More and more people are taking an interest in trading foreign currencies. Investing in currency seems more appealing than investing in equities, and there is a lot of potential for growth. As the FTSE approaches an all-time high, and investors become nervous about the inevitable push-back that will follow the high, many investors are considering where they should put their money after profit taking, while they ride-out the storm.
Optimove studied the difference in activity between forex and binary options traders and noted that client retention appears to be higher in the world of forex. The important question is – why are forex traders more likely to keep coming back to make new deposits, and why are they more likely to still be trading after several months?
Accessible and convenient
The type of trading software that is offered, and how easy it is to get up and running, appears to be an important part of investor retention. The conversion rate for binary options traders is higher than that of forex traders – at least for the first deposit. This could be because the friction for making that first trade is lower in the binary options world. However, of those who actually make a first time deposit, more forex traders are likely to come back to make a second or third trade, and more forex traders are likely to still be trading after six months.
The flexibility, power and ease of use of the typical forex trading platform software could be a reason for this. Trading tools such as those offered by http://www.iforex.com/trading-tools are particularly appealing for long-term traders. Binary options traders are more engaged than forex traders – completing trades once every 3.3 days, rather than once every 4.3 days, but the turnover of traders is higher. Once someone has started a relationship with a foreign currency broker they are far more likely to remain loyal to the company, and to stick with trading for the long haul.
Customer turnover
Optimove’s survey shows that while it is easier for a new trader to get started with other forms of trading, foreign currency investment is a popular long-term choice. If you can find a broker that you trust with trading platform software that you enjoy using, then you will find that it is easy to build a long-term relationship with that broker, and the potential for profits is there.
Binary options trading firms rely on a steady flow of new customers, and emphasise volume of trade over all other metrics. Forex brokers, on the other hand, want to grow relationships with their customers, and place more emphasis on nurturing high value VIP investors.
The world of forex is a volatile one, and not every trader will strike it rich. If you are considering investing in foreign currency, be sure to research margins and leverage carefully, and trade only with money that you can afford to lose. There is always some risk associated with investing, and you should make sure you understand the markets well before you commit your funds.
