Binary Options: Tackling the EUR/USD Pair

Binary Options: Tackling the EUR/USD Pair

Submitted by adil on Thu, 05/08/2014 - 06:28

It is very common for a binary options trader to trade in a wide range of foreign exchange pairs. But if a trader wants to make a successful trade, it is important for him to have a clear understanding of how paired currencies are traded in relation to each other. The first currency of the traded currency pair is known as a base currency and the other one is known as a quote currency. Therefore, when investors purchase a currency pair, they actually buy the base currency and later on sell the quote currency. So, bid of a trader determines how much of the quote currency is required to get one unit of the base currency.

One of the most traded currency pair in the binary options market is EUR/USD pair. Traders must possess strong knowledge about the strength of these particular currencies and their related economies, because every investment carries a certain amount of risk. When you are trading in Forex binary options, you have a chance of making 80 percent or more money with these trades, but you are also exposed to the risk of losing 100 percent of your investment if it closes out of the money. However, with Forex binary options, you don’t have to be as accurate as you should be with the standard Forex trading, where a trader hesitates to trade because he or she is never sure whether the trade would shift as predicted.

Being the most popular traded pair, trade of millions is executed in EUR/USD every day. This makes it difficult for traders to predict the movements that are worthy of trading. Therefore, you should be well prepared before entering into a EUR / USD trade. A very important term used in EUR/USD trade is called ‘space’. Investors and traders should be aware of it as it represents the price variance between how much money you would make if your forecast is correct, and the amount of money you lose if your forecast is incorrect. It is associated with Forex binary options, which is not as clear as the ‘spread’, but it is crucial and should be considered.

Moreover, technical and fundamental analysis is very helpful for traders who are trading in forex binary options trading. Almost every trader performs some sort of analysis before buying options, even if he had designed a strategy for trading. Technical binary options trader will observe technical indicators and certain patterns so as to find out the potential investment opportunities. On the other hand, from a fundamental perspective, traders follow news releases to buy options in EUR/USD currency pair. However, there are other factors that need to be considered when trading in this currency pair, including the political happenings, economic data and decisions regarding the rate of interest. If the binary options trader understands how to trade in the market after considering these factors and how they affect the value of EUR/USD currency pair, it will create a profitable trading opportunity for them.

Binary options traders, who trade in EUR/USD currency pair, should be able to assess the strength of these currencies and their economies. The US region and EU are two of the major contributors to the worldwide economy and hence, make the EUR/USD pair a crucial foreign exchange asset for investors in the binary options market.