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: economists see a likely ECB rate cut in DecemberThe EUR/USD pair is trading with signs of corrective growth around 1.0574, which is facilitated by the weakening of the US dollar and support from positive data on the eurozone economy.The publication of data on the gross domestic product (GDP) of the eurozone for the third quarter is expected today at 12:00 (GMT+2). According to analysts, the quarterly indicator will remain at 0.4%, and the annual indicator will adjust to 0.9% against the previous 0.6%, which indicates the effectiveness of the monetary policy of the European Central Bank (ECB). Meanwhile, investors have already assessed the published statistics on retail sales, which decreased by 0.5% on a monthly basis, which turned out to be worse than the predicted -0.4%. On an annualized basis, the decrease was 1.9%, which exceeded expectations of 1.7%, but still remains less significant compared to the previous 3.0%. The reduction of industrial orders in Germany to 1.5% in October after 4.2% earlier strengthened the arguments of supporters of the ECB's "dovish" rhetoric. A Reuters poll confirms experts' expectations: the cost of borrowing is likely to be reduced by 25 basis points at the December 12 meeting. Forecasts for 2024 suggest that the regulator will continue to adjust rates, reducing them by a total of 100 basis points next year.Resistance levels: 1.0610, 1.0740.Support levels: 1.0550, 1.0420.AUD/USD: Australia's GDP growth rate was below market expectationsThe AUD/USD pair is trading in a sideways range, holding near the 0.6430 mark, due to weak economic statistics from Australia and a decline in the position of the US dollar. Despite the small activity, investors remain cautious when assessing the current data on the dynamics of the Australian economy.According to published data, in the third quarter, gross domestic product (GDP) growth amounted to 0.3% in quarterly terms, which is lower than analysts' forecasts of 0.5%. The annual rate also slowed from 1.0% to 0.8%, falling short of expectations of 1.1%. The indicators of foreign trade showed a more positive trend: exports increased from -4.7% to 3.6%, and imports moved into a positive zone, rising from -2.8% to 0.1%. The trade balance also improved, increasing from 4.532 billion to 5.938 billion Australian dollars. Although positive changes in exports may support the economy, the slowdown in GDP growth remains a key factor in the pressure on the Australian currency. Investors continue to assess the prospects for economic development, waiting for new signals from the Reserve Bank of Australia and additional data that may affect the further dynamics of the AUD/USD pair.Resistance levels: 0.6470, 0.6600.Support levels: 0.6400, 0.6260.NZD/USD: the week ends with the weakening of the New Zealand currencyThe NZD/USD pair is correcting downwards, testing the 0.5855 mark, almost leveling out the results of the growth observed on Thursday. Market participants prefer to take profits on long positions before the publication of the November report on the US labor market, forecasts for which remain contradictory.Against the background of the lack of significant news from New Zealand, the main attention of traders was focused on data from China. The index of business activity in the service sector decreased from 50.2 to 50.0 points, while the same indicator in the NBS manufacturing sector rose slightly from 50.1 to 50.3 points. The Caixin indicator, on the contrary, showed a steady increase from 50.3 to 51.5 points, significantly exceeding the projected 50.5 points, which indicates an improvement in conditions for the manufacturing sector.Analysts expect a gradual recovery in the New Zealand real estate market. Over the next two years, housing construction volumes could increase by 5.0%, helped by a 125 basis point reduction in interest rates by the Reserve Bank of New Zealand. At the same time, according to a Reuters poll conducted at the end of November, average rent growth will continue to outpace inflation, which will increase pressure on family budgets as house prices have doubled over the past seven years. Experts predict that in 2025 and 2026, the value of real estate will grow by 5.1% annually, while in 2023 a decrease of 0.3% was recorded. The Reserve Bank had previously assumed a similar recovery, forecasting a 4.0% price increase in 2025 and almost 7.0% in 2026.Resistance levels: 0.5888, 0.5920, 0.5950, 0.5975.Support levels: 0.5858, 0.5830, 0.5800, 0.5750.USD/CAD: the former head of the Bank of Canada announced the beginning of a recessionThe USD/CAD pair is showing a moderate increase, aiming to gain a foothold above the 1.4030 level. Trading activity remains subdued, as market participants are waiting for the release of important employment statistics in the United States and Canada, which may set the direction for further dynamics.At a recent webinar organized by Osler, Hoskin & Harcourt LLP, former head of the Bank of Canada Stephen Poloz said that the country is showing signs of a technical recession. According to him, despite the absence of two consecutive quarters with negative GDP growth, a significant increase in migration to Canada has changed the structure of consumption: the growing demand for basic goods contrasts with the reduction in spending by local residents, who are faced with a 30 percent increase in the cost of living amid the recent inflationary surge. Confirming Poloz's words, Statistics Canada last week reported that GDP per capita fell by 0.4% over the last quarter, extending a series of cuts to six in a row. Economists point to the weakness of domestic markets and the high burden on the budget of the population, which confirms the vulnerability of the country's economy.Resistance levels: 1.4050, 1.4100, 1.4145, 1.4200.Support levels: 1.4000, 1.3958, 1.3908, ...
FOREX Fundamental analysis for EUR/USD on December 6, 2024Investors are beginning to realize that Donald Trump's statements before his return to the White House do not pose much of a threat. Even if the Republican tries to implement his plans, it is not a fact that American lawmakers will approve them. Therefore, the optimal forex trading strategy for today is to lock in profits from short positions in EUR/USD, temporarily abandon the US dollar and monitor developments from the outside.A decrease in activity against the background of "Trump trade", expectations of easing the Fed's policy at the last meeting in 2024, increased interest in risky assets and the traditional seasonal weakness of the dollar create favorable conditions for strengthening EUR/USD. At the same time, political instability in France, due to the resignation of the government, has not yet affected the exchange rate of the single currency. The key factor remains Marine Le Pen's statement that the prime minister, who is able to control the budget deficit more effectively, has a chance to stay in power.Investors have revised the scale of the expected Fed rate cut from 75 to 84 basis points, which weakens the dollar. Meanwhile, market participants ignore Bloomberg forecasts of employment growth of 220 thousand and stable unemployment of 4.1%, confirming the strength of the American labor market.Market expectations for the Fed rateAt the same time, the uncertainty surrounding the October data and employment forecasts for November complicates the assessment of the situation. Hurricanes and strikes have distorted statistics, which is also recognized by representatives of the Fed. Some experts predict an increase in unemployment to 4.2%, which may indicate an approaching recession.Recessions and the dynamics of the share of unemployed in the United StatesThus, a significant improvement in indicators is required to maintain the current Fed rate in December. This, along with the weakening of the "Trump trade", stimulates the sale of the dollar. Even reasons such as the increase in applications for unemployment benefits to a monthly maximum are pushing EUR/USD up.Nevertheless, fixing long positions on the dollar may lead to a correction of the pair, despite its "bearish" medium-term forecast. The high productivity of the US economy and its separation from other regions, including the Eurozone, will continue to put pressure on the euro. Trump's fiscal incentives and trade measures will have an additional impact.In such a situation, it is more reasonable to change the methods of forex trading and switch from short-term purchases of euros to sales on its growth. The reaction of EUR/USD to the US employment data remains unpredictable: weak indicators will strengthen long positions, while strong ones will cause sharp price fluctuations.EUR/USD Technical analysisEUR/USD is growing within the framework of a short-term uptrend and is approaching the main target of buyers in the area of the maximum on November 29 - 1.0597. After working out this goal, we will expect testing of the target zone 1.0636 - 1.0608. To continue the growth, market participants in the American trading session will need to break through the target zone and gain a foothold higher. In this case, the target of the bulls will be the "golden zone" 1.0709 - 1.0700.If the target zone of 1.0636 - 1.0608 is held by sellers during trading, then EUR/USD will again go into correction, within which new purchases can be ...
FOREX Fundamental analysis for EUR/USD on December 5, 2024For the first time since 1962, the French National Assembly dismissed the government. Although this event was an important political milestone, it did not turn into a disaster for the euro. France is facing a period of uncertainty - the dissolution of parliament is impossible, the appointment of a new prime minister is associated with high risks, and the president has no plans to resign. Despite expectations of a vote of no confidence in Michel Barnier and his cabinet, the EUR/USD collapse did not occur.Even against the background of the political crisis and the growth of the French and German bond yield differential to the highest since 2012, the volatility of currency pairs with the euro remains moderate. Investors do not assume France's exit from the Eurozone (Frexit) or the collapse of the Euroblock. So far, they prefer to observe the development of events and are in no hurry to draw serious conclusions.The Fed's actions and their impact on the dollarA similar wait-and-see tactic is evident in the actions of the US Federal Reserve. The head of the Federal Reserve, Jerome Powell, noted that the US economy is feeling better than at the beginning of the monetary policy easing cycle. At that time, the Fed sought to support the labor market, but fears about its "freezing" did not materialize.However, market expectations of a possible pause in rate cuts have not been confirmed. Powell did not give such signals as, for example, his colleagues Alberto Musalem from the St. Louis Federal Reserve or Mary Daly from the San Francisco Federal Reserve. As a result, the forex trading method "buy a dollar on rumors, sell on facts" played a role, and EUR/USD grew.Dynamics of euro volatilityAccording to OECD forecasts, the Fed may cut the rate to 3.25% by the first quarter of 2026, which is lower than current expectations for derivatives (3.75–4%). At the same time, the ECB is likely to soften its rate to only 2%, and not to 1.5–1.75%, as investors expect. These differences, along with an improvement in the forecast of global GDP growth for 2025 from 3.2% to 3.3%, create support for the euro.EUR/USD forecasts for December and the impact of the seasonThe OECD also warns that protectionist measures such as Donald Trump's tariffs could slow global economic growth. While these duties have not been earned, the euro has a chance of growth, especially given the seasonally weak dynamics of the dollar in December.The catalyst for the growth of EUR/USD may be disappointing US employment statistics for November or profit-taking on short positions. As in the case of the political crisis in France or Powell's statement, moderate data may push the euro up. A breakout of the $1,054 pivot level looks increasingly likely, but in the current conditions it is preferable to stay out of the market, observing the development of the situation.EUR/USD Technical analysisYesterday, EUR/USD tested the 1.0477 support. This level was held by sellers, as a result of which the pair moved to strengthen in the American trading session. As part of this growth, the maximum was updated on December 3, which formed another buying pattern. Today, the short-term uptrend may continue. The target is around the 1.0597 level. After working out this target, we will observe the border of the upper Target zone 1.0636 - 1.0608. If the bulls are successful, the next growth target will be the Gold Zone 1.0709 - 1.0700.To change the direction of the trend and switch to sales, the bears need to break through the 1.0445 level and consolidate below. In this case, from the next trading day, it will be possible to consider selling EUR/USD with the main target in the area of the lower Target zone 1.0321 - ...
FOREX Fundamental analysis for EUR/USD on December 4, 2024The euro continues to hold its position despite the political instability in France, where the government is teetering on the verge of resignation. However, this factor, coupled with the economic slowdown in the Eurozone, the ECB's aggressive monetary policy and new trade duties from Donald Trump, strengthens forecasts of a possible fall in EUR/USD to the level of parity. This is the opinion of 18 out of 42 experts surveyed by Reuters.The pivot level, which indicates the equality of the euro and the dollar, may be less painful for the export-oriented economy of the Eurozone than for its politicians. However, such a scenario is likely to strengthen the positions of the parties advocating an exit from the currency bloc. For example, the German right-wing AfD party has already included this issue in its election agenda before the parliamentary elections in February. Political risks are becoming an additional factor of pressure on the euro.Tariffs are Trump's weaponECB officials warn that Donald Trump's protectionism could further slow down the Eurozone economy. And this is not without reason. If during the first trade war of 2018-2019 tariffs on Chinese imports increased from 3% to 11%, now Trump is threatening duties of 20% for a number of countries, including Europe. For economies that depend on exports to the United States, such as the Eurozone countries, Mexico and Canada, duties of 10-25% can be a devastating blow.Dynamics of average US tariffsAlthough some analysts suggest that Trump is using tariffs as leverage in negotiations, his actions are unpredictable. Under the slogan "America first", the US economy may receive additional incentives, but a strict migration policy may weaken this trend.Economic divergenceMigration and high labor productivity have become key factors that have allowed the United States to withstand the most aggressive Fed rate hike cycle in the last 40 years, said FOMC member Adriana Kugler. Since 2008, labor productivity in the United States has increased by 30%, which is three times the growth rate in the Eurozone. This contributes to stronger economic growth: the IMF predicts that in 2024 US GDP will grow by 2.8%, while in the Eurozone it will grow by only 0.8%.EUR/USD forecastAgainst the background of the difference in economic growth, Reuters experts revised their forecasts for EUR/USD. The pair is expected to fall to 1.05 in the next three months, and to 1.04 in six months. Nevertheless, most analysts do not consider the level of parity to be inevitable, since negative factors have already been partially taken into account by the price.I'm sticking to a more pessimistic forecast. Political instability, a weak economy and pressure from the United States create an unfavorable background for the euro. If EUR/USD falls below 1.048, we will receive a signal to strengthen the shorts formed when rising to $1.06.EUR/USD Technical analysisEUR/USD is trying to continue its growth. The main goal of strengthening the pair is the maximum on November 29 in the area of 1.0597. If the asset gains a foothold higher, then buyers will probably try to break through the upper Target zone of 1.0636 - 1.0608. In this case, the next target of the bulls will be the "Golden Zone" 1.0709 - 1.0700.We will consider purchases after a decline to the support area 1.0505 - 1.0496. The stop loss can be placed at the minimum of today. The trend boundary is in the range 1.0459 - 1.0445. If EUR/USD gains a foothold below this area, the trend will change to a downward ...
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 ...