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Currency pairs in Binary Options trading: the main asset for trading BO

Currency pairs in Binary Options trading: the main asset for trading BO

Every novice trader faces a very important question: what to trade? Indeed, there are now a lot of assets for trading, so your eyes run wide very quickly. There are four main types of assets for trading Binary Options:
  • Currency pairs (consisting of currencies of different countries)
  • Shares (of various large companies)
  • Indices (the sum of securities of several companies included in one group)
  • Cryptocurrencies (currency pairs consisting of virtual currency and/or real currency)
From this list, the most understandable for the common man (novice trader) is currency pairs, because We very often have to deal with currencies of different countries. In such a situation, it is not surprising that almost all novice traders prefer trading on currency pairs.

Another important argument in choosing currency pairs is that stocks are not traded around the clock, and trading indices requires some additional knowledge. In general, currency pairs are what we will talk about today.

Paired currencies in Binary Options trading

All currency pairs, no matter how obvious it may be, consist of two currencies:
  • The first currency in the pair is called the base
  • The second currency is called quoted
The order in currency pairs is always the same, and this order is established by the international organization ISO (International Organization of Standardization). So EUR/USD is always traded, not USD/EUR.

The quote for any currency pair is as follows:

currency pair quote in binary options

The quote itself consists of two parts:
  • Purchase price (Ask)
  • Sale price (Bid)
I think this is understandable, since there is always a buyer and a seller. A clear example is the information board in any bank, which indicates the purchase price of currency by the bank and the price of sale of the same currency to the client.

The purchase price and the sale price have different price values, and the difference between them is called the spread:

purchase price and sale price of the asset

But this is in the FOREX market; in Binary Options, the price has only one value, which is displayed on the chart:

asset quotes on binary options

This is because Binary Options displays the average price of an asset. It is calculated using the formula:

(Bid + Ask) / 2

You only need to know this form in order to understand how Binary Options quotes are obtained and why they differ from Forex market quotes.

How to understand a currency pair in Binary Options trading

Each currency pair should be understood as the price of one currency being paid by another currency. For example, if we take the same popular asset Euro/American dollar (aka EUR/USD), the quote of which will be equal to 1.2880, then:
  • EUR/USD = 1.2880 - this means that one Euro costs 1.2880 American dollars
But what happens when the price of an asset changes? Let's look at this point in more detail.

Each currency pair consists of two currencies. The price of each individual currency depends on many factors, for example, the economy of the country where it is state-owned. For example, the economy of Germany and a number of other European countries where this currency is used is very important for the EUR (Euro). For USD (US dollar), the economy of the United States itself is very important. For GBP (British Pound) – UK economy.

If there is economic growth in a country, then the national currency strengthens - its price rises, and it does not matter at all in which part of the currency pair it is located (as a base currency or as a quoted one). Thus, if positive economic news comes out for the USD currency, which strengthens the currency, then it, being in the EUR/USD pair, will lead to a fall in the price of this pair: the EUR will cost slightly less against the USD than before the release of positive news for the dollar (B ).

How do currency pair quotes change

If there is positive news for the EUR, this will lead to an increase in the price of the Euro itself, which means you will have to pay more dollars to buy one euro. On the chart, the price will go up (A).

Types of currency pairs at Binary Options brokers

There are a total of 4 types of currency pairs that you will encounter while trading with different Binary Options brokers:
  • Major currency pairs or “major” currency pairs
  • Cross pairs
  • Exotic currency pairs
  • Cryptocurrencies

Major currency pairs

Major currency pairs are the most popular currency pairs on which the economies of the richest countries depend. These countries include:
  • United States of America (USA)
  • Great Britain
  • Japan
  • Switzerland
  • Canada
Accordingly, the main currency pairs include pairs consisting of the currencies of these countries:
These assets are traded all over the world. Also, trading on these assets is associated with increased risks - the trader should be aware of the frequent release of important economic news, which greatly affects many currency pairs.

Cross pairs

Cross pairs appeared out of the need to exchange one currency into another without intermediaries. For example, without cross pairs, exchanging EUR into GBP would be very difficult - first the Euros had to be exchanged for American dollars, and only then the dollars could be exchanged for the British pound.

Cross pairs solve this problem - we have a quick way to understand how much the Euro is currently worth in UK currency (EUR/GBP). Cross pairs include the following currency pairs:

Exotic currency pairs

Exotic currency pairs tend to consist of currencies from small countries with less than stellar economies. Such assets are not particularly traded, but you need to know about them (you never know where they will come in handy?!). Exotic currency pairs include:


Cryptocurrencies appeared relatively recently. For those unfamiliar, cryptocurrencies are virtual currencies that can be used to pay online. Cryptocurrencies themselves are traded like regular currency pairs – they are valued in another currency, usually USD. Sometimes this is clear from the name of the asset, and sometimes not.

Cryptocurrencies that are most often found in Binary Options trading:
  • BTC/USD (Bitcoin and USD)
  • LTC/USD (Litcoin and USD)
  • Dash/USD (Dash and USD)
  • ETH/BTC (Ethereum and Bitcoin)
  • BTC/EUR (Bitcoin and EUR)
  • BTC/JPY (Bitcoin and Japanese Yen)

cryptocurrencies in binary options trading

Commodity currencies in Binary Options

Commodity currencies are currencies of different countries of the world, which earn mainly from the export of various goods, for example:
  • Oil
  • Gold
  • Silver
  • Copper
  • Nickel
  • Platinum
  • Sugar
Commodity currencies also include the government currencies of developing countries, which are also very dependent on the export of raw materials. Commodity currencies include:
  • CAD (Canadian dollar)
  • AUD (Australian dollar)
  • NZD (New Zealand dollar)
  • BRL (Brazilian real)
  • NOK (Norwegian krone)
  • CLP (Chilean peso)
The problem is that such countries (and their currencies) are very dependent on the price of their raw materials. If the price of exported goods falls, then the price of the currency immediately falls. Very strong price fluctuations occur due to changes in the price of oil and gold - countries producing these products suffer from this.

The best currency pairs for the beginning Binary Options trader

It just so happens that the most traded asset is EUR/USD - this is the asset that novice traders usually trade on. But the popularity of an asset does not always mean it is easy to understand. Likewise, the price of EUR/USD depends very much on economic news from America and a number of European countries - there are a lot of them!

Of course, you can simply ignore the release time of important economic news, but then it may turn out that there is no time left for trading at all. So you have to choose between two evils:
  • Or learn to trade complex currency pairs
  • Or look for simpler currency pairs for your trading
Many experienced traders advise starting trading on currency pairs with the British pound (GBP) and this is not just so. The pound is very stable in its price movements, is well forecasted and, relatively, rarely presents surprises.

GBPUSD on the chart

Of course, GBP currency pairs are very attractive for beginner traders and beyond, but personally I rely more on trading discipline, which allows me to confidently use many trading strategies, as well as on risk management and money management (rules for managing your capital). The assets themselves for trading, for me personally, fade into the background.

Volatility of currency pairs in Binary Options trading

The volatility of any asset is the number of sharp price movements over a short period of time. If the price jumps very high and then immediately rolls back down very quickly or there is a very strong trend, then the asset is considered to have high volatility. If the price moves calmly in a sideways movement or there is a sluggish trend, then the volatility of the asset is low.

Volatility is important both for the Forex market and for Binary Options trading - it determines what strategies will be used right now.

If in Forex it is very important for a trader that the price moves far from the purchase point (a strong trend is needed), then in Binary Options everything is limited by the expiration time, and the presence of a strong trend is not necessary.

downtrend on the price chart

The trend is quite easy to predict; the main thing is not to miss the moment when it slows down or changes its direction. But, both for a novice trader and for a more experienced trader, it is much easier to look for entry points in the direction of the current trend (they are more reliable), and you can determine the current price trend just by looking at the chart.

price consolidation

At the same time, in Binary Options trading you can use aspects that you would not use in the Forex market - sideways price movements, which are also known as “Flat” and “Price Consolidation”. Everything is still very simple here - trade from the boundaries of consolidation and earn your profit.

By the way, for many novice traders it is much easier to trade in lateral price movements rather than in a trend. Here, of course, the approach will be individual, so I cannot say what will be best for you.

Trading sessions of the foreign exchange market on Binary options

The Forex currency market is traded 24 hours a day and 5 days a week (except Saturday and Sunday). Of course, the whole world cannot trade currencies non-stop - after all, there are people working there who are obliged to sleep and rest. Therefore, each of the five business days is divided into trading sessions - sessions when different countries around the world engage in trading. This is also determined by working hours in these countries.

As a result, we get the following trading sessions:
  • Asian
  • European
  • American
  • Australian
Typically, at the intersection of these trading sessions, currency pairs are very active. For example, at the intersection of the European and American trading sessions, very strong movements occur in the EUR/USD asset.

Also, the names of trading sessions often use the main cities that enter into trade at this time:
  • Asian (Tokyo)
  • European (London)
  • American (New York)
  • Australian (Sydney)
To find out what trading session is right now, you need to indicate your time in the table below and click on the “GO” button:

Which currency pairs to use for trading Binary Options

Typically, experienced traders use the most studied currency pairs for trading, which they understand well and predict well. So it all depends on your personal experience and preferences.

One thing is clear: it’s not worth studying several dozen different currency pairs at once - miss a lot of important information and in the end your knowledge will not move an inch. It is best to start studying the foreign exchange market with 2-3 pairs, which you should choose at your discretion.

I would advise starting to study this market with the GBP pair, for the reasons that I described above. You can also pay attention to the cryptocurrency BTC (Bitcoin), which is also easy to predict and quite stable. The problem is that not all brokers offer cryptocurrencies, unlike regular currencies.

If you have problems with trading psychology, then trade only on one currency pair – there will be plenty of opportunities for opening trades, don’t worry about it.

As a result, you need to decide on currency pairs, and also begin to study them in practice and in theory. The price movement of each asset is very dependent on economic news for that asset, so you will also need to look at this news and look for patterns in price behavior.

All this may look scary and incomprehensible, but, in this case, you just need to start - do not forget that knowledge will come gradually, and the experience gained will not go anywhere.
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