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Keeping Your Brokers Honest

Getting Bank DataThe world of Forex trading is about to change, but will it last? The company Integral is planning on publishing second by second updates to how currency prices change in an effort to keep banks honest and to keep individual traders better informed. This service will be completely free at the end of each business day starting January 15th.

The main purpose of this is to help Forex traders figure out whether or not their broker is helping them or hurting them by hindering their access to good prices. This might actually prove to be a quite helpful tool, but it will likely not be easy to use at first. In the world of Forex trading, prices can change quickly second by second, and this means that you will need to track your trades very precisely and then compare to the service. Most good brokers today will take care of these details for you now and save them to your account, but an effort will still be required on the end user’s behalf.

This has far reaching effects for all sorts of traders, especially binarytraders. The binary options market might not have the same fame and grandeur as the Forex market, but this is only because it is a newer marketplace. Binaries can move even faster than traditional currencies thanks to the new short term trades such as the 60 second trade and the two minute trade. And because the rates of return are fixed before the trade even begins, it is possible to see big returns off of an increase of a single pip. In traditional Forex trading, it would still be possible to see returns like this, but with binaries, the amount that you need to risk would ultimately be a lot less to see the same dollar amounts.

There is another big advantage to using this method for binary option Forex trading. If you go through a currency broker, in order to see any sort of profit, you will have to beat what is called the spread. This is the inherent difference between the bidding price and the asking price, or in other words, what you can buy a currency at and what you can sell it at. In order to make money, the buying point is always higher than the selling during any given moment. If you want to make money with a currency, you want to buy the currency as cheaply as possible and see it high, but this is simply not how these brokers set up their trading structure. This helps to protect their own financial interests, but it also can create a roadblock. For example, assume you buy the U.S dollar with the Euro at a rate of 1.3680. You want the price to go up here, but what if it only goes up two or three pips? You were right in your prediction–the price went up–but you will still lose money because it didn’t go up enough. Typical brokers have a spread of four or five pips, meaning that the price must go up more than this before a profit can be realized. If you were using a large amount of leverage, that could mean losing thousands of dollars, all because you weren’t right enough. With binary options, you would still earn the full amount in this instance. And if you were wrong, you can never lose more money than you originally invested.

Checking out prices on a sheet at the end of the day can be a good thing if you want to double check that your binary options broker is keeping currency rates moving at the correct speed while you’re trading. This will help you to find the right broker for your trading style a bit more easily.
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