Sep 30 2020 0
Some investors find binary options too complicated and too dangerous to have to predict price movements. They tend to adopt the copy method, a new way of trading that is quite suitable for those who are just starting out in the forex or binary options markets. Copy trading implies that you can keep a close eye on the professional traders' strategies and simply copy them over. This is the principle of social trading. Let's learn more about binary options social trading.
What is binary options social trading?
Binary options social trading allows investors around the world to follow the transactions of other investors. Social trading has the same principles as today's social networks and you can imagine them as a social network for investors. Investors can log into social exchanges, review the trades of other investors and make a decision whether or not to copy that strategic process.
The purpose of the basic social trading is quite clear: to create convenience and help investors learn more. Often beginners do not know how to properly use indicators or fully understand the effects of events from the economic calendar. Therefore, they accept strategies and trends from more professional investors.
By subscribing to social trading platforms, you get access to the trading history of investors in the community. You have to choose which trades you will copy to your account and this system allows you to make money based on the strategies of other investors when you sign up for the platform.
Who can join binary options social trading?
Binary options social trading is not too binding on the participants. Anyone with a computer and a little bit of money can easily enter the market and make a profit with a relatively low risk. If you don't have time to learn how to trade, or don't want to take investment courses, then social trading is the perfect direction for you.
With a fairly simple system, you don't have to spend a whole day with a calculator or get confused between indicators, charts, ... Simply find a few investors with good statistics from Last 6 to 12 months and copy their transactions. Social trading is ideal for beginners or those who do not have time to deal with all the complex trading processes.
The difference between Forex and binary options
There is only one type of contract on Forex. Of course, you can trade in currency pairs, CFDs, commodities or stocks, but all are just variations of the same type of contract: contracts for difference (CFDs). If you buy a currency pair and its price goes up, you will gain the difference between the bid and ask.
There are several types of binary options contracts: the most common are the Higher/Lower we have studied, One-Touch options require waiting until the price reaches a certain level, the Range option requires. specify a target price range, and the Ladder option is most profitable.
Amount of initial fund
In Forex, your profits are not limited. You can of course limit your profits by placing orders, but for a simple one-direction order it can be profitable until you close the order yourself at the price you choose. Usually when you open a position, after only a few minutes, the price will increase a lot, giving you more return than you expected.
When trading binary options, profit is always limited by the type of contract chosen. Most importantly, your profit can never be greater than the stake. If you bet $100, you would have $90 in profit if it was favorable. If you lose, you lose all 100 dollars. Of course you are allowed to choose other types of contracts but the success rate will always aim at not making a profit. However, the distributor of these options is always profitable.
Easy to close the trades
It is widely accepted that Forex has the most modern and simplest end system of all exchange markets. A trade closing system is the process from analysis to the moment you place an order in the market. There are many different trading platforms, some with advanced functionality, but it is not difficult to master them.
In binary options, the trade end system is even simpler than that of Forex. In essence, all trading originates from choosing a trading instrument, the type of option, the execution time of the order, and pressing the buy or sell button "buy" or "sell". We will not discuss the effectiveness of this operation, but the likelihood is about 50/50.
On Forex, all contracts have no time limit and therefore, they do not expire. This means that when opening a position, you can wait until the price has not reached your expected level. Yes, there are commissions that can harm your deposit, but here's another topic.
In binary options, all contracts have an expiration time. All option types have a limited lifespan, so you can't "wait for the storm to pass" like on Forex. This type of contract has completely removed the investment component, leaving only pure speculation.
Minimum starting capital
On Forex, this line is now mostly deleted and you can start trading with as little as $10. But you should understand that the smaller your initial investment, the greater the leverage you need from the broker and this greatly increases the risk.
In binary options, the minimum starting capital can be $1. But if you only invest that much, your income will be just as low. Perhaps that is enough for the person who wants to get acquainted with these contracts.
Social trading is also a very good environment for professional investors in Forex or binary options investing. The main advantage a professional investor can do is that you have to have a great name and a great reputation. This helps you to gain huge followers and it is also an opportunity for you to supplement your profits and improve your skills. Overall, binary options social trading is a new system for both beginners and professional investors to join and benefit them.