Binary options are one of the more extraordinary alternative modes of trading in foreign currencies, or forex markets. Binary options allow traders to place time-bound bets on predefined values of the underlying assets, which may include stocks, indices, and forex.
Like any other exchange trade, binary options offer an option premium, a predetermined strike price, and an expiration date. The main difference is the settlement price, which depends on whether the option condition is met.
Foreign Exchange
One of the most popular assets traded in binary options is forex, or foreign currency. 92% of traders prefer forex trading over any other asset or commodity, due to its high rate of return.
There is a vast range of forex pairs available, which provides the trader with a grand variety to choose from. Additionally, there’s less volatility among forex than cryptocurrency, making the trade easier to conduct.
However, as compared to stocks and commodities, there is a more prominent rate of price fluctuation in forex, allowing the trader to enter multiple trades a day.
Top Currency Pairs
Following is the list of the most popular currency pairs among the majority of traders:
EUR-USD
The EUR/USD is the most traded pair around the globe. This is undoubtedly due to the massive popularity of both of these currencies individually. The U.S. dollar is the most popular currency worldwide, and the euro, even after being introduced in 1999, remains the second.
The price fluctuation remains pretty consistent due to the liquidity in the market. However, it is still not overly volatile. It is one of the best pairs to trade during both U.S. and European market hours.
USD-CHF
The US dollar and Swiss franc pair is also regarded as a strong trading partner. However, the price movements are not as strong as in the EUR/USD pair.
This is mainly because the Swiss franc is not as popular as the Euro. Nevertheless, the US dollar being part of this pair acts to its benefit. The USD acts to stabilize the pair overall and drive its volatility. This pair is also great to trade in during both the U.S. and European market hours.
GBP-USD
GBP-USD and EUR-USD are known to trend heavily in the same direction. They also have a rather high correlation as a whole. GBP-USD is considered an appropriate alternative to EUR-USD and is the best option to go for if EUR-USD trading is not going as well as you intend it to go.
Further, if you are facing any technical difficulties or minor setbacks with EUR-USD, then you can go for GBP-USD as they both have similar liquidity and volatility in the market.
GBP-JPY And EUR-JPY
GBP-JPY and EUR-JPY are known to be good pairs for trade setups and to follow their support well. Further, they have a good volatility track record, making them more profitable to trade in.
Both of these currency pairs are ideal for trading in the European and Asian markets. They are also a good choice to trade with when the Japanese Yen session is active.
USD-JPY
USD-JPY is not as volatile a pair as others involving USD, but is a good choice when you are interested in trading in the Asian market. Being a US resident, you can also go for it if you are more comfortable trading in the evening.
USD-CAD
It is given that both USD and CAD are North American currencies, they would be most active and robust in the hours the North American session is active. They would be the optimum choice when trading in the said market.
AUD-USD
AUD/USD is one of the most popular trading pairs around the world. The pair mostly attracted traders due to its differential rate as compared to other forex pairs.
This has, however, waned in recent years due to the current economic volatility worldwide. The pair is a good choice to trade within both the Australian and the U.S. markets.
When choosing an asset or a currency pair to trade, the correct way to go about this is to study the binary charts explaining its market trends and recent history to make the correct prediction.
What is the Best Time to Conduct Your Trade in Each Market?
Binary Options host a series of forex currencies that are active in each locality at a different time, according to their respective time zones. The markets are divided mostly in terms of continents.
If the U.S. market session or the European market hours seem most convenient to you, or if they overlap, then you can never go wrong with trading assets in the European currency or pairs that either include the U.S. dollar (USD) or the Canadian dollar (CAD).
If you prefer to trade after U.S. market hours, you should look for pairs that include either the Japanese yen (JPY) or the Australian dollar (AUD). A pair containing them both would be the perfect choice!
The following is a rough estimate of the opening and closing times of each continental market:
- Asian Market Session – 11 PM – 8 AM GMT
- European Session – 7 AM – 4 PM GMT
- North American Session – 12 PM – 8 PM GMT
Conclusion
The most traded asset in binary options trading remains forex, which consists of currency pairs. The most popular pairs among these are EUR-USD, USD-CHF, GBP-USD, GBP-JPY, EUR-JPY, USD-CAD, and AUD-USD.
Most of the time, the ratings for the currency pairs are different because of how they stand in their respective continental markets. To trade successfully between these pairs, you must be familiar with the best times to trade in each market.