3% since spring, and silver by 10.00%. If the upward trend among the metal asset group continues, silver could renew its year-to-date high at 24.50.Resistance levels: 23.00, 24.50, 26.00.Support levels: 21.50, 20.00, ...
FOREX Fundamental analysis for EURUSD on March 29, 2023Not so long ago, the U.S. dollar was deservedly regarded as the undisputed leader in currency trading on forex, receiving support from the American exceptionalism, the "hawkish" course of the Fed and the demand for protective assets. But now the banking crisis has arrived and investors are abandoning the greenback in favor of gold, the franc and the yen. Moreover, if in the fall the world was expecting a deep recession in the Eurozone economy, now the opposite is true. A deep recession is forecasted for the economy of the Investigative States, while the Euro bloc economy is giving strong signals of recovery, which only plays into the hands of the EURUSD buyers. The dollar has only a chance for further tightening of the Fed's monetary policy, but judging by the latest statements of the regulator's representatives, this chance is pretty slim.Actually, the banking crisis is a side effect of the tightening of monetary policy. A decline in lending with full portfolios of cheapening bonds is not the best option for any bank, especially since financial institutions in the United States are used to living with the soft policies of the Central Bank.The banking crisis is dragging the U.S. economy into the hole, as confirmed by the head of the Minneapolis Federal Reserve Bank, Neel Kashkari. Bloomberg predicted that the probability of a recession within 12 months rose to 60%, well ahead of the negative outlook for the Eurozone.Trends in the likelihood of recession in the U.S. and the eurozoneInvestors, fearing a recession scenario, are buying treasuries, thus reducing bond yields, which puts pressure on the dollar. The franc, yen and gold took away the greenback's status as the main defensive currency. In such conditions the idea of the "dovish" U-turn of Fed, which can be realized this time already in the current year, appeared in the market again.Dynamics of market expectations on the Fed rateThe ECB has a more hawkish stance than the Fed. Christine Lagarde keeps saying the regulator will continue to fight inflation through rate hikes, which means EURUSD has good growth prospects towards 1.12 and 1.14. Our preference is to ...
ECB Council member Pablo Hernandez de Cos believes that the EU economy will not reach the pre-pandemic level until the end of the second half of 2023.The governor of the Spanish central bank has joined the chorus of ECB policymakers calling for the first rate hike in more than a decade to curb the highest inflation rate since the creation of the euro and prevent price increases from taking hold.The ECB is lagging behind global competitors in raising borrowing costs and is even still pouring money into the financial system through its asset purchase program, a legacy of a decade of fighting too low inflation.Inflation in the eurozone reached a record 7.5% in April, and was well above the ECB's 2% target. Now the ECB's key rate is 0%, 0.25% on margin loans, and minus 0.5% on deposits.The official also believes that a gradual increase in rates should be expected, especially if the medium-term inflation forecast remains at the current target level.According to de Cos, the completion of the bond purchase program should be completed at the beginning of the 3rd quarter, and soon after that the first interest rate increase will follow. The gradual abolition of extraordinary monetary incentives is adequate in the current ...
The year 2022 on world markets will largely be determined by the tightening of monetary policy in the United States, and the first week of the new year confirmed this. The minutes of the Fed's December meeting published last week showed a significant tightening of the position of the regulator's representatives – Fed members believe that the rate can be raised as early as March, and also see a faster reduction in the balance sheet as appropriate. Representatives of the regulator believe that the current economic conditions are already in many ways conducive to tightening the labor market, some even noted the recovery of the labor market already sufficient for such actions, although the majority still expects further improvement in the labor situation. Against this background, it is worth noting the publication of December labor data in the United States, which came out ambiguous. On the one hand, employment in December increased by only 200 thousand. The Bloomberg consensus forecast assumed an employment growth of 450 thousand, and the actual growth rate of the indicator was the lowest since the beginning of 2021. Nevertheless, in many respects such weak employment growth is explained by seasonal adjustment, and the unemployment rate in December fell more than expected. Thus, the indicator has updated the next lows since the beginning of the pandemic, dropping to 3.90% against the expected 4.10%. The unemployment rate continues to approach a historic low of 3.40%, and labor statistics have further increased fears in the market of an imminent tightening of the PREP in the United States. As a result, on Friday, the yields of ten-year US treasuries at the moment exceeded 1.80% per annum - the maximum since the beginning of the pandemic. Today they have returned to these levels again.This week, the dynamics in the market will continue to be determined by expectations for the actions of regulators - investors will follow the statements of representatives of the Fed and the ECB, as well as the publication of price data in the United States for December. Statistics published last week showed an increase in inflation in the EU to 5.00% YoY. As a result, the topics of price growth in December updated the historical maximum, while analysts expected a slight slowdown in price growth. The situation on the supply side also has high inflation in the United States. The December business activity indices indicated a slight easing of logistical problems, however, the further deterioration of the epidemiological situation again intensified disruptions in logistics chains, which does not lead to a significant slowdown in price growth. The FAO World Food Price index fell in December for the first time since July, but food inflation remains at elevated levels. Against this background, US inflation data is likely to continue to bring the Fed rate hike closer, intensifying the negative in the markets.The main event for the oil market in early 2022 was the OPEC+ meeting. However, as expected, it was decided to stick to the current plan to increase production. Nevertheless, the cartel lowered its forecasts for a surplus in the oil market, which allowed Brent crude futures to exceed the level of $80/bbl. Moreover, against the background of interruptions in the supply of black gold from Kazakhstan and Libya, quotations were close to $83/bbl. However, at the end of the week they declined from these levels, today Brent futures are growing by 0.35% and are trading around $82.05/bbl. The main negative for oil this week may be related to the potential strengthening of the dollar amid expectations of a tightening of the PREP in the United States. However, in the absence of a significant strengthening of the dollar, Brent futures may still exceed the levels of $83/bbl– - the quotes may be supported by another weekly decline in oil ...
The foreign exchange market is better known as Forex or FX. Trading in this market has become very popular in recent years. However, this is not the case - Forex trading raises a number of questions. For example: what is the foreign exchange market? Which currency pairs are best to trade? Is currency trading risky? Some of the answers to these questions will be found in this article.What is the Forex market?The foreign exchange market is also called the Forex market or the English foreign exchange market. It is simply a market where currencies are exchanged. According to the Bank for International Settlements (BIS), the foreign exchange market is the largest market in terms of total volume, with up to USD 5 trillion traded daily. It is not a physical place, but rather an electronic network where institutions or individuals trade with each other.The left-hand currency is called the base currency and the right-hand currency is called the quote currency. The second currency indicates the value relative to 1 unit of the base currency. For instance, the formula EUR/USD = 1.4000 implies that EUR/USD trades at 1.4000, i.e., 1 Euro has a value of $1.40. The first currency is always expressed in the second currency. USD/JPY at 110.50 means that one USD is worth JPY 110.50. EUR/USDWhat are the best currency pairs to trade?The best currency pairs to trade effectively depend on your trading style. If you have a short term strategy, for example, if you like to scalp, then the major currency pairs will be most profitable for you because of the low spreads.On the other hand, for a fundamental trader, smaller currency pairs will be of interest based on long-term analysis. The most profitable currency pairs may be those involving the Australian dollar, Japanese yen or Canadian dollar.The best forex currency pairs:EUR/USD: this pair has the lowest spread and is not very volatile.GBP/USD: this pair is interesting in terms of spreads and possible gaps, but it is quite volatile.USD/JPY: this pair has low spreads and offers some interesting possibilities. GBP/USDHow to get started trading currencies online?To start trading currencies online, follow these steps:- Choose a regulated and reputable broker- Choose a broker by the quality of execution of trading instructions- Decide on the trading style that suits you best (scalping, intraday trading, swing trading - you keep your position open for several days)- Determine the appropriate leverage effect in the stock market according to your strategy and experience.- Do not invest more than you can afford to lose.- Choose an intuitive, simple and secure trading platform such as MetaTrader 4.- Try all the above steps on a demo account, before trading live.Read more: Features of intraday trading on the Forex marketGoldIs online currency trading dangerous?Like any financial investment, currency trading online is subject to risks. However, there are different methods to control these risks:- Determine the price of the currency pair at which you want to close a position if developments are unfavourable (for example, if you buy and the price falls, or if you sell and the price rises),- Determine the size of the trade so that your potential loss should not exceed 2-3% of your capital per trade,- Estimate your risk/return ratio (loss/profit) before you open the trade. By default you should have a greater potential for profit than loss, e.g. risk 50 pips, but try to make a profit of e.g. 100 pips.For proper money management and risk reduction it is advisable to start trading on a demo account and try things out on the dirt first. Such an account will allow you to trade in real market conditions, but with fictitious capital, so that you have a complete understanding of the foreign exchange market without any risk.Read more: Forex broker: how to choose a good ...