The category of currency pairs has appeared in a range of the assets from the options’ brokers among the first. This is no accident because it is the most liquid and massive underlying asset in the entire financial market. Currency binary options stay the world’s hit and provide the lion’s share of all deals up to now.
However, it is necessary to note that not all of the currency pairs are favorites in the financial market, only a small amount of them really are. The assets of these pairs are called majors, and they appear to be the exchange rates between currencies of the countries of the Big Seven. The less popular part is called minors, and these illiquid national currencies form the exotic part of the currency options.
Who does trade currency binary options?
Main contingent that trades currency binary options are the ordinary people. They often see the signs with currency rates and hear people speaking about instability of the certain currency. They go to the options’ market trying to manage their own capitals.
Another part of traders are the professionals that came to binary options from the currency pairs in the derivatives market. Their appearance is logical too, because the result of working in the currency market depends up not only the correct forecast of the price movement’s direction, but from the movement’s pattern too. The correct analysis can lead to the small profit or even to the loss, if the price is not quick enough and gets into the consolidation sector. As is well-known, it does not matter in the binary options trading. Any change of price, regardless of its amount, leads to earning a profit.
Both these groups trade binary currency options for a higher level of profit. For some, the profit is secured by the low level of a startup capital, for another it is secured by the opportunity to increase risks drastically (and profits accordingly) with the same trading deposit that was used in the derivatives market.
Principle of currency binary options trading
Generally speaking, there are no particular differences between currency pairs trading and trading any other asset.
- A trader has to analyze the price movement’s chart and forecast its action the same way;
- He has to give an eye to the macroeconomic data and conduct fundamental analysis of the major economics in the world;
- He has to take into account the surprise element in the political situation or economic crisis.
It is natural that there are nuances in trading, but their part is very subjective, for example, the habit to use the familiar charts. Being similar to many other types of underlying assets, currency pairs in binary options distinct with the higher profit rate that is driven by the risk’s level, and with the simplicity of closing a deal.