What is Forex, Nadex & Binary Trading
Forex, Nadex & Binary Trading is investing your money through world currencies.
Currencies are the assets and as currencies change in value amongst one another. You can either make profit or loss from them. A brief example would be. Let's say I have a European dollar, or in other words a EUR. Let's also say I have a US Dollar or USD. When I open my Forex broker account or exchange account that I am investing with. The pair will be plotted as EUR/USD. The price that you see 1.2345 for example is simply the current value of those two pairs compared to one another. Which means, one EUR is worth 1.2345 US Dollars. As that price increase, if I am in the option of Buying (or choosing it to go up) EUR/USD then I will notice that I will gain profit the more that value goes up. 1.2350 is an increase of 5 pips (1 pip = .0001). Let's say I wish to gain $1 for every pip that the current market goes up. If I get in at 1.2345 and the market goes to 1.2350 then that means I have gained $5 of profit. On the flip-side, if the market starts at 1.2345 and the market goes opposite of my direction chosen, or in other words it goes down 1.2340 then it means I have now lost $5. The markets are fluctuating every second of everyday. News and technical charting indicators help to give a prediction of where the markets will go. The actual determining factor that moves the markets in either direction over time is the Traders, investors who are getting in on those different predictions and market analysis. About 5 Trillion Dollars is invested and traded on the Forex Markets every single day around the whole world. If you want a more detailed explanation of Forex Investing I suggest reading my ebook "The Ultimate Guide to Forex Investing"
Nadex and Binary options are a tad bit different.
2. Binary Options
Binary Options are usually traded through independent brokers across the world and it is based on True or False statements. Which means, if the price you get in at is 1.2345 and the direction you choose is "BUY" or "UP" then that means that your profit will be based on where the markets finish at based on the expiry time you choose. It could either be 60 secs, 5 mins, 30 mins, 1 hour, 4 hours, 1 day, 1 week and some brokers offer even 1 month. So lets say that you get in at 1.2345 and you set your expiry time for 1 hour. When that hour is up, you may gain 80% return of your investment as profit if it finishes above your set price by 1 pip or more. A winning trade for you would be 1.2346 and above if you got in at 1.2345. A losing trade for you would be 1.2344 and below. On loosing trades you only lose your initial investment for that trade. On winning trades you win whatever percentage return given by the broker on that specific trade + your intitial investment back. For example, if you invest $10 on a trade, a losing trade would mean that you lose your whole $10, but if you win you will get $8 (80% of $10) of profit. Which means a total of $18 ($8+$10 that you invested) will be returned back to you.
Nadex is Binary options but it is a tad bit different. It is an exchange, which means you are trading against other traders and not against the broker. Your risk can be chosen by you as opposed to most Binary brokers they give you the percentage return for each trade. On Nadex you can profit from 10%-900% return on each trade. The more percentage return you desire, the more difficult the trade is to win. A 10% Return on Investment trade is much easier to win than a 150% ROI trade. Therefore, the accuracy of your decision making must be above a certain level in order to gain profit. This is why traders use News & Chart data with indicators. Because they are trying to use past patterns to determine future results. If I have a Technical indicator or chart indicator that has been correct 60%-70% of the time over the past couple of years. My best bet is to continue to trust and rely upon the fact that it may continue to be correct at that rate in the future. Past stats is no promise of future results. But they are there to give a gage or an idea of what could be done if markets patterns have been consistently the same over time, and they usually are.
If you are getting a low return then it means your win rate must be extremely high in order to stay in the green, because 1 loss could take away a good amount of wins. But if you are getting a high return then your win rate doesn't have to be nearly as high because 1 win can cover over a couple of losses.
Nadex is the exchange that Simple Forex Options use to invest. They are one of the only exchanges that is regulated in the US. They are regulated by the CFTC and their pricing as well as trade volume and overall business integrity is respected and trustworthy amongst most. I would suggest heading to Nadex.com to familiarize yourself with their platform. They also allow people to open up a Demo account that has fake money in it, but that allows them to trade the real markets for the sake of practicing and getting familiar with the platform.